Congress Zeroing in on Providers to Bear Medicare Cuts

Beginning Jan. 1, healthcare providers will begin seeing a new round of cuts to Medicare reimbursements,including reduction of bad debt reimbursement to 65 percent. But lawmakers apparently don’t want to stop there, and are focusing on providers to shoulder the burden for future cuts in Medicare and Medicaid.

Politicians and pundits are well aware the nation is facing a “fiscal cliff,” but there are limited places in the federal budget with wiggle room to correct that. However, Medicare is one of the most popular (if not the most popular) federal program going. So if cuts are in the wind, who gets them? The answer more and more is healthcare providers.

Politico has published an excellent round-up of projected areas of cuts in Medicare (“Medicare cuts give health providers jitters“). While providers will benefit from expansions to Medicaid and changes to Medicare as part of the Patient Protection and Affordable Care Act, they also will be expected to absorb much of the much-ballyhooed $716 billion in cuts.

Medicare Part B monthly premium to recipients will increase $5 per month beginning in January, a smaller increase than originally projected, according to the Associated Press.  While that represents a quarter billion dollars a month in new revenue, it will not even come close to staving the increases in Medicare program costs for just this year.

Modest premium increases are more palatable to voters, of course. And while Congress could increase taxes to prop up Medicare growth, the Republicans have dug their collective heels in the sand against that tact. If increasing premiums or taxes are off the table, that leaves cuts. And there appears to be a growing perception in Washington that healthcare providers can absorb those cuts without cutting services to Medicare patients.

One of the bellwethers of this approach comes from the think-tank Center for American Progress, which according to the Associated Press has President Barrack Obama’s ear. Rather than cut Medicare and Medicaid programs, “instead, it targets Medicare service providers, from the pharmaceutical industry to hospitals and nursing homes,” according to the news service. “Higher-income Medicare recipients also would face increased monthly premiums for outpatient and prescription coverage.”

“Hospitals account for an additional $61 billion in cuts, or 16 percent of the total” over 10 years, according to the AP. “Nursing homes are targeted for $16 billion in reductions.” In addition, the center proposes “to repeal a payment formula for doctors that has failed to contain costs, replacing it with an approach that rewards primary and preventive care while squeezing specialists.”