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President Releases FY 2015 Budget Proposal

Summary of hospital-related provisions

The President has released his federal fiscal year 2015 budget for the federal government. The $3.9 trillion budget is viewed largely as a political document because Congress and the administration agreed to spending limits as part of December’s Bipartisan Budget Act. Nonetheless, it does offer a list of potential savings that Congress may turn to as it looks for funds to offset additional spending for policy priorities, such as fixing or repealing the sustainable growth rate formula for Medicare physician payments.

Of significant concern to hospitals are cuts in Medicare payments to providers totaling $354 billion dollars over the next 10 years. The plan also cuts Medicaid spending by $7.3 billion. Many of the proposed cuts have been suggested before and/or recommended by MedPAC. Fortunately, few other areas have additional spending proposed. Of note, the proposed budget also eliminates sequestration by finding other savings. A brief summary, including the 10-year nationwide savings (in red) or spending figure, follows. CHA is working with AHA and others to analyze the budget request and will share additional information soon.

  • Bad Debt – reduce Medicare coverage of bad debts from 65 percent to 25 percent over three years; $30.8 billion
  • Graduate Medical Education$14 billion
  • New Health Care Provider Training – 13,000 new residents, including support for pediatric specialties in children’s hospitals; $5.23 billion
  • Children’s Graduate Medical Education – eliminates the program; $265 million
  • Critical Access Hospitals – reduce payments from 101 percent of reasonable costs to 100 percent; $1.7 billion
  • Critical Access Hospitals – limit the CAH designation to those facilities more than 10 miles apart; $720 million
  • Hospital Preparedness Program – unlike previous years, no cuts proposed
  • Mental Health Programs – train 5,000 new professionals; $164 million
  • Value-Based Purchasing – implement payment reforms for home health agencies, ambulatory surgical centers and hospital outpatient departments; budget neutral
  • Post-Acute Care – reduce payment updates; $97.8 billion
  • Inpatient Rehabilitation Facilities/Skilled Nursing Facilities – implement site-neutral payment for certain conditions; $1.6 billion
  • Inpatient Rehabilitation Facilities – re-establish the 75 percent compliance threshold for patient conditions; $2.4 billion
  • Skilled Nursing Facilities – implement payment reduction for readmissions beginning in 2018; $1.9 billion
  • Home Health – implement beneficiary co-payments; $0.8 billion
  • Bundled Payment – implement bundled payment for post-acute care beginning in 2019; $8.6 billion
  • PACE – create pilot to expand age eligibility; budget neutral
  • Dually Eligible – establish integrated appeals process for Medicare-Medicaid enrollees; budget neutral.
  • Clinical Laboratory Services – cut payments by 1.75 percent each year from 2016 – 2023; $7.9 billion
  • Medicaid Disproportionate Share – extend current payment reductions into 2024; $3.26 billion
  • Medicaid Primary Care – extend enhanced payments for one year; $5.4 billion
  • Qualified Entity (QE) – expand current activities to allow for use of data for fraud prevention activities and value-added analysis for physicians, and release of raw claims to providers for care coordination and practice pattern improvement; and allow CMS to charge the QE for the cost of providing the data; budget neutral