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Medical Coding News Archives

White House 2015 Budget Proposal Gets Push-Back

March 21, 2014:

Nannette Orme, Clinical/Technical Editor

President Obama’s proposed budget for fiscal 2015 includes a reduction of more than $407 billion to Medicare over the next 10 years, with $3.5 billion slated to be cut in 2015. Some industry groups have protested that such a reduction would hinder access to care in the long run.

Among the more criticized cuts in the plan, released March 4, are the following:

  • A $30.8 billion reduction in Medicare’s bad debt payments over 10 years. Currently, Medicare pays 65 percent of any deductibles and coinsurance that go unpaid by beneficiaries after providers have tried and failed to collect what they are owed. Noting that most private insurers make no such payments, the White House plan would reduce this percentage to 25 percent over three years.
  • Add-on payments for indirect medical education would drop 10 percent beginning in 2015, saving Medicare $14.6 billion over 10 years.
  • Postacute facilities such as inpatient rehabilitation facilities, long-term care hospitals, and home health agencies would see market-basket payment updates reduced by 1.1 percentage point for each year from 2015 to 2024. The reduction for skilled nursing facilities would be accelerated. The White House projects that such cuts would save nearly $100 billion over 10 years.
  • Medicare would pay critical access hospitals (CAH) 100 percent instead of 101 percent of reasonable costs, saving $1.7 billion over the next decade.

The American Hospital Association (AHA) and Federation of American Hospitals (FAH) argue that the budget’s suggested cuts could endanger beneficiaries’ access to health care. The AHA points out that reducing funding to physician education would only exacerbate a worsening physician shortage and that cutting CAH payments threatens access to care in underserved areas of the country. The FAH takes issue with the reduction in bad debt payments, saying that the end result could hurt seniors. The group notes that the payments, which act as backstop funding for hospitals that rely on them, ensure ongoing access to care for seniors at facilities that otherwise might not be able to afford to provide such services.

Because federal spending levels through fiscal 2015 were agreed upon in December 2013, the White House budget is unlikely to be acted upon this year. The budget does provide talking points in the lead-up to midterm elections in the fall, however, and many of the ideas could be taken up in future budget negotiations.


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