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CEO Update 234

Senate Finance Committee’s Budget Reconciliation Bill Includes Unsustainable Medicaid Cuts

The Senate Finance Committee’s recently passed budget reconciliation package includes significant and burdensome changes to the House-passed budget reconciliation bill and contains unsustainable cuts to Medicaid programs for behavioral healthcare providers.

Notable Medicaid program changes include restricting provider taxes, reducing state-directed payments, mandating work requirements that contain a complex behavioral healthcare treatment carve out, and eliminating the enhanced premium tax credit for Marketplace plans.

The biggest changes include a moratorium on new or increased provider taxes, which propose a significantly deeper cut to states’ ability to use provider taxes to finance Medicaid. As in the House bill, section 71120 of the Senate Finance bill would prohibit states from receiving federal Medicaid matching funds for any new or increased provider taxes enacted after the bill passes unless authorized already.  Notably, the moratorium would apply to increases in the amount of tax on a per-unit basis or the rate of tax imposed with respect to a class of healthcare items or services or increases in the base of the current provider tax. This effectively places a moratorium on using newly enacted or expanded provider taxes to finance the non-federal share of the Medicaid program.

The Senate bill would also modify the “hold harmless” standard for healthcare-related provider taxes under Medicaid, which limits how much states can tax providers without triggering federal penalties. Currently capped at 6%, the Senate bill phases down the threshold for expansion states beginning Oct. 1, 2026, to 3.5% by fiscal year 2031, while preserving the 6% cap for non-expansion states.

Meanwhile, the Senate bill would not affect the “hold harmless” threshold for provider taxes that states impose for nursing facility or intermediate care facility services as long as the tax is effective as of Oct. 1, 2026, within the hold harmless threshold as of May 1, 2025, and the provider tax is not modified or otherwise changed unless to come into compliance with these provisions. The Senate bill clarifies that these provisions only apply to the 50 States and Washington, D.C. (it does not apply to U.S. territories). The bill provides $6 million to HHS for implementation.

The Senate bill also includes modest – and meaningful – changes for the treatment of certain state- directed payments when no published Medicare rate exists. The bill directs HHS to revise Medicaid managed care regulations so that state-directed payments to providers in Medicaid expansion states cannot exceed 100% of the published Medicare payment rate for a given service, while non-expansion states would be permitted to go up to 110%. Rather than directing HHS to use an “equivalent Medicare payment rate” when no published rate exists — as the House bill does — the Senate version instead calls for an equivalent payment under the Medicaid State Plan.

The Senate bill also applies a stricter approach to grandfathered payments. While the House bill would allow grandfathered payments to continue at existing levels, the Senate version phases them down by 10 percentage points annually starting in 2027 until they meet the applicable cap. It also broadens eligibility for grandfathering to include cases where states made a good faith effort to secure prior approval.

The Senate version also includes a notable addition to the Uniform Medicaid Provider Tax Requirement that would allow states to revise existing provider taxes to comply with the new standards without being penalized. Under the bill, states’ ability to obtain waivers from the uniform tax requirement for Medicaid provider taxes would be limited.

Specifically, the bill would prohibit waivers for tax structures that impose lower rates on providers with less Medicaid volume, or higher rates to those with more. The section includes definitions for “Medicaid taxable unit,” “non-Medicaid taxable unit,” and “tax rate group” to help identify impermissible structures and makes clear that attempts to achieve the same effect through indirect language is also prohibited, effectively closing any loopholes to the restriction. These changes would take effect immediately upon the bill’s enactment, with a transition period of up to three fiscal years at the HHS secretary’s discretion. The Senate bill adds that states will not be considered in violation if they are changing their taxes to comply with the new requirements and clarifies that these provisions only apply to the 50 States and Washington, D.C. (again excluding the U.S. territories in this provision).

Other provisions, including work requirements and cost sharing, have behavioral health-focused exemptions that align with the House bill. However, NABH continues to have concerns with the work requirement exemption for people with a “disabling mental disorder,” because this language could imply the need for a formal disability determination. We are also concerned that the Senate bill excludes a provision to extend premium tax credits for Marketplace plans.  

The NABH Government Affairs team is contacting senate offices to oppose the current draft and sent an Action Alert to NABH members urging them to contact their U.S. senators. We hope you will respond to the alert and encourage colleagues to do the same.  NABH is asking senators to:

  • Eliminate provisions that (1) create restrictions on the use of provider taxes that states rely on to pay for their share of the Medicaid program, and (2) tie state-directed payments the Medicare payment rate, which is substantially lower than what many providers currently receive. These provisions would inhibit efforts to address systematic underpayment of behavioral healthcare providers and therefore perpetuate access challenges.
  • Replace the existing exemption for people with “disabling mental disorders” to people with “serious mental illness.” The term “disabling” could suggest that people must receive a formal disability determination, a complex and potentially yearslong process that often does not capture those with even the most debilitating mental disorders. Using “serious mental illness,” a term more commonly used in both clinical practice and policy to describe disorders that substantially interfere with major life functions, would align with the intent of the existing exemption while eliminating unnecessary red tape.
  • Extend the enhanced premium tax credit. If the enhanced tax credits expire, nearly 4 million people could discontinue receiving coverage through the Marketplace by 2026.

The Senate will not mark up its bill before a Senate floor vote and may vote on the legislation next week before it adjourns for the Independence Day recess.

HHS Announces Funding Opportunity for Behavioral Health Information Technology Pilot

HHS recently announced a funding opportunity to promote behavioral health data exchange and pilot the implementation of a specified set of behavioral health data elements.
 
HHS anticipates distributing $5 million across six to 10 participants, which include a wide range of provider organizations that receive SAMHSA grant funds or partner with recipients. More information can be found in the Request for Application and Frequently Asked Questions document.
 
The deadline for the expression of interest is Wednesday, July 2 and full applications are due Wednesday, Aug. 27.

JAMA Study Finds Addiction to Social Media, Mobile Phones & Video Games Linked to Higher Risk of Suicidal Thoughts

A study published in JAMA on Wednesday found that addiction to social media, mobile phones, and video games is linked to a higher risk of suicidal thoughts and behaviors.

Researchers examined data on more than 4,000 kids from an ongoing longitudinal study following them for years, starting at ages 9 to 10. It found that by age 14, about a third of the kids had become increasingly addicted to social media, about a quarter had become increasingly addicted to their mobile phone, and more than 40% showed signs of addiction to video games.

“It’s an important study and raising awareness about screen addiction,” Jason Nagata, M.D., a pediatrician specializing in adolescent screen use at the University of California, San Francisco, said in an announcement about the study. “It shows that elements of addiction related to screen use are more strongly predictive of poorer mental health and even suicide risk compared to just screen time. So, I think that it provides more nuance.

NIDA Director Nora Volkow Likens ‘the Addicted Brain to a House on Fire’ in Recent Blog

National Institute on Drug Abuse Director Nora Volkow, M.D. this week penned a blog post about her recent commentary in The New England Journal of Medicine that likened “the addicted brain to a house on fire—a crisis requiring urgent efforts to contain the damage and preserve life.”
 
Volkow authored the article with John Kelly, Ph.D. and Howard Koh, M.D. and noted that America’s drug crisis has demanded a sustained focus to extinguish those fires by expanding treatment access and overdose prevention and reversal strategies—and added that data show such efforts have helped overdose fatalities decline since 2023.
 
“However, a house that has had its addiction fire extinguished still smolders and can readily burst into flames again,” Volkow wrote. “After an initial remission of substance use disorder symptoms, it can take as much as 8 years and 4-5 engagements in treatment or mutual support groups to achieve sustained remission, and risk for meeting SUD criteria can remain elevated for several more years after that.”
 
Click here to read the full post.

Please Submit Surveys on EMTALA Implementation in Psychiatric Hospitals and Patient Safety Standards by Next Friday, June 27!

NABH is releasing two surveys to members:

  • EMTALA Implementation in Psychiatric Hospitals, which is focused on how EMTALA compliance affects operational and clinical practices, such as staffing, workflow, documentation, processes (e.g., patient transfers), and resource allocation.
  • Patient Safety Standards, which is focused on standards for preventing and responding to incidents of patient violence and abuse (i.e., violence and abuse toward patients perpetrated by facility staff or other patients), particularly for inpatient and residential settings.

Please submit your responses by Friday, June 27. If you have any questions, please contact Dan Schwartz.

Reminder: CMS Releases RFI to Gather Information on Improving Hospital Price Transparency

The Centers for Medicare & Medicaid Services (CMS) has issued a Request for Information (RFI) seeking public feedback about whether and how the agency can improve hospital price transparency (HPT)compliance and enforcement processes.
 
This RFI relates to the President’s Executive Order 14221 to ensure compliance with the transparent reporting of complete, accurate, and meaningful HPT data. Click here to read the RFI.

USC Seeking Mental Healthcare Providers for New Research Study

The University of Southern California is seeking mental healthcare providers who working with bisexual+ (bi+) adult clients—including those identifying as pansexual, queer, or attracted to multiple genders for a new research study.
 
The study will explore how social and structural inequities contribute to disproportionately high unmet need for mental health care among bi+ people.

Eligible participants may be invited to share their insights in a focus group discussion and receive $50 compensation. Your input will support efforts to close the health gap and promote equal opportunity and justice for bi+ people. Click here to learn more.

Fact of the Week

Lawmakers are considering changes to the Medicaid program that could lead to at least 8,241 and as many as 24,604 preventable deaths, according to a new study published in the Annals of Internal Medicine.