White House Proposes Billions in Medicare & Medicaid Cuts

Today the White House proposed a 2020 federal budget that would slash Medicare spending by nearly $846 billion and Medicaid by $241 billion over 10 years, sparking concern among hospice organizations.

“[The National Hospice and Palliative Care Organization] is concerned the president’s proposed Medicare cuts could interrupt patient and family access to person-centered, interdisciplinary hospice care,” said Edo Banach, president and CEO of NHPCO. “NHPCO stands ready to help lead the transition to person-centered care in Medicare, but does not believe doing so requires cuts that risk impeding access to hospice care.”

Among the provisions in the proposal was a call for converting Medicaid to block grants or to per-capita capped grants to the states. A block grant releases federal funds to individual states to support broad purpose programs; per capita capped grants place hard limits on the amount the federal government will provide to states for each person enrolled in Medicaid.


“This has never been a good idea, since it would reduce federal Medicaid funding by several billion dollars. States already struggle to adequately finance long-term services and supports through their Medicaid programs,” said LeadingAge President and CEO Katie Smith Sloan.

Other provisions included a proposed expansion of the U.S. Centers for Medicare & Medicaid Services (CMS) authority to conduct prior authorization on items or services considered at high risk of fraud or abuse, according to the White House Office of Management and Budget (OMB). Prior authorization policies, which private insurers also use, require physicians to receive permission from a health plan before prescribing certain medications.

Currently, CMS covers drugs for hospice patients to treat pain, nausea, constipation, and anxiety under the hospice benefit. However, if the patient takes any medications unrelated to the terminal diagnosis they would be covered under Medicare Part D and would subject to prior authorization. It’s uncertain whether these rules would change if the provisions in the proposed budget were enacted.


The proposal would also place caps on the amounts Medicare beneficiaries would be expected to pay out-of-pocket for medications, a concept that has seen bipartisan support in Congress. Beneficiaries currently have a co-pay of 5 percent, but this small percentage can amount to thousands of dollars if the patient needs expensive drugs.

The proposed budget would also increase funds allocated to the Health Care Fraud and Abuse Control program, a joint Department of Justice and Department of Health & Human Services program designed to curb fraud in both public and private health insurance plans, according to OMB.

Response from Capitol Hill was mixed.

Sen. Patrick Leahy (D-Vt.), vice-chairman of the Senate Appropriations Committee called the budget “dead on arrival,” and “divorced from reality,” in a statement.

Senate Budget Committee Chairman Mike Enzi, (R-Wy.), issued a statement saying the budget proposal is “the first step in the federal budget process and will allow us to consider how [the president’s] priorities align with the priorities of Congress.”

House Budget Chairman John Yarmuth, (D-Ky.) said his committee intends to bring a Congressional budget resolution, the next step in the federal budget process, to the House floor by early April.

While voicing some apprehension about the Medicare and Medicaid proposals, hospice organizations affirmed that they would work with government stakeholders to address CMS spending.

”The White House budget raises some important concerns for home care and hospice with proposals for block granting Medicaid and instituting rate cuts for Medicare post-acute services,” said National Association for Home Care & Hospice President William Dombi. “We look forward to working with the administration and the Congress as we tackle the challenges of health care delivery together.”