House Zika Bill Would Raid HHS Fund for New Medicare Payment System

The House bill providing money to fight the Zika virus would strip the Department of Health and Human Services of funding it plans to use for implementation of the bipartisan Medicare payment overhaul that was enacted last year.

In a letter to the House Appropriations Committee obtained by Morning Consult, the Department of Health and Human Services wrote that it plans to use $108 million of its “Nonrecurring Expenses Fund” to invest in “the development of information technology and other systems needed to effectively implement several provisions” of the Medicare Access and Chip Reauthorization Act, or MACRA.

The Nonrecurring Expenses Fund, along with leftover money to fight the Ebola virus, is used to pay for the House’s Zika bill, according to a House appropriations aide. HHS has already planned to use the money in that fund for investments totaling $230 million, including the MACRA implementations.

Yet if the House version of the Zika bill passes, that $230 million could be taken away to offset the cost of fighting the virus.

The fund has $600 million, the aide said, and HHS sent the letter about using it for MACRA after the Zika bill included language to rescind some of it. In theory, there is money left over in the fund for MACRA and other HHS goals, but it’s not clear what other plans HHS has for the remainder.

The House bill would provide $622 million for Zika. The extra cash is completely offset with about $352 million of leftover Ebola funding and “$270 million in unused administrative funding within HHS,” according to the House Appropriations Committee. Much of that unused money comes from the Nonrecurring Expenses Fund, where HHS would designate the lion’s share to implement the new Medicare payment scheme.

The House’s Zika bill has been criticized as grossly underfunding the public health crisis by both Democrats and some Senate Republicans. The Obama administration has asked for $1.9 billion in funding, and the Senate has negotiated a bipartisan bill that would give $1.1 billion.

But House appropriators are adamant that any Zika money must be offset elsewhere in the federal budget. “This legislation will make dollars available to fight the disease now, prioritizing critical activities that must begin immediately, such as vaccine development and mosquito control. The legislation funds these efforts in a responsible way, using existing resources — including excess funding left over from the Ebola outbreak — to pay for it,” said House Appropriations Chairman Hal Rogers (R-Ky.) when the bill was introduced earlier this month.

The new Medicare payment model was passed last year as a replacement to the previous  payment system, which annually under-estimated what doctors should be paid for their services. The shortfalls gave rise to the “doc fix,” an annual exercise Congress engaged in  to save Medicare providers from cuts in the forthcoming year. It took nearly two decades for Congress to find a long-term solution.

A spokeswoman for the House Appropriations Committee declined to comment on the proposed offset in the Zika bill.

According to the HHS letter, the $108 million for the new Medicare payment system would be used to “design and develop the value-based purchasing IT system” needed to implement the two different components of MACRA, the Merit-Based Incentive Payments and the Alternative Payment Models. It would also be used to remove Social Security numbers from Medicare cards.

The two Medicare payment systems represent different ways that providers can be reimbursed. Under the Alternative Payment System, the government will provide bonus payments to doctors who participate in advanced alternative payment models. The Centers for Medicare and Medicaid Services released a proposed rule defining these models last month.

Most providers will participate in Merit-Based Incentive system, which gives doctors bonuses or penalties based on performance. CMS also defined the measures used to evaluate providers’ performance in last month’s rule.

The other money in the Nonrecurring Expenses Fund, according to the HHS letter, would be distributed to various agencies, including the Indian Health Service, the Centers for Disease Control and Prevention and the Administration for Children and Families. If the Zika offset doesn’t become law, $34 million would be used for internal investments.

Update: This story has been updated with additional information about the Nonrecurring Expenses Fund and the timing of HHS’s letter.