To the relief of many in the healthcare industry, the National Commission on Fiscal Responsibility and Reform's draft proposal with recommendations to eliminate $200.3 billion in spending and trim the federal deficit by $4 trillion did not survive last week's vote by the bi-partisan commission's members. With a final count of 11-7, it failed to reach the 14 "yes" votes required to put the draft before Congress.
The proposal, delivered by commission co-chairs Alan Simpson, former Republican Senator from Wyoming, and Erskine Bowles, chief of staff to President Clinton called for physician pay cuts that would trim Medicare spending by $10 billion between 2013 and 2015 and an additional $14 billion by 2020, a prospect that left many in the industry befuddled.
"It appeared they were not taking into consideration the bill that Congress passed last spring on healthcare reform that will reduce hospital payments by $155 billion over the next 10 years," said Tom Nickels, senior vice president of federal relations for the American Hospital Association. "We juxtapose this to the commission led by [former Senator Pete Domenici and Alice Rivlin] that did not make those reductions to healthcare programs for that very reason."
In addition to physician pay cuts, other proposals that were floated to help offset those costs include directing CMS to establish a new payment system beginning in 2015 and the expansion of the Independent Payment Advisory Board, still an area of major industry criticism, and an area in which providers appear to have Congressional support.
"We are very much opposed to what the commission suggested about the Independent Payment Advisory Board, and their unwillingness to take into consideration what Congress already said: that it not be applied to us through 2019," Nickels said.
If enacted, IPAB would have the authority to impose federal cuts in hospital pay for patients covered by Medicare and Medicaid; raise the IPAB's savings target to 1.5% instead of 0.5% in 2015; impose payment reductions even when Medicare spending does not exceed price index growth rate; and eliminate the trigger that could de-activate IPAB by 2019.
AHA was also disappointed that the commission removed caps on noneconomic damages as it attempted to address tort reform. And the elimination of provider taxes in the Medicaid program would "remove crucial funding for states already under significant budget pressures," said AHA President and CEO Rich Umbdenstock in a statement.
The industry did not find fault in everything the commission was trying to accomplish. It did positively react to the panel's decision to drop cuts to disproportionate share hospitals, which provides funding to hospitals serving high populations of poor and underinsured patients.
It's likely that we have not seen the last of the recommendations, according to Nickels. "This provided a menu of options for both the administration when they put their budget out in February and for the two congressional budget committees," he said. "For us, this becomes problematic because it puts options on the table in terms of cutting Medicare and Medicaid that we don't think should be there."