Hospital leaders are objecting to draft recommendations issued Wednesday that would impose earlier and more draconian pay cuts to hospitals and doctors, and slice many programs that support hospital programs that serve the poor.
The report from the co-chairs of the National Commission on Fiscal Responsibility and Reform, appointed by President Obama in February to deal with the nation's fiscal crisis, suggests numerous strategies to save $200.3 billion in federal spending by 2015 and reduce the federal deficit by $4 trillion by 2020.
The proposals were submitted by co-chairs Sen. Alan Simpson, former Republican Senator from Wyoming, and Erskine Bowles, Chief of Staff to former President Clinton.
The panel's recommended cuts are sprinkled through a wide variety of 58 federal programs, including paring defense and space program budgets, downsizing the federal workforce by 200,000, and cutting the budget for the White House and Congress. They would increase the maximum income tax as well as the tax on gasoline.
"America cannot be great if we go broke," the commission said. "Our economy will not grow and our country will not be able to compete without a plan to get this crushing debt burden off our back."
But some of the biggest cuts are proposed for the healthcare sector, in part to pay for the repeal of the sustainable growth rate formula (SGR) that would cut physician payment by 23% Dec. 1 and another 1.9% Jan. 1. They include:
- While repealing the SGR, the proposal would also result in gradually lowering payments to doctors over the next 10 years (with a pay freeze for the next two or three), amounting to savings of $10 billion by 2015 and $24 billion by 2020. Other strategies would improve physician efficiency and reward quality.
- Expanding powers of the new Independent Payment Advisory Board to impose federal cuts in hospital pay for patients covered by Medicare and Medicaid, which the board now can't impose until 2020. Raise the IPAB's savings target to 1.5% instead of .5% in 2015. Also, eliminate the trigger that could de-activate IPAB by 2019 and allow it to impose payment reductions even when Medicare spending does not exceed price index growth rates.
- Accelerating phase-in of disproportionate share payment (DSH) cuts to hospitals, Medicare Advantage cuts and home health cuts, which would save $9 billion.
- Directing the Centers for Medicare and Medicaid Services to establish a new payment system starting by 2015 to reduce healthcare costs and improve quality.
American Hospital Association president and CEO Richard Umbdenstock commended the commission's co-chairs for taking up the task, but said some of its suggestions "could jeopardize hospital services for vulnerable patients and communities, particularly given that hospitals already face $155 billion in cuts as part of health reform."
He added that the draft's proposal to accelerate DSH payment cuts "is not acceptable" because "the vital program was already cut in the health reform legislation" and because it provides funds to hospitals that serve a large portion of the poor and uninsured.
The idea that the IPAB would be able to cut hospital Medicare fees before 2020 "flies in the face of congressional intent and removes lawmakers from decisions that will affect healthcare in the community," he said.
And proposed cuts in funding for graduate and indirect medical education " at a time when physicians are in short supply." And it cuts the Medicare bad debt program that provides funds to hospitals that treat seniors who can't pay their bills, Umbdenstock said.
Among the reports other recommendations to cut healthcare spending are these:
- Require rebates for brand name drugs as a condition of participating in Medicare Part D.
- Enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law.
- Expand cost-sharing in Medicare to promote informed consumer health choices and spending.
- Expand Accountable care organizations, bundled payments and other payment reforms.
- Cut federal spending on graduate and indirect medical education.
- Reduce Federal Spending on Medicaid Administrative Costs.