Congress Includes Medicare, Medicaid and Other Health Policies in Omnibus FY 2022 Spending Bill Leave a comment

Manatt, Phelps & Phillips, LLP

After weeks of negotiations and months of temporary stopgap funding bills since the federal fiscal year started in October 2021, on Tuesday, the President signed the Consolidated Appropriations Act, 2022, an omnibus funding bill that includes government appropriations for fiscal year (FY) 2022 through September 30, 2022; $13.6 billion in aid for Ukraine; and an array of health policy provisions.1

The FY 2022 omnibus legislation provides $1.5 trillion in discretionary spending, including a 6.7% increase in nondefense spending over FY 2021. For the Department of Health and Human Services (HHS), the omnibus provides a total of $108.3 billion, an increase of $11.3 billion over FY 2021.2 The legislation makes a number of notable investments, including $1 billion to establish the Advanced Research Projects Agency for Health (ARPA-H) within the HHS Office of the Secretary, more than $2 billion in behavioral health investments, $1 billion for programs to improve maternal and child health, and $3.9 billion for substance use treatment. Other discretionary programs—like Title X family planning—did not receive increases relative to FY 2021. For the first time in more than a decade, the omnibus also includes congressionally or member-directed spending and “community project spending,” also known as congressional earmarks, including limited capital funding for health care providers across the country, funding for workforce training and support for providers to invest in telehealth equipment.3

The legislation also includes health policy changes in the following areas:

  • Telehealth. Extends for five months after the end of the Public Health Emergency (PHE) a number of Medicare telehealth flexibilities critical for Medicare beneficiaries to access services via telehealth. (See companion newsletter for more information.)
  • Medicaid. Temporarily reinstates the 76% Medicaid matching rate for Puerto Rico through December 13, 2022, and extends the 83% matching rate for other territories through the same date. The bill also expands state flexibility for Medicaid programs to recover funds when an individual has additional health insurance coverage through modifications to third-party liability and prior authorization requirements in Medicaid.
  • Medicare. Delays by one year, from 2030 to 2031, a change to the annual updates to the hospice services aggregate cap. It also delays the timing of a report from the Medicare Payment Advisory Commission (MedPAC) on ambulance cost data to account for a data lag. The bill also reduces amounts appropriated to the Medicare Improvement Fund, from $99 million to $5 million, to pay for some of the costs of other parts of the bill.
  • 340B. Continues 340B eligibility for hospitals that otherwise would have lost such eligibility due to changes in their payer mix resulting from the COVID-19 pandemic. Hospitals would be required to submit a self-attestation setting forth actions they have taken (or impacts they have experienced) in response to or as a result of the COVID-19 PHE that may have impacted the hospital’s ability to meet the eligibility requirement.
  • Maternal Health. In addition to investing $1 billion in new funding for the Health Resources and Services Administration to improve maternal health outcomes, the bill also includes new grant programs to fund implicit bias training for health care providers, maternal health innovation and integrated care for pregnant and postpartum women. The bill also enacts portions of the bipartisan Rural Maternal and Obstetric Modernization of Services (Rural MOMS) Act (S. 1491/H.R. 769) to expand access to maternal health care in rural and underserved areas.
  • Fentanyl Scheduling Extension. Extends the ban on fentanyl-related substances by continuing their classification as Schedule I drugs under the Controlled Substances Act from March 11 to December 31, 2022. Schedule I drugs are those with no currently accepted medical use and a high potential for abuse.
  • Synthetic Nicotine. Amends Section 901 of the Federal Food, Drug, and Cosmetic Act to give the Food and Drug Administration (FDA) authority to regulate products containing nicotine that is not made or derived from tobacco (synthetic nicotine) in the same manner as other tobacco products. These amendments would become effective 30 days after enactment and would provide a transition period for previously marketed synthetic nicotine products to submit marketing applications.

Notable, too, are policies that are not included in the legislative package. Over the past several months, provider organizations urged Congress to extend the current moratorium on Medicare sequester cuts through the end of the calendar year and to provide additional COVID-19 relief funds in the face of threats of new cases from evolving variants and growing workforce shortages. The White House also sent Congress a request for $22.5 billion in COVID-19 relief earlier this month. However, neither ask is included in the final legislation. Barring congressional intervention in the interim, Medicare sequester cuts are scheduled to phase in on April 1.

Note: More detailed information is available through Manatt on Health, Manatt’s premium information service. 

1 A division-by-division summary of the appropriations provisions is available here.

2 For more information about HHS appropriations, see page 26 (Division H) of the House Appropriations Committee summary or page 3 of the House Appropriations Committee summary of the Labor, HHS and Education funding provisions.

3 The explanatory statement for the Labor, HHS and Education funding divisions (available here and here) include tables with community project funding.


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