Funding for Physician Payment Not Included in Health Reform Downpayment

Article by Paul Campbell and Maura Farrell

The President’s 2010 Budget includes a $634 billion reserve fund for health reform, funded equally by tax revenue and budget savings. The Budget outlines $316 billion in Medicare and Medicaid savings; 58 percent of which will be generated by using a competitive bidding process to set Medicare Advantage rates. Hospitals and homecare providers would share almost one-quarter of the budget reductions. The hospital savings are associated with policy changes designed to reduce readmission rates and to bundle post-acute care services. The homecare savings are associated with reducing provider payments to reflect costs.

SECTORS IMPACTED BY FEDERAL SAVINGS IN PRESIDENT’S 2010 BUDGET

The Budget does not provide any specific information on the physician payment “fix”, except to say that “the baseline reflects our best estimate of what the Congress has done in recent years”. The potential “cliff” associated with the current fix, which expires on December 31, 2009, is shown in the following chart.

MEDICARE SPENDING IN 2010 BUDGET PERCENT CHANGE FROM PRIOR YEAR

Presumably, the Administration will wait for Congress to address physician payment. In the meantime, the $430 billion moderate fix scored by CBO is not likely to compete for heath reform funds.