Bud­get warn­ing

White House de­tails im­pact of loom­ing cuts

Modern Healthcare - - LATE NEWS - Rich Daly

The Obama ad­min­is­tra­tion is warn­ing that bud­get cuts sched­uled for March 1 would hit es­pe­cially hard in men­tal health­care, med­i­cal re­search and the drug ap­proval process. On Fri­day, the ad­min­is­tra­tion re­leased de­tails of some of the non­mil­i­tary cuts un­der the Bud­get Con­trol Act of 2011, which re­quired $1.2 tril­lion in across-the-board spend­ing cuts from most fed­eral pro­grams over 10 years. The White House pa­per said the cuts would mean the loss of 12,000 re­search po­si­tions funded by grants from the Na­tional In­sti­tutes of Health and the end of treat­ment for 373,000 peo­ple with men­tal ill­ness due to re­duc­tions in the Men­tal Health Block Grant.

The pa­per also warned that ad­min­is­tra­tive cuts at the FDA’s Cen­ter for Drug Eval­u­a­tion and Re­search could re­sult in “de­lays in new drug ap­provals.”

The ad­min­is­tra­tion pre­vi­ously of­fered more de­tailed ac­counts of the so-called se­quester’s im­pacts on fed­eral agen­cies but now says the ef­fects could be worse. That is be­cause the roughly 5% an­nual re­duc­tion in non­de­fense fed­eral pro­grams would need to oc­cur with only seven months re­main­ing in the fis­cal year so they would deepen to an “ef­fec­tive” 9% cut in those pro­grams’ bud­gets.

The mes­sage fol­lowed a grow­ing num­ber of state­ments by Repub­li­can law­mak­ers that they ex­pect the re­duc­tions won’t be averted or de­layed again, much to the alarm of Democrats.

The pres­i­dent has urged Repub­li­cans to ac­cept a package of al­ter­nate cuts and taxes to al­low for a short de­lay while a per­ma­nent re­place­ment to se­quester is devel­oped. The se­quester was pre­vi­ously sched­uled to be­gin Jan. 2 but was de­layed by an end-of-the-year deal.

Un­men­tioned in Fri­day’s pa­per was the 2% cut to Medi­care provider and in­surer pay­ments that also will oc­cur un­der the se­quester. That re­duc­tion would elim­i­nate $100 bil­lion in Medi­care spend­ing over 10 years, in­clud­ing $3 bil­lion in the cur­rent fis­cal year, ac­cord­ing to up­dated es­ti­mates re­leased this week by the Con­gres­sional Bud­get Of­fice.

“Cuts to physi­cian pay­ments re­sult­ing from se­ques­tra­tion would fur­ther desta­bi­lize the Medi­care pro­gram and com­pound the al­ready dire sit­u­a­tion for med­i­cal group prac­tices caused by the sus­tain­able growth rate for­mula,” Dr. Su­san Tur­ney, pres­i­dent and CEO of the MGMA-ACMPE, wrote in a Feb. 8 let­ter to con­gres­sional lead­ers.

Sev­eral provider ad­vo­cates, how­ever, said in re­cent in­ter­views that they were re­signed to the cuts tak­ing ef­fect be­cause of the po­lit­i­cal stale­mate and were de­vel­op­ing strate­gies to re­verse them later. “The prob­a­bil­i­ties are very high that the se­quester will go into ef­fect,” said Ken­neth Raske, pres­i­dent of Greater New York Hospi­tal As­so­ci­a­tion.

Oth­ers have raised con­cerns that a package of re­place­ment cuts, which the ad­min­is­tra­tion has avoided spec­i­fy­ing, could be worse than the se­quester. For in­stance, some pro­pos­als have sur­faced to re­place de­fense cuts with fur­ther re­duced pay­ments to providers, said Alan Rosen­bloom, pres­i­dent of the Al­liance for Qual­ity Nurs­ing Home Care. “Un­der the present po­lit­i­cal sit­u­a­tion, there is still con­cern that they could re­place a meat ax ap­proach with some­thing that is still a very blunt in­stru­ment,” he said.

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