Feb. 19, 2020

1 in 6 Medicaid Dollars at Stake: Medicaid Takes a Hit in Trump Budget

On February 18, 2020 by Jodi Boyne

We delved deeper into the proposed fiscal year 2021 budget from the Trump Administration and discovered a $1 trillion spending cut that could impact aging services and the people you serve. While there is a lack of detail on where these cuts would come from and the budget is likely dead on arrival, it provides perspective on the Administration's vision for Medicaid that could come into play as part of the November election.  

Block Grants and Per Capita Caps Results in Less Funding

The proposed budget would cut more than $900 billion, a 16% cut, from the Medicaid program through 2030. The cut in funding comes in part from block grants and per capita cap waivers. It would be impossible to make a spending reduction of this scale without affecting long-term services and supports that account for close to 1 in 3 Medicaid dollars.

New Rulemaking on Eligibility Forthcoming

The proposed budget includes a reference to an upcoming proposed rule that would call for more frequent eligibility redeterminations and other reforms to improve the integrity of state eligibility determination and renewal processes. 

Budget Assumes Final Medicaid Fiscal Accountability Regulation 

The proposed budget does not estimate the financial implications of the proposed Medicaid Fiscal Accountability Regulation (MFAR), which would make changes to how states can structure provider taxes and supplemental payments in their Medicaid program. The budget narrative indicates that the proposed rule is part of its strategy to cut Medicaid spending. LeadingAge has raised concerns regarding this proposal and a group of bipartisan lawmakers last week asked CMS to withdraw the MFAR proposal.

Home Equity and Long-Term Services and Support Eligibility

Under the proposed budget, states would no longer have the flexibility to set home equity limits for long-term services and support above the federal ceiling, which could result in a $34.3 billion Medicaid cut through 2030. It’s likely that thousands of older adults would lose eligibility for the care they currently receive. To read more, see this Kaiser Family Foundation Issue Brief.

Money Follows the Person State Option

The proposed budget would enact Money Follows the Person as a permanent state option. This program has helped transition more than 60,000 people from nursing homes to home and community-based settings. A permanent option would save $91 million through 2030.

Medical Transportation at Risk

The proposed budget seeks to make non-emergency medical transportation service optional to states, which could limit transportation support for people in affordable housing and/or receiving community-based services.

Increased Focus on Payment Integrity

The proposed budget indicates that CMS will increase its crack down on improper payments for services that do not have the appropriate documentation to support them. The budget estimates a $17.6 million cut to Medicaid through 2030 as a result of these efforts. Such payments are not always inappropriate and often occur as a result of clerical or similar errors. We will monitor this proposal to ensure that people receiving Medicaid long-term services and support do not have their care unduly disrupted.