Hospitals don't want cuts outlined in Obama budget proposal

For-profit hospitals have a clear message on the Obama administration's recently proposed budget for 2016: Don't make any cuts that would impact our business.

"(We) urge you to reject the hospital cuts contained in the administration's 2016 budget proposal. These cuts are untenable," Chip Kahn, chief executive officer of the Federation of American Hospitals (FAH), wrote to the U.S. House and Senate Budget Committees. "Since 2010, $122 billion in cumulative cuts have been imposed on hospitals. The net effect of this budget is to add to that total. It would jeopardize the ability of hospitals to deliver the care seniors expect and deserve, and the healthcare security all Americans count on hospitals to provide."

The proposed budget would restore funds that had been cut as a result of the sequester, which led to a 2 percent across-the-board reduction in Medicare payments a couple of years ago and are slated to continue until 2021. Those cuts have hit the hospital sector fairly hard.

The budget would give the Medicare program some broad new powers to negotiate prices with pharmaceutical manufacturers on new specialty drugs, a change that if implemented could save more than $116 billion over the next decade. It also proposes preserving enhanced payments to primary care physicians participating in the Medicaid program through 2016. Those payments lapsed at the start of the calendar year.

However, the Obama proposal would also cut Medicare payments to hospitals and doctors. Altogether, funding would be reduced by $415 billion over the next decade. That is similar to last year's proposal, which was met with strong resistance by hospital lobbies.

The budget proposal also contains a greater push for more care to be delivered in ambulatory settings, a proposal that is expected to save as much as $29.5 billion by 2025 if implemented in next year's budget. And the proposed budget would cut funding to rural hospitals by as much as $23 billion next year if implemented without changes.

It's unknown as of yet the fate of the Obama administration's budget. It faces passage in a GOP-controlled Congress that may be hostile to many or all of the proposals, although both sides are expected to negotiate moving forward.

To learn more:
- read the FAH's letter (.pdf)
- check out the budget proposal (.pdf)