Obama’s FY 2016 Proposed Budget Gives to HHS, Takes From Hospitals

The Obama Administration released its budget proposal for fiscal year (FY) 2016, calling it “the nation’s first open sourced budget.” According to an overview provided by the Office of Management and Budget (OMB), the budget will provide a deficit reduction of $1.8 trillion, which the OMB attributes “primarily from reforms to health programs, our tax code, and immigration.”

The FY 2016 proposed budget builds on President Obama’s 2015 State of the Union address, which discussed health care-related successes in 2014 and health issues that still need to be addressed. The President’s speech, which included praise for Ebola workers, a push for precision medicine, and acknowledgement of the success of the ACA (see State of the Union: President Obama addresses ACA, innovation, and Ebola, January 21, 2015), shares much of the same framework as the budget.

Affordable Care Act

The budget prioritizes the support of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), including support for the Health Insurance Marketplace, premium tax subsidies, and the ACA’s Medicaid expansion. President Obama’s budget message praised the ACA, calling it progress toward “ensuring that every American has the peace of mind that comes with quality, affordable health insurance.” He explained that the ACA has put the United States “on a more sustainable fiscal path by slowing the growth of health care costs,” and touted the budget’s “additional reforms and cost saving proposals to continue encouraging high-quality and efficient health care.”

Health Innovation

The FY 2016 budget provides a 6 percent increase for research and development. The budget provides for investments in biomedical research—like the BRAIN initiative, which is developing tools and technologies to offer new insight into diseases like Alzheimer’s, and Precision Medicine, which can improve health outcomes and better treat diseases.

Infectious Diseases

The budget includes funding increases for global health challenges, including the eradication of polio, and creates a new Impact Fund for targeted global HIV/AIDS efforts. It also provides resources to support the Global Health Security Agenda. Domestically, the budget increases preparedness funding to ensure effective and efficient responses to potential future disease outbreaks in the U.S. and invests in state implementation plans to address the domestic HIV epidemic.

HHS Funding

HHS Secretary Sylvia Burwell announced that the President is requesting a $4.8 billion increase in HHS’ discretionary budget authority, for a total of $83.8 billion. HHS highlighted health-related budget inclusions, such as:

  • serving approximately 28.6 million patients in FY 2016 at more than 9,000 health center sites in medically underserved communities throughout the country;
  • making strategic investments in our nation’s health care workforce to ensure rural communities and other underserved populations have access to doctors and other providers;
  • reforming health care delivery by finding better ways to deliver care, pay providers, and distribute information;
  • reducing the prevalence and impact of opioid use disorders, including heroin abuse, by investing in a new, aggressive, multi-pronged initiative;
  • accelerating progress in scientific and public health efforts to detect, prevent, and control illness and death related to antibiotic-resistant infections; and
  • improving the Medicare Appeals process to increase adjudication capacity and implement new strategies to alleviate the current backlog.

HHS provided a “Budget in Brief” document to explain the provisions in the FY 2016 budget proposal that affect the department.

Deficit Reduction

According to the Administration, new investments in the FY 2016 budget “are paid for with smart reforms across a range of programs,” which is “achieved primarily by focusing on the key drivers of our Budget challenges: health care cost growth and inadequate revenue levels in the face of an aging population.” The proposed budget “includes $400 billion in health savings that build on the Affordable Care Act to help maintain slower cost growth while improving health care quality,” and the Administration claims that the health savings included in the budget “grow over time—raising about $1 trillion in the second decade, and extending the Medicare Hospital Insurance trust fund solvency.”


Republicans denounced the Administration’s budget proposal. Senate Majority Leader Mitch McConnell (R-Ky) said that the proposal is “another top-down, backward-looking document that caters to powerful political bosses on the Left and never balances—ever.” House Speaker John Boehner (R-Ohio) echoed McConnell, saying, “Like the president’s previous budgets, this plan never balances—ever.” He promised that the GOP’s FY 2016 budget proposal “will be about the future.” Similarly, House Majority Leader Kevin McCarthy (R-Cal) accused the Administration budget of not being a serious proposal.

Criticism also came from less partisan sources. The American Hospital Association (AHA) criticized the budget for proposing “cuts that diminish our nation’s health care infrastructure.” AHA President and CEO Rich Umbdenstock released a statement claiming that “many items in today’s proposal would seriously challenge hospitals’ ability to keep the promise of maintaining access to quality health care services.” Umbdenstock did, however, praise the Administration for its “willingness to explore structural reforms to the Medicare program” and its “proposal to replace the remaining Medicare sequestration cuts.”

“Open Source”

In a blog post, the White House explained that its goal with the budget proposal is to allow “as many members of the American public as possible to review the President’s proposals, and have clear opportunities to provide feedback.” To that end, the budget proposal was made available in its entirety on blogging platform Medium, and released all of the data in the FY 2016 budget in an easy, machine-readable format on GitHub, a website for hosting open-source projects.

Highlight on Alabama: ACA Grants to Reach Alabama Health Providers and Improve Patient Care

Alabama health providers will receive grant funding totalling $343,606 as part of a Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) initiative. Health and Human Services Secretary Sylvia M. Burwell announced $36.3 million in funding to 1,113 health centers in all 50 states, the District of Columbia, and seven U.S. Territories to recognize health center quality improvement achievements and invest in ongoing quality improvement activities. Thirteen Alabama health providers are set to receive the quality improvement grant funds to help with their ongoing efforts to improve patient care.

The funding rewards Alabama health centers that “have a proven track record in clinical quality improvement, which translates to better patient care, and it allows them to expand and improve their systems and infrastructure to bring the highest quality primary care services to the communities they serve,” Burwell said in a news release “With these funds, health centers in all 50 states will continue to provide access to high quality, comprehensive primary and preventive health care to the patients that need it the most.”

Alabama health centers receiving these funds are being recognized for high levels of quality performance. These providers have demonstrated their ability to focus on quality in all aspects of their clinical operations and the best overall clinical outcomes. They have exceeded national clinical benchmarks for quality, and demonstrated at least a 10 percent improvement in clinical quality measures between 2012 and 2013. Many of them have also used electronic health records (EHRs) to report quality measures. Alabama providers set to receive funding include:

  • Bayou La Batre Area Health Development Board, Inc., recognized as a clinical quality improver;
  • Birmingham Health Care, Inc., recognized as a clinical quality improver;
  • Cahaba Medical Care Foundation, recognized as an EHR health center and clinical quality improver;
  • Capstone Rural Health Center, recognized as a clinical quality improver;
  • Central North Alabama  Health Services, Inc., recognized as a clinical quality improver;
  • Franklin Primary Health Center, Inc., recognized as a clinical quality improver;
  • Health Services, Inc., recognized as a clinical quality improver;
  • County of Mobile, recognized as a clinical quality improver;
  • Northeast Alabama Health Services, Inc., recognized as an EHR health center and clinical quality improver;
  • Quality of Life Health Services, Inc., recognized as a clinical quality improver and a health center quality leader;
  • Rural Health Medical Program, Inc., recognized as an EHR health center and clinical quality improver;
  • Southeast Alabama Rural Health Associates, recognized as a clinical quality improver;
  • Whatley Health Services, Inc., recognized as a clinical quality improver.

“These funds reward and support those health centers that have taken steps to achieve the highest levels of clinical quality performance and improvement,” said Health and Resources Administration (HRSA) Administrator Mary K. Wakefield, Ph.D., R.N.

HHS Outlines Preparedness for Global Climate Change

HHS has released two reports on how it is preparing to respond to climate change. Climate change has been identified as one of the top public health challenges of our time according to HHS. One report, HHS Climate Adaptation Plan, describes how HHS can provide better health services and preparedness for changing health issues as a result of climate change. The second report; HHS’ 2014 Strategic Sustainability Performance Plan describes what HHS is doing to mitigate the agency’s impact on global climate change.

Health Impacts

“Recent reports from the U.S. Global Change Research Program and Intergovernmental Panel on Climate Change indicate that climate change is already negatively affecting human health in the United States, and that it is likely to have greater harmful effects on human health in the future,” according to a statement from HHS. In its Climate Adaptation Plan, HHS identified increased respiratory stress from poor air quality including diminished lung function, increased risk of asthma and premature deaths as one of the main impacts of climate change on human health. Other impacts include increases in plant based allergens, increased exposure to toxic air pollutants, and increased respiratory and asthma conditions from an increased amount of fungus and molds resulting from extreme rainfall and rising temperatures. Conditions sensitive to extreme heat like cardiovascular disease, heat stroke, and respiratory disease could also increase as a result of global warming stated HHS.

Specific Populations

HHS is also worried about the impact of climate change on specific populations of people like the elderly, children, and those with chronic conditions. “Climate change is anticipated to have its greatest impact on people whose health status is already at risk and who have the fewest resources to address or adapt to climate change,” said HHS. Seniors are more at risk from extreme heat waves and have more underlying diseases that increases their health risks and morbidity. HHS pointed out that lower-income people have higher rates of asthma, diabetes and other chronic disease that maybe exasperated by global climate change.

Emergency Preparedness

Increasing the emergency preparedness of the health care system was a large component of HHS’ Climate Adaptation Plan. The objective of a Proposed rule issued in December of 2013 is to establish consistent emergency preparedness requirements for health care providers participating in Medicare and Medicaid and was proposed with global climate change in mind. The Proposed rule would require emergency plans, policies and procedures, communications plans, and training and testing by providers and suppliers who participate in the Medicare and Medicaid programs (see Proposed rule would create emergency preparedness requirements for Medicare, Medicaid, December 27, 2013). Some of the greatest threats to health as a result of global climate change will come from more frequent and severe weather events like heat waves, drought, wildfires, heavy rainfall and flooding and CMS’ main goal is prepare for these natural disasters, said HHS.

In addition HHS is preparing additional reports to assist local health care planning and delivery agencies respond to national disasters, and increasing awareness and participation of volunteer medical groups like the Medical Reserve Corps which is an organization of 200,000 volunteers organized in almost 1,000 local units. These groups and groups participating in the Health Care Coalitions are committed to strengthening public health; reducing vulnerabilities; improving local preparedness, response and recovery capabilities; and building community resilience.

HHS’ Footprint

HHS’ Strategic Sustainability Report describes the agency’s efforts to reduce its impact on global warming. HHS reports that it has reduced its greenhouse gas emission by 12.3 percent when compared to 2008 by reducing energy use and employee travel. The report acknowledges that HHS is not meeting its target in using sustainable buildings. Only 0.73 percent of new and existing buildings are in compliance with Guiding Principles for Federal Leadership in High-Performance and Sustainable Buildings when it had a target of 15 percent of its leased buildings being in compliance with these guiding principles. The report goes on to describe HHS’ efforts at more efficiently using waters, electricity, renewable energy, and fleet management. HHS reports that in 2013 it awarded $40.9 million in contracts to improve energy savings and other efforts to reduce its impact on global climate change. HHS issued its first strategic sustainability report in 2010.

CMS Releases Home Health Rate Update for 2015

CMS has issued an advance release of its Final rule to update Medicare’s Home Health Prospective Payment System (HH PPS) payment rates and wage index for calendar year (CY) 2015. The regulations, which will take effect on January 1, 2015, update the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supply (NRS) conversion factor under the Medicare prospective payment system for home health agencies (HHAs). The updates represent the second year in a four year rebasing adjustment required by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Among other provisions, the Final rule, which is set to be published in the Federal Register on November 6, 2014, also makes changes to the face-to-face encounter regulatory requirements and home health quality reporting program requirements.


Beginning in 2014, CMS was obligated, under section 3131(a) of the ACA to make adjustments to home health payment rates over a four year phased in period. Under the law, the rate increases over the four year period must be made in equal increments that cannot exceed 3.5 percent of the 2010 payment rates. Through the 2014 HH PPS Final rule (78 FR 72256), which sets the adjustment for 2014 through 2017, CMS finalized a fixed-dollar reduction to the national, standardized 60-day episode payment rate at $80.95 per year. Additionally, the 2014 Final rule adjusted the per-visit payment rates with upward adjustments that ranged from $6.34 for medical social services on the high end to $1.79 for home health aide services on the low end. Additionally, the non-routine medical supply (NRS) conversion factor was set to reduce by a factor of 2.82 percent per year. The 2015 Final rule continues with the adjustments adopted in the 2014 Final rule. Also in accordance with an ACA mandate, taking into account a multifactor productivity adjustment, under the 2015 Final rule, the HH market basket is being updated 2.1 percent (see, Home health rates to be cut by 0.30 percent in CY 2015, July7, 2014).


In addition to making changes related to the ACA requirement, the Final rule discusses how CMS is monitoring the impacts of the rebasing adjustments. The update also includes simplifications to the ACA-mandated face-to-face encounter requirement. In particular, the Final rule eliminates the narrative requirement for certification of eligibility for home health services. Among other implemented rules, the changes establish procedures for obtaining documentation to establish that a patient is eligible for the home health services and demonstrating that a face-to-face encounter with a patient is related to the reason the patient requires home health services.

Other Changes

The Final rule also makes updates to the home health wage index using a 50/50 blend of the existing core-based statistical area (CBSA) designations and the new CBSA designations outlined in a February 28, 2013, Office of Management and Budget (OMB) bulletin. Additionally, changes are made under the Final rule to the quality reporting program for home health providers. Specifically, the quality changes include the establishment of a minimum threshold for submission of Outcome and Assessment Information Set (OASIS) assessments for purposes of quality reporting compliance and the creation of a policy that will assist in the adoption of changes to measures that take place in between rule making cycles.

Costs and Benefits

CMS projects that new requirements associated with certifying patient eligibility for home health services will result in a reduced burden of $21.5 million. However, the overall economic impact of the Final rule is estimated to be $60 million in decreased payments to home health agencies.