The 2005 budget blueprint President Bush submitted to Congress last week reignited the debate over several issues important to healthcare providers, especially alarming some advocates for rural hospitals and the uninsured.
For fiscal 2005, Bush proposed HHS spending of $580 billion, a 5.8% increase over 2004. The agency's discretionary spending, which increased 26% from 2001 to 2004, would increase only slightly more than 1% in 2005, HHS Secretary Tommy Thompson said during a Senate Finance Committee hearing last week.
To achieve that lower-level increase for nonmandatory programs-those outside Medicare and Medicaid-the Bush budget proposal would cut several rural healthcare programs, including grants that help small hospitals with a range of needs including the purchase of new clinical equipment and information technology.
Critics of the cuts said they were at cross-purposes with the intent of Congress, which allocated some $25 billion over 10 years to increase payments and provide other assistance to rural healthcare providers.
The budget outline "seemed to be inconsistent with the direction of Congress," said Bill Sexton, chief executive officer of the North Coast Service Area for Seattle-based Providence Health System. Sexton runs Providence Seaside (Ore.) Hospital, a critical-access facility.
The Bush budget plan, which Congress uses as a guide for the budget it will ultimately draft, calls for eliminating so-called rural flexibility grants next year, after 2004 funding of roughly $39 million.
"I am concerned that (the Bush administration) did not understand the impact the elimination of those grants would have on communities and their hospitals," Sexton said.
The budget proposal would eliminate at least two programs created in the Medicare reform law, said Alan Morgan, spokesman for the National Rural Health Association, referring to the Medicare Flex Program and the Small Hospital Improvement Program, which were designed to help small hospitals convert to critical-access facilities and fund quality tracking and patient-safety initiatives.
The association was expecting both programs to be funded with at least $50 million each in fiscal 2005. If Bush's budget were enacted, it would take a 70% bite out of rural health programs administered by the Health Resources and Services Administration and would represent "the largest reductions to rural programs in more than 10 years," Morgan said. At deadline HRSA officials had not returned calls seeking comment.
Some members of Congress said last week that lawmakers will be very hesitant to renege on commitments made only months ago.
Cutting back on funds to rural providers would "eliminate the (payment) fairness established in the Medicare bill," said Sen. Olympia Snowe (R-Maine). Following the Medicare battle, during which rural lawmakers fought hard and won major concessions for providers in their states and districts, "It would be very difficult to reverse that type of funding," Snowe said.
Democrats are on the same page. Congress has funded rural healthcare improvements consistently since 1999, and there is bipartisan support for that to continue, said a Democratic aide to the Senate Finance Committee.
The uninsured also got some attention in the Bush budget outline, which proposes spending $72 billion over 10 years, most of it on tax credits to help individuals and families buy coverage. Some 4.5 million uninsured people would obtain coverage as a result of the spending, Thompson said.
Critics, however, were quick to find fault. Last year, the administration proposed $89 billion over the same time frame, they pointed out (See related story, p. 16).
An HHS spokesman defended the figures, saying that expansion of community health centers represents part of providing access to care for those without coverage. Under Bush's budget proposal, HHS would spend $1.8 billion on community health centers in 2005, up from $1.6 billion in 2004.
Funding for hospital bioterrorism preparedness would also fall next year if Congress adopts the Bush budget. Bush proposed spending $476 million on such efforts in 2005, down from the $518 million allocated for 2004.
"There is a lot of demand for hospitals to be ready for anything," said Don May, vice president of policy at the American Hospital Association. "That need to be ready doesn't go away. ... To see the number go down instead of up is clearly not the direction we'd like."
The House and Senate held budget hearings last week, and more are scheduled for this week. Senate Budget Committee Chairman Don Nickles (R-Okla.) said he hopes to conclude work on the budget in the next two months, but "that is a lot of work. This is a $2.4 trillion budget."
In other news last week, CMS Acting Administrator Dennis Smith said the agency would issue a notice before Feb. 15 clarifying how hospitals can qualify for wage-index reclassification.
The CMS last month put out a policy allowing hospitals in low-wage areas to request that Medicare consider them part of a community with higher wages, which would raise the applying facility's reimbursement (Jan 12, p. 10).
In the weeks that followed, the CMS received several questions and complaints about the policy and will therefore clarify some "technical issues" before the Feb. 15 deadline by which interested hospitals must apply, Smith told the Senate Finance Committee last week. Smith later told Modern Healthcare that the changes are unlikely to significantly affect which hospitals will be eligible for reclassification. He did not specify what the changes would be.
Under one set of criteria the CMS outlined last month, the applying hospital must be in a state with fewer than 10 people per square mile. The Medicare reform law authorizes $900 million over three years to finance the reclassifications.