Common Sense Savings Act of 2016 The House Energy and Commerce Bill that Sheds Light on How the GOP Would Change Medicaid’s Federal Financing March 31, 2016 First Published: March 31, 2016 Producer: Alexander Perry Director: Afzal Bari

SectionDescription in Brief End Medicaid for lottery jackpot winners Under current law, states are not allowed to remove multi-million dollar jackpot winners from Medicaid - this reform would alter how Medicaid eligibility is determined for persons who receive lottery winnings Eliminate enhanced Medicaid payments for prisoners This provision reduces the Medicaid matching rate for inpatient services for those who are incarcerated Reform Medicaid Provider Tax The policy would limit the ability of states to impose Medicaid “provider taxes” aimed at increasing Medicaid funding from the federal government Eliminate Obamacare SCHIP enhanced match rate Obamacare increased the federal financial responsibility for State Children’s Health Insurance Program (SCHIP) This reform would return matching rates to previous levels Repeal of the Prevention and Public Health Fund This would eliminate the ACA’s Prevention and Public Health Fund, which was created to provide communities with resources to fund programs preventing disease and injury COMMON SENSE SAVINGS ACT OF Proposed Energy & Commerce Spending Bill Targets Health Care for $25 Billion in Cuts Over 10 Years Initiatives of H.R. 4725, Common Sense Savings Act of 2016 March 31, 2016 | Alexander Perry Sources: National Journal Almanac, 2016; House of Representatives, “H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; Energy & Commerce Press Release, March 15, 2016; HHS.gov, 2016; Dan Diamond, “House GOP Targets Health Care for $25 Billion in Cuts,” Politico Pulse, March 14, Bill Sponsor: Rep. Joe Pitts (R-PA) Chair of E&C Health Subcommittee *Although the spending proposal is unlikely to become law, the legislation lends insight as to how Republicans would change Medicaid’s federal financing *Estimates put the savings from these policies at nearly $25 billion over 10 years

COMMON SENSE SAVINGS ACT OF GOP Spending Proposal Would Treat Lump Sum Payments as Income, Making Some Lottery Winners Ineligible for Medicaid Under Current Medicaid Regulations: March 31, 2016 | Alexander Perry Sources: House of Representatives, “ H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; 2016 Office of Congressman Joe Pitts, Press Release, January 14, 2015; Noun Project, Luis Prado, Tuk Tuk Design. Modified Adjusted Gross Income (MAGI): States are required to use MAGI for determining what income to include when determining Medicaid eligibility for most non-elderly and non- disabled individuals Under Medicaid regulations, income received as a lump sum, such as lottery winnings, is counted as income only in the month received - as a result, states cannot disqualify multi-million dollar lottery winners from Medicaid Lump sum payments are not included when determining Medicaid eligibility Medicaid Spending Proposal Closes Medicaid Lottery Loophole: Amount of Lump Sum Winnings: Would be Treated as: Below $60,000Income in the month received Between $60,000 and $70,000 Income over two months Over $80,000 Income over three months plus another month for every additional $10,000 This legislation would require states, for purposes of determining MAGI for Medicaid and CHIP eligibility, to count lump sum winnings in excess of $60,000 as if they were obtained over multiple months As such, monetary winnings from lotteries, gambling winnings, inheritances, or legal damages above a certain amount would disqualify someone from Medicaid. Medicaid Lump sum payments would be included when determining Medicaid eligibility

COMMON SENSE SAVINGS ACT OF Common Sense Savings Act Would Eliminate Enhanced Federal Medicaid Funding for Prisoners Under the Affordable Care Act: March 31, 2016 | Alexander Perry Sources: House of Representatives, “H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; Alexandra Gates, Samantha Artiga, and Robin Rudowitz, “Health Coverage and Care for the Adult Criminal Justice-Involved Population,” Henry J. Kaiser Family Foundation, September 5, 2016; GAO, “Medicaid and Inmates,” September 5, 2016; Noun Project, Diego Naïve, Ralf Schmitzer, Carl Holderness. Medicaid Inmate Exclusion Policy – Exception for inmates at qualifying medical institutions Federal Medicaid law prohibits the payment of federal Medicaid matching funds for the cost of any services provided to an inmate of a public institution, except when the individual is a patient in a medical institution. This means that an inmate who is a patient at a hospital qualifies for federal Medicaid matching funds Medicaid Federal Medical Assistance Percentage (FMAP) The federal government matches state Medicaid service expenditures based on a statutory formula known as FMAP FMAP Medicaid Expansion gives states an enhanced FMAP Those states that chose to expand Medicaid under the PPACA cover a greater portion of their incarcerated populations and receive an enhanced federal matching rate for newly eligible adults The Common Sense Savings Act would eliminate the enhanced federal matching rates paid to states for services for those who are incarcerated ACA Medicaid States that expanded Medicaid receive an enhanced federal matching rate for newly eligible inmates receiving services at a medical institution FMAP

COMMON SENSE SAVINGS ACT OF Budget Bill Would Lower Threshold of Provider Tax, Which Would Force States to Compensate for Less Federal Funding How Common Sense Savings Act of 2016 Would Impact Federal Medicaid Funding Provider Tax March 31, 2016 | Alexander Perry Sources: House of Representatives, “H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; Caitlin Owens, “Republicans Shed Light on How they Would Change Medicaid,” Morning Consult, March 15, 2016; Henry J. Kaiser Family Foundation, “States and Medicaid Provider Taxes or Fees,” March 14, Provider taxes are imposed by states on health care services where the burden of the tax falls mostly on providers, such as a tax on inpatient hospital services or nursing facility beds. Medicaid is funded jointly by states and the federal government and provider taxes are one of the ways states pay to support Medicaid programs Under Current Regulations: Safe Harbor Threshold of 6.0% Currently, states cannot be “held harmless” from the burden of a provider tax, which means that they cannot recoup the cost of the tax through higher Medicaid reimbursements or other means of getting the money back. The exception to this rule is any taxes 6% or less of net patient revenues In other words, providers can seek back the money they paid for provider taxes that are at or below this 6% threshold Common Sense Savings Act of 2016: Proposed Lower Threshold of 5.5% The House Energy and Commerce Committee’s budget bill would lower the held harmless threshold to 5.5% Lowering the safe harbor threshold would affect 24 states that currently have provider taxes above 5.5% As an effect, states would be forced to either make up for funding losses via other revenue sources or cut Medicaid programs. 5.5% 6.0% Net Patient Revenue Congress’s Proposed Lower Threshold

COMMON SENSE SAVINGS ACT OF Proposed Budget Bill Would Eliminate Enhanced Federal Matching Rate for CHIP The Federal Government’s Enhanced Match Rate for CHIP Funding: March 31, 2016 | Alexander Perry Sources: House of Representatives, “H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; Medicaid.gov; Noun Project: Marie Van den Broeck. Kelcey Hurst, Phillip Ashlock. Medicaid Federal Medical Assistance Percentage (FMAP) The Children’s Health Insurance Program (CHIP) is funded jointly by the federal government and states through a formula based on FMAP FMAP The Federal Government Matches Money Spent By States for CHIP As an incentive for states to expand their coverage programs for children, Congress created an “enhanced” federal matching rate for CHIP Enhanced Matching Rate: This Enhanced Matching Rate is generally about 15 percentage points higher than the Medicaid rate (averaging 71% Nationally. For example, if a state has a 50% match rate for Medicaid, it may have a 65$ match rate for Chip $$$ Federal Matching Rate State Money Spent on CHIP CHI P The Common Sense Savings Act would eliminate the CHIP enhanced match rate

COMMON SENSE SAVINGS ACT OF Proposed Budget Bill Would Eliminate ACA’s Prevention and Public Health Fund Details of Prevention and Public Health Fund: March 31, 2016 | Alexander Perry Sources: House of Representatives, “H.R Text of the Common Sense Savings Act of 2016,” Govtrack, 2016; HHS.gov. Prevention and Public Health Fund (PPHF) The Affordable Care Act established the Prevention and Public Health Fund to provide expanded and sustained national investments in prevention and public health, to improve health outcomes, and to enhance health care quality. The PPHF has invested in community and clinical prevention initiatives; research, surveillance and tracking; public health infrastructure; immunizations and screenings; tobacco prevention; and public health workforce and training. For FY 2016, the PPHF has funded $932,000,000 worth of programs across the Center for Disease Control, Administration for Community Living and Substance Abuse and Mental Health Services Administration The Common Sense Savings Act would eliminate the Public Health Fund Federal Agencies that Have Programs Funded by the PPHF:

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