The Bush administration's budget proposal for fiscal 2008 could be bad news for physicians and hospitals.
The proposal, sent to Congress in early February, seeks about $600 billion in net outlays to finance the Centers for Medicare and Medicaid Services including Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP), a $29.2 billion increase over projected 2007 levels. But the budget also includes legislative proposals that would trim about $4.3 billion from the Medicare program this year and $252 billion over 10 years.
It also calls for Medicaid reforms that would save about $28 billion over 10 years.
The president's plan outlines several provider payment changes, including reducing the update factor for hospitals, hospices, and ambulance services 0.65% each year starting in fiscal year 2008, and freezing the update for skilled nursing facilities and inpatient rehabilitation facilities in 2008.
The proposed budget does not address payments to physicians under Medicare, calling into question whether physicians will get relief from a projected 5%-10% cut in Medicare reimbursement slated for January 2008. However, Leslie Norwalk, acting administrator for the Centers for Medicare and Medicaid Services, said she has “no doubt” that proposals to address the sustainable growth rate formula—which is used to determine physician payments under Medicare—will be on the table for discussion with Congress.
The reductions in traditional entitlement programs such as Medicare, Medicaid, and Social Security are necessary to avoid tax increases, deficits, or cuts in benefits, President Bush wrote in an accompanying statement to Congress.
But the fate of the Bush proposal already is in doubt in the Democrat-controlled Congress. “I doubt that Democrats will support this budget, and frankly, I will be surprised if Republicans rally around it either,” Rep. John Spratt (D-S.C.), chairman of the House Budget Committee, said in a statement.
Physicians organizations also took aim at the proposed budget. Dr. James T. Dove, president-elect of the American College of Cardiology, said the budget fell short in several areas, particularly in the lack of proposals to fix the physician payment formula. “Unless we can work together to put in place a more sustainable payment system for physicians, patients will suffer,” Dr. Dove said in a statement.
Officials at the American Medical Association echoed those comments in their reaction to the president's budget request. “Over the next 8 years, Medicare payments to physicians will be slashed by nearly 40%, while practice costs increase about 20%. Without adequate funding, physicians cannot make needed investments in health information technology and quality improvement, and seniors' access to health care is placed at risk,” Dr. Cecil B. Wilson, AMA board chair, said in a statement.
The president's proposal also came under fire from the American Hospital Association, which called it “devastating news” for children, seniors, and the disabled.
The president's plan would reauthorize SCHIP for 5 years and spend nearly $5 billion on the program over that period. However, it would refocus the program to children at or below 200% of poverty, a smaller group than many states currently target. That level of funding would actually reduce SCHIP spending in fiscal year 2008, according to the American College of Physicians. Officials at the ACP called on Congress to provide additional funds so that SCHIP could be expanded.
President Bush also seeks the standard deduction for health insurance he outlined in his State of the Union address.