Medicaid Provisions Run Afoul of the Byrd Rule

Authors: Patti Boozang, Katie Rubinger and Elizabeth Dervan
Editor: Amanda Eisenberg

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tl;dr

• On June 26, the Senate Budget Committee Democrats released information on the Senate Parliamentarian’s ruling on the health policy provisions in the June 16 Senate Finance Committee reconciliation proposal. During the so-called “Byrd Bath,” the Parliamentarian deemed that several significant Medicaid provisions in the reconciliation bill run afoul of the Byrd rule.

• Under the Congressional Budget Act’s Byrd rule, Senators can challenge provisions that are “extraneous” to the budget — in other words, provisions that have no federal budgetary effect or have budgetary effects that are far outweighed by their policy implications.

• Based on the Parliamentarian’s rulings, the health policy provisions detailed below would be subject to a Byrd rule point of order. Republicans have been regrouping today to amend the provisions to clear compliance with the Byrd rule (where possible) or take the provision out (and find saving elsewhere).

• Despite no apparent resolution yet on these issues, the Senate seems poised to plow forward to a weekend vote.

The 80 Million Impact

As we’ve written about extensively, the Medicaid provisions in both the House and Senate bills will have detrimental impacts on millions of people, including children, older adults and people experiencing substance use disorder, homelessness and disabilities. Yesterday we learned that the following provisions did not satisfy the Byrd Rule and can’t be enacted via the Senate’s privileged reconciliation process as drafted, according to the Senate Parliamentarian:

• Establishing a moratorium on future new or increased provider taxes (Section 71120). This provision would significantly change how states finance Medicaid by prohibiting states from establishing new or increased provider taxes to help finance their share of Medicaid expenditures. The provision also layers on additional cuts to provider taxes in expansion states.

• Prohibiting federal financial Medicaid and CHIP funding for noncitizens while their eligibility is verified (Section 71109). This provision would prohibit federal Medicaid and Children’s Health Insurance Program (CHIP) funds from paying for coverage provided to noncitizens during the “reasonable opportunity period” while their immigration status is being verified.

• Limiting Medicaid and Medicare coverage as well as premium tax credit eligibility for certain noncitizens (Sections 71110, 71201, and 71301). These provisions would limit the availability of Medicaid, Medicare, and premium tax credits for Marketplace coverage to certain noncitizens, including lawful permanent residents, certain Cuban immigrants, people residing in the U.S. under the Compact of Free Association, and (for Medicaid), lawfully residing pregnant people and children.

• Penalizing expansion states that use state-only dollars to provide coverage to certain noncitizens (Section 71111). This provision would reduce federal Medicaid funding for Medicaid expansion programs in states that provide state-funded health coverage to certain immigrants.

• Spread pricing in Medicaid (Section 71116). This provision would ban spread pricing in Medicaid and require transparent pricing models between pharmacy benefit managers (PBMs) and state Medicaid agencies or Medicaid managed care plans.

• Prohibiting federal Medicaid and CHIP funding for gender-affirming care (Section 71117). This provision would prohibit federal Medicaid and CHIP funding for gender-affirming medical care.

• Disallowing premium tax credit eligibility during periods of Medicaid ineligibility due to immigration status (Section 71302). This provision would prohibit noncitizens below 100% of the Federal Poverty Level (FPL) from receiving premium tax credits if they are ineligible for Medicaid due to their immigration status.

Several provisions remain under review:

• Repealing the Eligibility and Enrollment rules (Sections 71101 and 71102). This provision would prohibit the implementation of the Biden Administration’s Eligibility and Enrollment rules (“Streamlining Medicaid; Medicare Savings Program Eligibility Determination and Enrollment” and “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes”).

• Repealing Nursing Home Staffing Regulations and Transparency Policies (Section 71113). This provision would repeal the Biden Administration’s nursing home staffing rule (“Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting”).

• Barring federal payments to prohibited entities (Section 71118). This provision would bar Medicaid participation by certain large providers that offer abortion services, including Planned Parenthood.

Potential Savings Associated with the Provisions

The Senate Parliamentarian’s rulings may jeopardize the viability of the provisions and the significant federal savings associated with their enactment. The table below lists the Senate Finance Committee provisions that the Parliamentarian ruled on and details the estimates from the Congressional Budget Office (CBO). Please note, however, that CBO has not put out estimates of the Senate Finance Committee provisions, so the CBO estimates of federal savings over 10 years are based on CBO’s June 4 analysis of parallel provisions — where available — in the House-passed legislation, H.R. 1.

Altogether, these provisions represent an estimated $233.5 billion in federal savings in the health title of the bill that may no longer be available to offset spending elsewhere in the legislation.

The Bottom Line

The rulings deal a major blow to Republicans’ plans to pass the reconciliation legislation by July 4. We understand that Senate Republicans have been hard at work today to amend some proposals to “cure” them of Byrd rule issues to the extent possible and resubmit them to the Parliamentarian for another review. Barring that avenue, the Senate will need to remove the problematic provisions and look elsewhere to find savings. This could include resurrecting proposals that would make major cuts to Medicaid, including perhaps per-capita cap proposals and other proposals that were generally disfavored and dropped from consideration during House deliberations.

Given reports earlier today that the Senate is still plowing toward releasing text and scheduling a budget reconciliation vote this weekend, we are trying to square the circle on the substantial work ahead for the Senate bill to garner sufficient support, and the breakneck pace to a vote that GOP leaders seem to be sticking to.

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