Playing the long game for budget, physician fee reforms

The U.S. budget and appropriations process is both extremely critical, as it is the mechanism through which the bulk of the government is funded, and quite confusing, particularly these days as it often drags out months beyond its due date.

Abraham Lincoln once stated, “The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves—in their separate, and individual capacities.” More recently, Jacob Lew, the current U.S. Ambassador to Israel and former U.S. Secretary of the Treasury, noted, “The budget is not just a collection of numbers, but an expression of our values and aspirations.” At a time of such significant political polarization, these two quotes help demonstrate the challenges both Congress and the president face today.

Part of the issue is that there is the official process, and then there is how it has been operationalized in recent years. The whole thing is supposed to start by the first Monday in February, when the president releases a budget request; however, in the past couple of years, this request has been released in early March—March 9 in 2023 for the 2024 budget and March 11 in 2024 for the 2025 budget. Then, the Congressional Budget Office (CBO) submits a report to the House and Senate Budget Committees that describes the discretionary spending proposals and estimates how much they would affect the economy and how the economic impact would affect the federal budget.

President Biden's budget request for fiscal year (FY) 2025 focused on a few key areas: additional investment in the Inflation Reduction Act (IRA) to continue to lower prescription drug prices, tax cuts for many families, extended solvency for Medicare, highway safety, small business loans, free universal preschool programs, additional funding for law enforcement and the Department of Justice, climate change, and funds for Congress to address national security.

ACP was very encouraged by this proposed budget, which was outlined in President Biden's State of the Union address and would expand Medicare prescription drug negotiating authority, expand price caps on insulin and other prescription drugs to private insurers, and extend insurance premium tax credits that help lower-income individuals afford health insurance—all key ACP priorities.

At this point, the House and Senate Budget Committees are typically supposed to report budget resolutions, which if reconciled in a budget conference (i.e., aligned between the House and Senate) become a concurrent resolution. This resolution is not signed by the president but is rather a starting point for appropriations bills to be developed. Sometimes this process does not go exactly as planned, which was definitely true for FY 2025 appropriations, but there are other mechanisms for moving it forward, as long as allocations are determined for how much the Appropriations Committees can spend in each bill. However, with all that said, the topline number for both the House and Senate for FY 2025 is capped at $1.6 trillion due to the Fiscal Responsibility Act, essentially making these budget resolutions moot.

Now, the formal appropriations process can begin. Last year, this was particularly painful, as the entire FY 2024 appropriations process was not complete until March 2024, a full five months after the start of the fiscal year on Oct. 1, 2023. Unfortunately, this year may not be much different, although given that the current 118th Congress will end on Jan. 3, 2025, there is some hope it will be completed sooner. At this point (the end of September), while the House has reported out all 12 of the appropriations bills (and passed six of them) and the Senate has reported out 11 of the 12 appropriations bills (with zero passed on the Senate floor), not a single one has been enacted.

This is when the now familiar continuing resolution (CR) comes into play. A CR is a bill that continues funding for all programs based on a fixed formula, usually at the prior FY funding levels. If the appropriations bills have not been enacted and a CR is not passed before Oct. 1, the government largely shuts down most nonessential operations. Regarding health care, this means that approximately 45% of the Department of Health and Human Services staff would be furloughed and COVID-19 operations, including surveillance efforts and drug development, would continue with whatever carryover balances are available. The Health Resources and Services Administration (HRSA) would also have to rely on carryover balances to keep programs like the Ryan White HIV/AIDS Program running, and the NIH would be able to treat current patients but would operate at 90% of its normal patient load. Social Security and Medicare would be able to make payments to beneficiaries, but card issuance and onboarding of new beneficiaries would cease.

In September, the Speaker of the House, Mike Johnson, attempted to pass a CR that would have funded the government through March 2025; however, Republicans could not reach agreement on aspects of the bill and Democrats declared the bill a “nonstarter.” A provision that was particularly objectionable for Democrats would have required U.S. citizenship verification in order to participate in elections. This bill ultimately died, and then, on Sept. 25, a bipartisan CR was finally passed, funding the government through Dec. 20. This was more of a “clean” CR, meaning it did not have additional, more controversial provisions included. With this bill now enacted, Congress has set a new clock to finalize and enact the appropriations bills.

ACP typically focuses our advocacy efforts on the Labor, HHS, and Education appropriations bills, with the goal of ensuring funding for key agencies such as CMS, HRSA, the CDC, NIH, and the Agency for Healthcare Research and Quality (AHRQ). For FY 2025, the proposed funding for these agencies is largely the same as FY 2024, with the Senate appropriations bills providing slightly more funding than those in the House. These bills then often end up getting rolled into an omnibus appropriations bill that typically contains additional provisions.

This year, ACP has also been advocating for report language to be added to the Labor, HHS, and Education appropriations bills regarding the utilization estimates that CMS makes when introducing new codes into the Medicare Physician Fee Schedule. These estimates have often been too high, which then results in substantial resources being unnecessarily deducted from the fee schedule, as required by budget neutrality. ACP-drafted language was included in the House bill, and a version of it was included in the Senate bill. While report language does not carry the force of law, federal departments and agencies do respond and usually carry out what Congress has requested, making this an interim win for ACP members. It would be a substantial win should some version of this language remain in the final omnibus package.

I would be remiss if I didn't mention another key provision that we are seeking, which is legislative language to address the Medicare Physician Fee Schedule payment cut for calendar year 2025. There are several bills currently circulating on Capitol Hill to do this, most focused on some form of an inflationary update to the fee schedule, which would in turn eliminate this cut.

I urge all ACP members to keep an eye out for grassroots action alerts, so that you can engage in outreach to Congress to share your stories about why these ongoing cuts are problematic for you and your patients. Our hope is to have one of these Medicare physician payment bills included in the final omnibus package to stabilize the system for calendar year 2025, as we continue to play the long game to implement broader reforms to address the issues associated with budget neutrality and the lack of an inflationary update.

As former Rep. John Delaney from Maryland has stated, “Federal spending is like a massive ship that takes a very long time to turn.” Therefore, I challenge Congress and all of you to take action and move these priorities forward. Or, in Dr. Seuss's language, “Today is your day! Your mountain is waiting, so … get on your way!”