Cold comfort

A final report from President Barack Obama's debt-reduction commission did little to comfort providers who balked at last month's draft recommendations they said would jeopardize patients and communities.

And enough of the commission's members flinched, too, so that the ambitious report won't receive formal consideration by the House and Senate. Last week, 11 members of the 18-member National Commission on Fiscal Responsibility and Reform approved the final report, which aimed to achieve nearly $4 trillion in deficit reduction through 2020 and ensure the solvency of Social Security.

Called The Moment of Truth, the plan has six components, including discretionary spending cuts, comprehensive tax reform, mandatory savings, Social Security reforms, process reforms and healthcare cost containment. In November, the commission's co-chairmen, Erskine Bowles, former chief of staff to President Bill Clinton, and Alan Simpson, a former Republican senator from Wyoming, released a draft proposal of the report (Nov. 15, p. 6).

While the final report did not receive the required 14 votes needed to send it to Congress, it did receive majority approval, which encouraged commission members that their work will initiate serious discussion among federal lawmakers about fiscal stability. Sen. Mike Crapo (R-Idaho) reminded his fellow members that 60% approval is enough to pass legislation in Congress, and that a lack of 14 votes doesn't signal an inability of members to move ahead aggressively on this issue.

Some commission members, including Andy Stern, president emeritus of the Service Employees International Union, developed their own separate plans. And others indicated that some of the report's recommendations will be used in budget plans in Congress. In the end, six of the lawmakers on the commission—three Republicans and three Democrats—approved the report.

The nation's federal debt has increased to 62% of gross domestic product from 33% of GDP in 2001, the last year the U.S. had a balanced federal budget, according to the report. While healthcare providers agree there is a great need to lower the debt and foster economic growth, some questioned—for a second time—the report's bid to slash payments to healthcare after substantial changes and reductions outlined in the Patient Protection and Affordable Care Act, such as $155 billion in cuts to hospitals over 10 years.

“What's disappointing is that there doesn't seem to be a connection between congressional actions earlier this year and these reductions,” said Tom Nickels, senior vice president of federal relations at the American Hospital Association.

The National Association of Public Hospitals and Health Systems said a number of the report's recommendations are likely to cause problems for hospitals: a cut to the Medicare bad-debt program; reduced federal funding for Medicaid administrative costs; and eliminating the use of healthcare provider taxes to help finance the nonfederal share of Medicaid.

There was one change in the final report from the draft proposal that the NAPHHS and the AHA said could ease the burden for hospitals, however: a decision not to hasten payment cuts to disproportionate-share hospitals. “We do appreciate that they backed up DSH cuts,” Nickels said. The Affordable Care Act already called for those payments to be phased down as coverage is expanded. “They wanted to accelerate even earlier than they are in the bill,” Nickels added. “To accelerate those before coverage occurs I think was unacceptable. This was an improvement.”

As with the draft proposal, payment cuts for graduate medical education outlined in the final report—expected to save $6 billion in federal spending by 2015 and $60 billion through 2020—also have hospital associations feeling anxious. “With our country facing a physician shortage, reducing critical GME funding will exacerbate problems of access to physician care for everyone—particularly low-income patients,” physician Bruce Siegel, CEO of the NAPHHS, said in a statement.

Chip Kahn, president and CEO of the Federation of American Hospitals—which opposed the commission's final report—agreed that now is not the time to cut payments for physicians. He also emphasized the need to evaluate the effectiveness of payment reforms outlined in the Affordable Care Act, such as accountable care organizations and value-based purchasing, rather than making what he called “arbitrary cuts.” “We need to give it a chance,” Kahn said. “In the longer term, we probably do need to explore the fundamental ways that Medicare is financed,” he added. “I think always focusing on the payment side is problematic.”