On Valentine’s Day, the biggest payer of healthcare in America put out a proposed budget for the next fiscal year. The budget was part of the President Obama’s overall $3.73 trillion federal budget submission for fiscal 2012 which proposes more than $1 trillion in spending cuts.
That payer, the U.S. Department of Health and Human Services (HHS), which includes the FDA and the Centers for Medicare and Medicaid Services (CMS), among other agencies, proposes to spend $79.9 billion of that $3.73 trillion between October 2011 and September 2012.
The proposed HHS funding is $400 million less than last year’s request and $1.4 billion less than estimated 2011 expenditures.
The FDA will receive $2.7 billion in budget authority and $4.4 billion in total program resources.
However, as the old saying goes in Washington, the President proposes, but the Congress disposes. Republicans in Congress have made it abundantly clear, that’s exactly what they intend to do with the President’s healthcare budget and Affordable Care Act—put it in the disposal.
Because an estimated $1 out of every $7 dollars of healthcare is spent on orthopedics and 13% of hospital admissions are attributed to orthopedics, Orthopedics This Week took a look under the hood of the proposed budget.
Primary Care Physician Focus
There are things for all physicians to like in this budget, including a provision to protect them from cuts in Medicare payments for the next two years. But for specialists like orthopedic surgeons, the results are mixed. For example, any additional funding to deal with physician shortages and training goes to the primary care physicians championed by the American Medical Association (AMA).
These increases are offset by a series of consolidations and eliminations among public health programs such as the elimination of a children’s hospital graduate medical education program.
“Doc Fix”
Photo courtesy: Andrew HuthSpecifically, the budget temporarily delays a scheduled 25% cut in the sustainable growth rate (SGR), Medicare’s physician payment formula that was slated to go into effect in 2012. This “Doc Fix” is paid for by squeezing $62 billion in savings out of Medicare and Medicaid payments to hospitals and doctors and via expanded use of generic drugs in federal health programs.
Surgeon Society Responses
John Callaghan, M.D., the president of the American Academy of Orthopaedic Surgeons (AAOS) told OTW at the Academy’s annual meeting in San Diego that the organization “applauds many of the initiatives within [the] budget proposal to promote patient safety and ensure that patients of all ages and conditions receive quality, affordable care.”
However, he continued, “While the AAOS appreciates the administration’s commitment to investing in biomedical and battle wound research, as well as its continued efforts to make our healthcare system more efficient, the AAOS is disappointed that the President did not include a permanent solution to Medicare’s physician payment formula in his budget, and believes that the absence of a replacement to the flawed sustainable growth rate formula critically threatens our most vulnerable patients’ access to care.”
The North American Spine Society (NASS) and the Alliance of Specialty Medicine told their members in a statement: “This policy would provide a bridge that would allow cuts scheduled under the [SGR] formula to be postponed for two years, but fails to replace the current reimbursement system with a long-term solution that reimburses physicians based on the cost of care they provide to Medicare beneficiaries. NASS and the Alliance oppose any changes that fall short of providing a long-term solution.”
American Medical Association President Cecil Wilson, M.D. praised the proposal, saying it would stop “devastating cuts…for another two years, which is important for providing stability in the Medicare system while a permanent solution is enacted.”
Affordable Care Act (ACA)
The ACA is estimated to reduce the deficit by approximately $230 billion over the next decade and about $1 trillion over the second decade, based on the most recent Congressional Budget Office analysis.
Republicans argue the Act actually increases the deficit and will cost jobs.
The Administration says the ACA reduces the deficit by employing a wide range of strategies that achieve the goal of delivering better healthcare for less, including provisions to fight waste, fraud, and abuse; reward providers for delivering high-quality care; and reform America’s healthcare delivery system by developing innovative ways to deliver care for patients. One of those innovations is the establishment of Accountable Care Organizations (ACOs)
Healthcare reform funding remained intact, with $465 million in funds to implement the law. CMS would receive $4.4 billion, a $700 million increase over 2010 spending. The budget lays out a plan for CMS to prioritize fighting fraud, including efforts to track “high prescribers and utilizers” of Medicaid prescription drugs, and creating a system that checks physician orders for “certain high-risk” products and services.
Disease Prevention
There are provisions for healthcare services which are preventative in nature, such as arthritis treatment and disease management. Medical device CEOs have already been singing the praises of orthopedic procedures as preventative measures and research and development dollars going into joint disease research to prevent the need for joint replacements in the first place. Keeping people “in motion” and active is a key prevention tool for controlling diseases such as diabetes and avoiding obesity.
The budget includes a new “Comprehensive Chronic Disease Prevention Program (CCDPP) by consolidating Centers for Disease Control and Prevention (CDC) Heart Disease and Stroke, Diabetes, Cancer, Arthritis and other Conditions, Nutrition, Health Promotion, Prevention Centers, and select school health activities into one competitive grant program.”
There is also a $1 billion allocation within the Prevention and Public Health Fund, for activities that have demonstrated improved health outcomes and will help reduce healthcare costs.
Health Centers
Health Centers are sites that offer comprehensive, high quality, primary and preventative health care services for anyone regardless of ability to pay.
In 2009, the Recovery Act provided $500 million to expand health center services to an additional 2 million patients. The proposed budget continues this effort by investing a total of $2.2 billion in new resources for health center services in 2011 and 2012. The Budget builds on this investment by providing an additional $2.1 billion. In 2012, health centers are estimated to serve 24 million patients.
Biomedical Research
The budget includes $32 billion for basic and applied biomedical research supported by the National Institute of Health (NIH).
The budget document notes this investment is essential in keeping people and the economy healthy: “Innovation is this field creates and sustains companies, products and jobs.”
Other HHS Budget Highlights
According to the budget document, in addition to the “Doc Fix, ” other highlights of the overall HHS budget include:
Provides new consumer protections and review of unreasonable premium increases, expands coverage for uninsured Americans with pre-existing conditions, and funds programs to hold health insurance companies more accountable to their enrollees.
Strengthens the program integrity in Medicare, Medicaid, and the Children’s Health Insurance Program, and provides new resources to reach the Administration’s goal of reducing the Medicare fee-for-service error rate in half by 2012. This is potentially a big problem for surgeons. Speakers at an AAOS symposium noted that the CMS CERT (Comprehensive Error Rate Testing) program is a “claw-back” effort where surgeons are audited to billing errors.
Strengthens national preparedness through funding for the advanced development of next generation medical countermeasures against chemical, biological, radiological and nuclear threats.
Invests approximately $3.5 billion for discretionary HIV/AIDS prevention and treatment activities across the Department to expand access to affordable healthcare and prevention services and align activities with the National HIV/AIDS Strategy.
Increases access to healthcare services among American Indians and Alaska Natives.
Strengthens the FDA’s food safety system by implementing provisions of the FDA Food Safety Modernization Act and recommendations from the President’s Food Safety Network Working Group.
The Sausage Making Begins
Given that Congress has not yet passed the 2011 fiscal budget and continues to operate the government on a Continuing Resolution, there is very little reason to believe that this proposed 2012 budget will make it through the sausage factory on Capitol Hill.
Gordon Wheeler, associate executive director for public affairs at the American College of Emergency Physicians reportedly said, “I don’t think anything meaningful will come from any of this. The intensity of the debate right now is on the debt and the deficit.”
However, the Executive Branch possesses significant administrative powers to move federal agencies in the direction outlined in the proposed budget. Whether or not President Obama has the political strength to push this budget through Congress as the next presidential and congressional elections heat up, is unknown.
If history is any indication, the interests of physicians and surgeons will be represented by fragmented efforts of the American Medical Association and the Specialty Societies. Such fragmented efforts in a political environment dominated by calls for reigning in the federal debt can result in defeat.
As we saw last year when Congress had a permanent “Doc Fix” up for a vote, even many physicians in Congress voted against the measure because it increased the federal debt.
Let the disposing begin…
