Obama bud­get plan draws the ire of health­care providers

Modern Healthcare - - FRONT PAGE - Rich Daly and Jes­sica Zig­mond

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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.

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