Hospital lobbyists are gearing up for a potential $70 billion cut to Medicare and Medicaid spending over the next five years.
Thats what some industry experts expect to see in President Bushs fiscal 2008 budget, slated for release this week.
In Washington, healthcare industry representatives spent a tense five days last week waiting to hear how muchand from wherethe administration planned to make its budget cuts.
Hospitals will likely shoulder the brunt of Medicare cuts, according to sources familiar with the administrations plans to balance the federal budget by 2012. Several sources familiar with the blueprint indicated that the Medicare cuts alone will tally $66 billion over five years, while Medicaid can expect $7 billion over the same time frame. Hospitals and physicians are far and away the biggest recipients of Medicare dollars.
The administration wants to rein in spending on its entitlement programs, which economists say is growing quickly out of control. Medicare spending increased 9.3% to $342 billion in calendar 2005, and hospitals account for the largest share$180.3 billion. All told, the government financed 40%, or $736.3 billion, of all the nations health services and supplies. The home health and nursing home sectors of Medicare, at $37.1 billion, as well as skilled-nursing facilities, $19.2 billion, are also expected to see an across-the-board 1% cut in reimbursement, according to sources.
Likewise, in calendar 2005, Medicare paid $89.3 billion for physicians and clinical services, and $6.8 billion for durable medical equipmentboth of which are on tap for a similar 1% cut, sources said.
Richard Pollack, executive vice president at the American Hospital Association, said the association would strongly resist the use of payments for hospital services as a piggy bank.
Last week, in a pre-emptive strike, the AHA urged members of Congress to reject cuts to Medicare and Medicaid. In the Jan. 30 letter, the AHA said hospital costs already outpace federal reimbursement and will worsen with growing shortages of healthcare workers.
Sources also indicated that the administration would target the average sales price formula that Medicare uses to reimburse for drugs in the outpatient setting. This would reduce spending on some cancer drugs, which often have a high price tag.