Obama budget plan draws the ire of healthcare providers
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President Barack Obama drew criticism from both parties and from healthcare providers for $364 billion in 10-year savings squeezed from healthcare spending in his fiscal 2013 budget proposal. While the administration would boost HHS funding by about $300 million to $76.4 billion from the fiscal 2012 level, it would enact a series of cuts in the next fiscal year, including about $5 billion in savings from the $528 billion in projected Medicare spending. The bulk of Medicare spending reductions, $3.8 billion, come from requiring drug rebates from manufacturers through the Part D program, just as they are required to provide in Medicaid. Another $770 million would be saved through reduced Medicare payments on patients’ bad debts.
Republicans blasted the budget for adding more Medicare cuts on top of about $500 billion in future reductions in the program included in the Patient Protection and Affordable Care Act.
“Again the president has refused to address the looming bankruptcy in our entitlement programs,” Rep. Dave Camp (R-mich.), chairman of the House Ways and Means Committee, said in a written statement. “These programs provide critical income and services to our nation’s seniors and those with disabilities, and they deserve presidential leadership. His inaction has put not only these programs at further risk, but also the Americans who rely upon them.”
Democrats also indicated concern that the proposed cuts—many initially proposed during last summer’s deficit debate—would embolden Republicans to adopt them in future legislation.
“The president has put them out there as part of a larger balanced approach—not just cuts, it would include revenues as well,” Rep. Allyson Schwartz (D-PA.) said in an interview. “That’s the way he presented them before and that’s the way he has presented them again as part of a much larger package, not to be picked off one by one as payfors.”
Don Moran, president of Moran Co., a health policy and research consulting firm, and a former executive associate director of the Office of Management and Budget, said the budget items are significant insofar as they identify the priorities of the president. Ultimately, he said, the budget items are a menu from which Congress may or may not choose.
The proposed Medicare cuts drew even stronger reaction from provider advocates.
“To reduce that dramatically is not only unfair to these folks, but likely to drive up uncompensated care,” said Tom Nickels, senior vice president of federal relations at the American Hospital Association, regarding reductions to bad-debt payments. “It’s both a beneficiary cut and a hospital cut. We don’t see the wisdom of doing that in an economy when more people are finding themselves in more difficult financial situations.”
Similarly, Mark Parkinson, president and CEO of the American Health Care Association, a nursing home trade and the affiliated
group, National Center for Assisted Living, described the bad-debt provision as “tantamount to cutting Medicare benefits,” which administration officials said were avoided in the budget.
Other Medicare savings included $180 million by returning to the 75% rule for inpatient rehabilitation facilities. The rule requires these facilities to meet a compliance threshold that specifies the minimum percentage of patients with designated medical conditions who require special services.
Meanwhile, Medicaid savings include targeted reductions in improper payments (accounting for $110 million of the total of $161 million in projected Medicaid savings) by barring states from waiving third-party liability when other entities are financially responsible for costs incurred by the program.
The budget’s healthcare cuts would continue beyond the next fiscal year and were projected by the administration to achieve about $268 billion in Medicare reductions over the coming decade and about $52 billion in 10year Medicaid reductions.
Outside of the healthcare entitlement programs, the budget proposed cuts to HHS’ Centers for Disease Control and Prevention, which would see its funding level decrease to about $5.07 billion for fiscal 2013 from $5.73 billion in fiscal 2012.