Revised megabill keeps strict provider tax, adds hospital fund
Illustration: Aïda Amer/Axios
Senate Republicans released an updated draft of their reconciliation package overnight that keeps in place strict limits on Medicaid provider taxes while trying to offset some of their effects with a provider relief fund.
Why it matters: The Senate appears intent on trying to force the House to accept its tougher version of provider tax policy in order to maximize the savings in the bill.
What's inside: The latest version still would lower the provider tax safe harbor from 6% to 3.5%, though it delays implementation of the phasedown by a year, to begin in 2028.
- There is a new fund that would provide $25 billion to rural hospitals over five years, to address concerns about how the provider tax changes would bring steep cuts in federal Medicaid spending. That is up from $15 billion originally proposed.
- Democrats have called a hospital fund inadequate to make up for the extent of the Medicaid cuts.
- A one-year Medicare physician payment fix that would boost payments 2.5% is also in the new draft.
- A provision that would expand the number of orphan drugs exempt from Medicare drug price negotiation is also back in the bill.
- Funding of Affordable Care Act cost-sharing reduction payments is no longer in the bill after the parliamentarian ruled it violated the Byrd Rule.
Between the lines: A provision that would block Planned Parenthood from receiving Medicaid funding, as well as one prohibiting Medicaid and CHIP from paying for gender-affirming care, were both kept in the bill.
- The parliamentarian had previously ruled the gender-affirming care measure violated the Byrd Rule, according to Senate Democrats.
The big picture: The core of the bill's health provisions has remained the same, including work requirements in Medicaid, as well as new barriers to ACA marketplace enrollment aimed at fighting fraud.
- Those provisions would save hundreds of billions of dollars, but also contribute to 10.9 million people becoming uninsured, according to the CBO analysis of the House-passed bill.
What's next: The Senate parliamentarian has yet to formally rule on the updated Senate Finance health provisions and whether they comply with the Byrd Rule, so there could be further changes.
- Senate Majority Leader John Thune still appears to be pushing for a vote on the bill over the weekend.
- But it's unclear whether the measure has enough support, and whether Senate GOP moderates will be satisfied with the provider tax and relief fund provisions.
