“It's like walking, chewing gum, quoting Shakespeare and singing an aria,” Halpern Paul says of the financial puzzles Congress and the Obama administration will try to solve. She also emphasized that the the expiring continuing resolution often gets overlooked because of the larger debt-ceiling and sequester issues. But it shouldn't, given that government agencies won't receive funding unless Congress keeps the government running through Sept. 30.
“Unfortunately, in this environment, nothing is safe—even NIH, which has enjoyed broad, bipartisan support,” Halpern Paul says, referring to the National Institutes of Health. “Given the overarching deficit-reduction mentality, I think there is a philosophy of some that everybody has to give a little. I think nobody is going to be exempt from anteing into the pot,” she says. “Those of us who have long advocated for research and public health are particularly worried.”
Eric Zimmerman, a partner with McDermott Will & Emery, warns that the Medicare programs that were spared cuts in the recent fiscal-cliff deal—namely payments for bad debt, graduate medical education, critical-access hospitals and evaluation and management services—will resurface in the 2013 debt talks. E&M services generated interest as a cost-cutting measure especially after the Medicare Payment Advisory Commission suggested a reduction in those payments in the panel's March 2012 report to Congress. MedPAC recommended that Congress direct HHS to reduce payment rates for E&M office visits provided in hospital outpatient departments so that payment rates are equal whether the services take place in a physician's office or hospital outpatient department.
“I think E&M will be talked about a great deal” in upcoming negotiations, says Dan Boston, executive vice president and partner at Health Policy Source, a Washington-based consulting firm. And while he says hospitals were successful in maneuvering around this issue in the just-ended fiscal-cliff discussions, he thinks this payment area has implications beyond hospitals.
“It's not a hospital payment issue, but an integrated-delivery issue. If we're moving toward more integration and more coordination of care and holding folks accountable, you can't cut them for that,” he says. “What the federal government can do is make sure that the people receiving the benefit are meeting the criteria.”
Above the various budget discussions hangs the cloud of entitlement reform, a top priority for Republicans in Congress. New statistics from the federal government last week underscore why many lawmakers have pushed hard to address reforming Medicare: U.S. healthcare spending grew at a rate of 3.9% for the third consecutive year, and represented the lowest growth rate in the 52 years since the data have been reported. Meanwhile, Medicare spending grew at a rate of 6.2% in 2011, up from 4.3% in 2010.
“If nationally healthcare expenditures are at 3.9%, but Medicare is 6.2%, the government should be more efficient—or at least not as inefficient as 160% higher than healthcare spending,” Boston says.
Serious discussions about entitlements would consider larger, structural reforms to the decades-long Medicare program, such as raising the eligibility age to 67 from 65; expanding means-testing for beneficiaries; re-evaluating the premium and cost-sharing structure across parts A, B and D; and implementing a defined-contribution system like the premium-support, or voucher, model that House Republicans favor. But with Congress and the Obama administration so far apart politically, is it realistic to think 2013 will yield any substantive changes on this front?
“My view is that they are not there and it will take a crisis far more stark to get them to the table for these major reforms,” says Don Moran, founder of the healthcare consulting firm the Moran Co. and former executive associate director at the Office of Management and Budget during the Reagan administration.
Tom Scully, a former CMS administrator, says he expects lawmakers to come up with a deficit-reduction deal, but it won't be big. The larger, structural reforms to Medicare will take place, he surmises, only if Congress agrees on a massive deficit-reduction deal that includes tax reform.
“1990 and 1997 were giant budget deals—and that's what you're talking about,” says Scully, now a senior counsel at the law firm Alston and Bird. “I don't right now see that coming together, given the politics.”
TAKEAWAY: Fiscal deals still to be hashed out and the ramifications of any entitlement reforms enacted will add to provider anxiety.