Advocated are blasting President Barack Obama’s plan to reduce the Medicare budget by $400 billion over the next 10 years as part of his proposed budget, calling the move “short-sighted.”
An estimated $350 billion in savings would come from health care providers and another $83.8 billion by encouraging delivery system reforms, according to the American Hospital Association.
“The cuts to hospital care are bad medicine for our nation’s seniors and other vulnerable patients,” AHA President and CEO Rich Umbdenstock said in a statement.
The 2016 Medicare budget released Tuesday includes $423 billion in reductions through 2025.
The budget proposal would reduce payments to providers by $29.5 billion by implementing site-neutral policies; cutting bad debt payments to providers, including hospitals, by $31.1 billion; reducing Medicare graduate medical education payments by $16.3 billion; and reducing payments to critical access hospitals from 101 percent of reasonable costs to 100 percent, costing CAHs $110 million in 2016 and a total of $1.73 billion over 10 years, according to the AHA.
It proposes to reduce the payment updates for post-acute care providers for savings of $102.1 billion.
The budget would also eliminate the Critical Access Hospital designation for hospitals located fewer than 10 miles from the nearest hospital for savings of $770 million, according to the AHA.
“Hospitals are implementing enormous changes while they continue to improve the quality of care, but the administration today proposes further cuts to hospital care,” Umbdenstock said. “These reductions are short-sighted at a time when our nation’s health care infrastructure needs to be strengthened.”
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President Obama’s budget would reimburse hospitals at the same amount as physician offices and other ambulatory facilities, failing to recognize the very different clinical capabilities, access to all and 24/7 emergency services hospitals provide, the AHA said.
“Today, one in three hospitals operates in the red, and many hospitals are at a breaking point in their ability to ensure patients have access to the care they need, when they need it,” according to the AHA. “With cuts to hospital services approaching $122 billion since 2010, this continued pattern of reductions is no longer sustainable. The Medicare Payment Advisory Commission notes that hospitals are expected to have a Medicare margin of negative 9 percent in fiscal year 2015, which would be the lowest in history.”
On a positive note for providers, the budget proposes to repeal the flawed sustainable growth rate reimbursement formula. It would also replace the sequester's automatic 2-percent cut in Medicare payments to providers.
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The budget reinforces the Obama administration's goal of ensuring 30 percent of Medicare payments are made through alternative payment models by 2016 and 50 percent by 2018.
However, Obama’s $4 trillion budget proposal is expected to face tough legislative opposition.
The budget increases by $74 billion this year’s expenses for the Centers for Medicare & Medicaid Services (CMS), for a total of $970.8 billion in mandatory and discretionary outlays in 2016, according to total budget figures for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), private health insurance programs and oversight, program integrity efforts and operating costs.
Twitter: @SusanMorseHFN
Budget breakdown from HHS: