Lit­tle agree­ment

Obama’s 2012 bud­get pro­posal has Dems, GOP re­hash­ing old ar­gu­ments

Modern Healthcare - - The Week In Healthcare - Rich Daly and Jessica Zig­mond

Democrats and Repub­li­cans went back to the fu­ture last week af­ter Pres­i­dent Barack Obama re­leased a fis­cal 2012 bud­get the ad­min­is­tra­tion says will help build a health­ier and more fis­cally re­spon­si­ble Amer­ica, but that the GOP says will only worsen the nation’s mas­sive debt prob­lem. Sim­i­lar to last year’s de­bate over the Pa­tient Pro­tec­tion and Affordable Care Act, Obama’s bud­get showed again that the par­ties can’t find much com­mon ground on what will im­prove the coun­try’s phys­i­cal and fis­cal health and longevity.

The White House re­leased its fis­cal frame­work for next year at the start of the same week House Repub­li­cans con­sid­ered leg­is­la­tion— known as a con­tin­u­ing res­o­lu­tion—that seeks to cut bil­lions in fed­eral spend­ing (See chart, p. 9) for the re­main­der of fis­cal 2011, which ends Sept. 30. Obama’s bud­get projects some rel­a­tively small de­creases for both Medi­care and Med­i­caid largely be­cause of ex­pected re­turns from $8.6 bil­lion in “pro­gram in­tegrity pro­pos­als,” which in­clude ex­panded anti-fraud ef­forts.

Al­though the pres­i­dent avoided any ma­jor re­forms of ei­ther en­ti­tle­ment pro­gram, the bud­get projects its sav­ings ini­tia­tives will re­duce Medi­care 0.7% to $485.8 bil­lion in fis­cal 2012 from $489.3 bil­lion in fis­cal 2011. Sim­i­larly, Med­i­caid spend­ing would drop 2.6% to $269 bil­lion in fis­cal 2012 from $276.2 bil­lion in fis­cal 2011. The third ma­jor en­ti­tle­ment pro­gram, the Chil­dren’s Health In­surance Pro­gram, would in­crease about 8.9% to about $10 bil­lion from $9.2 bil­lion.

The cuts in the two big­gest health­care pro­grams are largely at­trib­uted to re­duced spend­ing on fraud­u­lent claims and in­creased re­cov­er­ies of falsely ob­tained fed­eral funds through more fed­eral pros­e­cu­tions, ac­cord­ing to ad­min­is­tra­tion of­fi­cials.

Specif­i­cally, the pro­posal counts on anti-fraud ef­forts re­cov­er­ing or pre­vent­ing the loss of $32.3 bil­lion Medi­care and Med­i­caid funds over 10 years, Tony West, an as­sis­tant at­tor­ney gen­eral in the Jus­tice Depart­ment, told the Se­nate Ap­pro­pri­a­tions Com­mit­tee last week.

More Med­i­caid re­duc­tions are ex­pected from states im­ple­ment­ing some of the $100 bil­lion in cuts to op­tional ser­vices that HHS Sec­re­tary Kath­leen Se­be­lius sug­gested in a Feb. 3 letter to the nation’s gov­er­nors. Her sug­ges­tions were in re­sponse to a Jan. 24 re­quest from the Na­tional Gov­er­nors As­so­ci­a­tion that the fed­eral gov­ern­ment waive cuts in fund­ing to states that re­duce their Med­i­caid rolls to close their es­ti­mated $175 bil­lion in bud­get gaps through 2013. The ap­proach sug­gested by Se­be­lius would not al­low such Med­i­caid en­roll­ment drops.

“We will give states plenty of lee­way in chang­ing their state plans to do things such as limit op­tional ben­e­fits and re-eval­u­ate cost shar­ing,” Chris Sten­rud, a deputy as­sis­tant sec­re­tary at HHS, wrote in an e-mail.

And ad­di­tional Med­i­caid re­duc­tions would come from the ad­min­is­tra­tion’s pro­posal to cut the al­low­able tax on providers, in­clud­ing hos­pi­tals and physi­cians. States use such taxes, which are au­to­mat­i­cally re­im­bursed to providers as part of their Med­i­caid pay­ments, to in­crease their over­all spend­ing on the pro­gram and draw pro­por­tion­ally greater fed­eral fund­ing un­der manda­tory ra­tios es­tab­lished be­tween the fed­eral and state gov­ern­ments.

Sen. Or­rin Hatch (R-Utah) was among Repub­li­cans who at­tacked the pro­posal to cur­tail the tax as “plac­ing a fur­ther strain on al­ready stretched state bud­gets.”

The nation’s health­care providers had their own con­cerns with the pres­i­dent’s bud­get. In a state­ment, Bruce Siegel, CEO at the Na­tional As­so­ci­a­tion of Pub­lic Hos­pi­tals and Health Sys­tems, said his or­ga­ni­za­tion is “dis­ap­pointed that the ad­min­is­tra­tion pro­poses to re­duce Med­i­caid provider taxes—a le­git­i­mate source of rev­enue which states use to fi­nance the non­fed­eral share of Med­i­caid costs. With Med­i­caid con­sum­ing ever larger por­tions of state bud­gets,” Siegel’s state­ment con­tin­ued, “rea­son­able fi­nanc­ing tools like provider taxes, which en­sure ac­cess to care for our nation’s most vul­ner­a­ble cit­i­zens, should not be lim­ited.”

Richard Umb­den­stock, pres­i­dent and CEO of the Amer­i­can Hospi-

Se­be­lius told sen­a­tors the CLASS Act pro­vi­sion of the re­form law will have to be self-sus­tain­ing be­fore HHS starts it.

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