President Barack Obama's budget blueprint issued last week drew cheers from healthcare leaders who wanted to see more money thrown into Medicaid, health professions and information technology. But the budget left out some provisions hospitals were specifically looking for.
The bucks start here
But some things hospitals want not in 2011 budget
Obama's $3.83 trillion request for the fiscal year starting Oct. 1, 2010, allocated about $911 billion to HHS, an increase of $51 billion, or 6%, over fiscal 2010.
And the budget proposal includes increases in spending almost across the board, with sizable discretionary spending jumps requested for the National Institutes of Health (a $1 billion increase), Food and Drug Administration (a $748 million increase) and Indian Health Service (a $354 million increase). The Centers for Disease Control and Prevention, conversely, would see a decrease in funding, going from nearly $6.5 billion this year to a projected $6.3 billion in the next fiscal year.
The budget request goes a long way “toward strengthening public health infrastructure, and provides additional coverage with children's health outreach and community health centers,” HHS Secretary Kathleen Sebelius said during a news briefing last week to discuss the 2011 budget request.
In the budget, the CMS would get $784.3 billion, a net increase of $48.3 billion, or 6.6%, from fiscal 2010. About 51% and 33% of HHS' overall budget is marked for Medicare and Medicaid, respectively.
The Obama administration also plans to push for an increase of $290 million for community health centers (See story, p. 12),
$250 million in new resources to address Medicare and Medicaid fraud and abuse and $110 million more to improve CMS' data management. Regarding fraud, HHS would aim to use the funding in the field, increasing Medicaid audits, and strengthening program oversight, according to HHS' budget summary. The goal with the CMS data-management initiative is to “transform CMS' data environment from one focused primarily on claims processing to one also focused on state-of-the-art data analysis and information sharing,” according to the HHS summary.
The Obama administration also calls for a temporary $25.5 billion increase in state Medicaid payments to offset increased use of the Federal Medical Assistance Percentages, or FMAP program.
Hospital representatives were encouraged to see a proposed increase of the federal Medicaid match in the budget. It's a measure “that will assist struggling states to maintain their commitment to low-income Americans who need healthcare assistance,” said Chip Kahn, president and CEO of the Federation of American Hospitals.
“Additionally, the budget would extend premium assistance for COBRA, helping Americans who have suffered a job loss retain their healthcare coverage,” Kahn said. “These two provisions will help hospitals meet our mission to serve the healthcare needs of all Americans, and we hope to see them enacted into law this year.”
Yet, there are line-item requests the industry hopes will never become law. One provision in particular would eliminate a fiscal 2010 congressional earmark for new hospital construction. More than $380 million was provided last year to help build hospitals and other facilities, said Tom Nickels, senior vice president of federal relations with the American Hospital Association. Obama's proposal is saying that “we don't want to spend that kind of money anymore,” he said.
The AHA is fairly confident that Congress, in passing a budget bill, will reject this provision, however, Nickels said. “It's an appropriate use of federal construction money and should be preserved.”
Another issue the AHA was looking for some details on that the budget request didn't provide was a deficit reduction commission the president has been considering. “There's no question that one of the issues this commission would address is entitlements, such as Medicare, Medicaid and Social Security,” which conversely, would affect the hospital bottom line, Nickels said. The Senate may have recently rejected legislation to form such a commission, but there's nothing stopping the president from issuing an executive order to create it, he said.
Larry Gage, president of the National Association of Public Hospitals and Health Systems, was disappointed to see that no funding was proposed for the Medicaid and CHIP Payment and Access Commission, also known as MACPAC, a new federal advisory panel that was supposed to get under way this year.
To his knowledge, the commissioners have been appointed, “but there's no money for it,” Gage said.
Physicians had mixed reviews over the budget as well. Family doctors in particular were heartened to see that the president's request included level funding for health professions grants (funds that have consistently been on the chopping block in previous years), and continued support for health IT. By adding $27 million to the National Health Service Corps, “the budget opens an additional 449 opportunities to new physicians who want to provide medical care to rural and underserved communities while reducing their medical education debt,” said Lori Heim, president of the American Academy of Family Physicians, in a written statement.
Obama's 2011 budget blueprint also includes an adjustment of $371 billion to account for what it would cost to stave off Medicare cuts to physicians over the next 10 years. The downside is this adjustment isn't offset or paid for, which makes some physicians uneasy—and waxing negative about Congress' ability to fix Medicare's troublesome sustainable growth-rate, or SGR, formula.
While applauding the budget proposal's attempt to permanently prevent steep Medicare cuts to physicians, J. James Rohack, president of the American Medical Association, played up the importance of a permanent fix to the SGR. “It is critical that Congress act to fix the broken Medicare physician payment formula once and for all before time runs out on March 1 when this year's 21% cut begins to threaten choice of physician for seniors and military families,” he said in an e-mailed statement.
Medicare's SGR formula for paying doctors is based on the economy's health, and has produced results that would have resulted in payment cuts to physicians every year since 2003. Congress has stepped in each time to enact a temporary fix so that doctors won't experience additional reductions to their Medicare payments, a move that only postpones the cuts and adds to the frustrations of the medical lobby, which wants a permanent fix.
While Obama's budget provision on the SGR makes clear how much it would take to fix this problem, “a permanent solution may be out of reach,” said Kevin Burke, director of the division of government relations for the AAFP. Congress recently passed a measure that provided just $82 billion to fund a physician fix over five years. According to various physician groups, Congress once again didn't go far enough to address their Medicare payment problems. “We still have a long way to go to fix this impossible formula,” Burke said.
No specific allocations or implementation strategy for healthcare reform had been included in the HHS request, though the need for reform was emphasized repeatedly in the fiscal 2011 budget summary. The budget plan is not a substitute for reform, Sebelius said, adding that a budget proposal would not be able to replicate the efforts in the health reform legislation “to reach out to the 30 something million Americans who have no health insurance at all and those who are woefully underinsured.”
Its assumption that a now shaky healthcare reform effort in Congress will someday become a reality caused some in the healthcare industry to get their hopes up and others to just scratch their heads. “Reports of health reform's death may be a bit exaggerated. So long as it is still viable, I think it is perfectly appropriate for the administration to assume its benefits to the budget,” Burke said.
This optimistic assumption, however, has resulted in a less substantial budget proposal, others claim.
Nickels found the budget lacking in detail, and attributes healthcare reform as the reason. “This is a much different budget than what we normally deal with,” he said, as it assumes that reform will take care of many of the issues that the federal budget generally addresses. “There's less here for people to react to.”
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