Some of President Trump’s proposed 2020 budget (with projections to 2028) is likely dead on arrival but other sections may well emerge from the gauntlet and become law. So, pay attention.
Here, according to the American Academy of Orthopaedic Surgeons (AAOS), are the proposals that orthopedic physicians should like. The AAOS statement says in part:
“We are encouraged to see the president’s budget request funding for several ongoing AAOS advocacy priorities… Reducing the cost disparity between sites of care, reforming anti-competitive physician self-referral laws, and providing safe harbors to the anti-kickback statute are a few of the ways we can begin to address the many regulations and policies that inhibit choice and competition.“
But politics is a full-contact sport these days. And Trump’s proposed budget faces tough going. Among other things, it proposes to cut healthcare and other entitlements going into an election year.
Some of Trump’s funding cuts which would affect orthopedists in easily predictable ways, and others with less visible consequences, do stand a chance of passing in Congress or being implemented in regulations. Here’s an overview.
- Trump’s $575 billion Medicare cut includes less pay for physicians and hospitals
Trump proposes to cut the Medicare budget by $575 billion* over the next 10 years.
* (A bigger number, $845 billion, has been widely reported in the media. However, $270 billion of that comes from moving out of Medicare two programs which aren’t direct patient care).
About 15% of the $575 billion cut is the estimated benefit from spending more to catch fraud and abuse. These programs have been fed more funds over the years, but sooner or later, spending on them will inevitably collide headlong with the law of diminishing returns.
The bigger cuts, according to the Committee for a Responsible Budget (CFRB), are reductions in Medicare direct payments to physicians and hospitals. Some of these might pass because they respond to the political pressures created by the giant Trump deficits, and some Democratic leaders believe Medicare overpays physicians and hospitals. Details include:
- Slash Medicare payments to on-campus hospital outpatient departments
In a “site neutrality” proposal supported by AAOS, the budget would slash Medicare payments to on-campus hospital outpatient departments by $131 billion over 10 years, pegging them to the Physician Fee Schedule (PFS). A budget document says:
“Effective CY 2020, this proposal makes site neutral payments between on-campus hospital outpatient departments and physician offices for certain services such as clinic visits, eliminating the disparity between what Medicare pays in these settings for the same services.”
This proposal mirrors the “site neutrality” reduction in payments to hospital off-campus outpatient departments, which the Centers for Medicare and Medicaid Services (CMS) implemented last November, setting their reimbursements to basically the same rates as paid to physicians under the PFS. (“CMS Finalizes Outpatient ‘Site Neutrality’ Rules,” Orthopedics This Week, November 14, 2018).
Those prior reductions in payments for off-campus clinics are being phased in over 2019 and 2020; they’re expected to cut total Medicare payments to hospitals by $33.98 billion over 10 years.
It’s not clear how much of the newly proposed cuts would be passed on by hospitals to physicians who receive pay from on-campus hospital outpatient clinics. Clearly, however, taking $131 billion out of the healthcare system, on top of the prior $33.98 billion, is downward pressure on the income of hospital-based physicians and subtracts money from patient care overall.
The American Hospital Association (AHA) and the American Association of Medical Colleges filed a lawsuit to challenge that first site neutrality rule. No doubt, they’d sue again if CMS were to propose the same change for on-campus outpatient departments without clear congressional authority.
