Medicare, Medicaid remain in cross hairs: AHA officials

As debates over the federal budget and deficit come up against deadlines throughout the year, Medicare and Medicaid remain potential targets for policymakers in search of savings, officials with the American Hospital Association told industry executives gathered in Chicago.

The trade group, meanwhile, will seek to draft legislation to delay by a year cuts to disproportionate-share payments scheduled for October under the Patient Protection and Affordable Care Act, said Ashley Thompson, the association's vice president of policy.

The law will cut disproportionate-share payments, which offset losses for treating low-income patients, and redistribute the payments under rules that are expected this spring.

Thompson said the law's disproportionate-share cuts were intended to balance an expected increase in insurance coverage that's scheduled to start in January 2014, three months after cuts take effect. And with uncertainty over the progress of health insurance exchanges, one of the law's major vehicles to expand insurance coverage, a one-year delay will allow more time for expansion of coverage, Thompson said.

Separately, hospitals and doctors will see Medicare payments cut by 2% starting next month under a package of $1.2 trillion in federal spending cuts over nine years included in a 2011 deficit reduction deal.

Richard Pollack, executive vice president of advocacy and public policy for the trade group, said any attempt to block this year's share of the spending cuts would require policymakers to find $85 billion in alternative revenue or spending cuts.

Lisa Kidder, vice president of legislative affairs for the association, said healthcare was relatively protected from the deficit-reduction cuts compared with defense spending, which dropped by 7.3% and other nondefense spending cuts of 5.1.%. Medicaid saw no spending cuts under the deal, and Medicare cuts were capped at 2%. That would increase to 4% under one proposal to draft replacement cuts, though another plan that failed in the Senate did not include additional Medicare cuts, she said.

Policymakers must also grapple with federal budget negotiations and the expiration in May of a suspension of the nation's debt ceiling. As the year ends, policymakers will again face the decision of whether to halt steep cuts to Medicare physician payments, which were last deferred at the beginning of the year with cuts to hospital payment.

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