Obama Budget Hits Health Care Hard: $300 Billion from Providers

Health care funding takes a huge hit in the Obama Administration’s FY14 budget released last week. Here are the highlights (all cuts are calculated over a 10 year period):

  • Hospital cuts:
    • $25.5 billion bad debt payments
    • $11 billion in Graduate Medical Education payments
    • $2 billion from Critical Access Hospitals
  • Post Acute Care cuts:
    • 1.1% market basket reductions for Inpatient Rehab, LTCHs, SNFs and home health
    • Create bundled payment program for these same services starting in 2018
    • Site neutral payments for inpatient rehab and SNFs for selected services
    • Home health copayments for new beneficiaries starting in 2017
    • Total Post Acute cuts: approx. $90 billion
  • Other Provider Cuts:
    • Reduce Part B overpayments: $4.4 billion
    • Clinical lab services changes: $9.4 billion
  • Cuts to Medicaid: $19 billion
  • Cuts to pharmaceutical companies: $14 billion

For a very good three page summary prepared by our SHC team, click here. For a 10 page summary of the Health and Human Services budget from the White House, click here.
To see the House GOP Budget Committee critique of the President’s budget, click here.


Should Doctors “Friend” Patients on Facebook?  

A policy paper released last week by the American College of Physicians and the Federation of State Medical Boards takes on how doctors should deal with everything from Facebook to cellphone photos to texts. The paper recommends that doctors steer clear of engaging with patients on social media and put in place strict privacy settings on all social media accounts. Click here for the paper.


Moody’s Says Sequestration Puts Not-for-Profit Hospitals at Risk

The 2% reduction in annual Medicare reimbursement rates mandated by federal sequestration over the next 10 years will make an already challenging operating environment for not-for-profit hospitals even more difficult, says Moody’s Investors Service in a new report out last week. Click here for more.


Budget Cuts Cancer Drug Payments

Among several cost cutting measures designed to preserve Medicare solvency is a proposal to reduce reimbursement for life-sustaining cancer drugs, according to an analysis by the American Society of Clinical Oncology. Currently, reimbursement to physicians for “Part B” drugs is based on the average sales price plus a 6% payment for services needed to administer chemotherapy in physicians’ offices, where most cancer patients receive their care. The President has proposed to reduce the 6% service payment to 3%. Click here for a summary of how the major health care trade associations responded to the President’s budget including radiology, anesthesiology, pediatrics and pharma.


Obama Meets with Insurance Execs on Health Exchanges

President Obama met with insurance industry executives at the White House late last week to coordinate the introduction this fall of the insurance marketplaces at the heart of the national health care law, and to discuss so called rate shock if the industry sharply raises premiums. Click here for the NY Times story.


Marketplace Oversight Official Offers Insights

Those insurance marketplaces were the topic of a U.S. Senate hearing last week where the government official who oversees the implementation of the exchanges testified. Gary Cohen, the Director of the Center for Consumer Information and Insurance Oversight, outlined for senators the status of the exchanges from him perspective. Click here for his testimony.


Five States Receive More Exchange Grants

HHS sent $275.6 million in new exchange grants to five states last week. The awards went to Hawaii ($128.1 million), Illinois ($115.8 million), Arkansas ($16.5 million), Rhode Island ($9.5 million) and New Hampshire ($5.4 million). You can see a state by state summary of awards here.


Navigator Rules Released; New Summary Available

CMS has released a proposed rule regarding the governance of Navigators and non-Navigator assistance personnel in federally-facilitated exchanges (FFEs). The purpose of the proposed regulation is to ensure that Navigators and non-Navigators are appropriately trained and will fulfill their roles by providing services and information in an accessible and unbiased manner. The proposed rule also clarifies who can legally serve as a Navigator. The agency is soliciting comments on several provisions, particularly those regarding conflict of interest standards until May 6, 2013. Click here for an excellent three page summary. The agency will provide up to $54 million in funding for navigators to help people enroll on federally run insurance exchanges starting this fall. Applications are due June 7.


Final Regs on Medicaid Expansion Detail Eligibles

CMS has released a final rule regulating states’ expansion of the Medicaid programs. Beginning January 1, and continuing through the end of 2016, all states that expand Medicaid to the newly-eligible adult population meeting 133% of the federal poverty level will receive 100% reimbursement of their expansion costs from the federal government.  The final rule sets forth conditions and approaches for states to claim these increased FMAP rates, and distinguishes between which individuals are “newly-eligible” (thus receiving the 100% match) and those that would receive the traditional lower federal match under existing state Medicaid program rules. Click here for a very good three page summary.


Cost of Exchange Subsidies Grows: CBO

The Obama administration’s estimate of how much it will spend to subsidize insurance on Obamacare exchanges increased substantially this year. At the same time, Medicaid spending will likely be less than initially forecast as some states decline the expansion. In states that choose not to expand, some of the people who would have been covered by Medicaid will be eligible for subsidies on the exchanges. And the subsidies are expensive, especially for those in the lower end of that range. The Congressional Budget Office now estimates that it will cost about $9,000 in subsidies for a person who would have qualified for Medicaid under the expansion, compared to $6,000 for Medicaid coverage. Click here for the CBO report.


GOP Leaders Outline Medicare Reform Proposals

House Energy & Commerce Republicans last week outlined a series of Medicare proposals they are considering and that the President or his fiscal commission have endorsed, including means testing, combining Part A and Part B cost sharing, capping beneficiaries’ spending, curtailing medical malpractice, fighting fraud and replacing the physician pay formula. Medicare premium support was not included on the GOP’s list. Click here to review their proposals.


Business Leaders Urging Congress to Adopt Reforms More Quickly

Business leaders are now pushing Congress to enact Medicare pay-for-performance policy changes that, today, are still demonstration projects, according to a report by the National Business Group on Health. The business association, a member organization of over 300 primarily large employers who provide coverage for over 55 million Americans, is urging Congress to pass legislation that would implement pay-for-performance on a widespread basis in the Medicare program for hospitals, physicians, and other health care facilities and professionals. Click here for their three page announcement.


ACOs May Evolve Into Medicare Advantage and Other Capitated Models

ACOs might be a spring board to Medicare Advantage and other capitated pay models, according to some MedPAC commissioners and accountable care organization representatives, as discussed during the last MedPAC meeting in Washington. The MedPAC presentation compares many of the aspects of ACOs with MA plans. It is very interesting information. Click here for the MedPAC powerpoint presentation.


New Coalition Releases Blueprint to Curb Health Care Costs

A new coalition of stakeholders released a blueprint last week for curbing health care costs that they hope can generate broad-based consensus and propel change. Families USA, America’s Health Insurance Plans, the Pacific Business Group on Health, Ascension Health, and the National Coalition on Health Care, want to phase out fee-for-service payments to providers, rework health care prices to incentivize more effective treatments, design insurance products to encourage patients to choose high-quality providers, refashion health infrastructure to more rapidly implement new, effective practices, and encourage states to take the lead by allowing them to share in savings from reducing total health costs. Click here for their 40-page report.


Hospitals More Wary of Compounding Pharmacies: Report

Hospitals are seeking more product quality information from outside compounding pharmacies and expanding their ability to produce sterile products in-house following a deadly meningitis outbreak tied to a large scale compounder, according to a report from HHS’ OIG released last week. Click here for the report.


Health Spending Continues in Record Low Territory

National health care spending in February 2013 grew 3.9% relative to February 2012, a falling rate that returns it to the record low levels seen annually in 2009–2011, and estimate of 4.3% for 2012, according to the Altarum Institute. Meanwhile, despite the recent pattern of historically low spending growth, the health sector now accounts for nearly 1 in 9 total U.S. jobs, a new all time high at 10.7%. Click here for the latest report from Altarum Institute.


Employer Health Coverage Declined Substantially Over Past Decade

The proportion of Americans with health coverage through an employer declined from 70% in 2000 to 60% in 2011, or by 11.5 million people, according to a report released last week by the Robert Wood Johnson Foundation. The largest decline occurred in Michigan (15.2%) and the smallest in Nebraska (4.3%). According to the report, the average annual premium for employee-only coverage doubled over the period to $5,081, while family premiums increased 125% to $14,447. Click here for the complete report.


Most Employers Will Continue Coverage into 2014: Survey

Almost 70% of employers surveyed said they will continue to offer employer-sponsored health plans going into 2014, according to preliminary results released Wednesday by the International Foundation of Employee Benefit Plans. Click here for their three page report.


Bird Flu Strain Further Identified

More information has been disclosed about the new strain of bird flu first found in China.  The New England Journal of Medicine has published a genetic analysis. The paper includes a discussion of the first three known patients, all of whom died after being infected with H7N9, which had never before been found in humans. The World Health Organization reported last week that 38 infections have been documented so far, including 10 deaths.  Click here for the NEJM report.


Children, Elderly Prescribed Antibiotics More: CDC

Children younger than 10 and adults 65 and older were more likely to be prescribed antibiotics compared with other age groups, CDC researchers reported in the New England Journal of Medicine. Aside from considerable difference in prescribing rates according to provider specialty, they found geographic disparities, with the South having greater rates than the West. Also, antibiotics are being prescribed at rates that suggest overuse and could promote increased bacterial resistance. The report analyzed 2010 data. Click here for more.