Obama's 2014 budget request: Good and bad news for providers

President Obama's fiscal 2014 budget request for the U.S. Department of Health & Human Services boasts hundreds of billions in savings--but at the cost of some provider payments.

The HHS budget includes Medicare proposals that would save the program $371 billion over the next decade; however, those much of those savings stem from cuts to hospitals and healthcare providers.

Not surprisingly, the budget request elicited mixed reviews from some hospital groups.

A major point of contention is that starting next year Medicare would reduce its coverage of bad debts from 65 percent to 25 percent over three years. The move will save Medicare $25.5 billion over 10 years while providers lose reimbursement for unpaid copayments and deductibles.

Under Obama's budget, teaching hospitals would see indirect medical education payments drop 10 percent. The Association of American Medical Colleges applauded proposed increases to medical research funding but expressed "deep concern" about indirect medical education payment cuts that could prevent teaching hospitals from offering 24/7 trauma and burn unit services.

"Cutting essential federal support for teaching hospitals could mean up to 10,000 fewer physicians trained every year when the nation already faces a shortage of nearly 92,000 doctors in the next 10 years," AAMC President and CEO Darrell G. Kirch, M.D., said today in a statement.

Some of the Medicaid legislative proposals offer hospitals a financial reprieve, for now. The proposed budget would push back health reform's cuts to disproportionate share hospital (DSH) payments one year to 2015. That means the payment reductions already scheduled for next year would be spread over 2016 and 2017.

While safety-net hospitals can breathe a temporary sigh of relief, the National Association of Public Hospitals and Health Systems still worries about facing higher DSH cuts in 2016 and 2017, as well as a $3.6 billion baseline adjustment in 2023, according to a statement today from NAPH President and CEO Bruce Siegel, M.D.

The budget also delivered some good news to rural hospitals today, which have been coming under greater financial pressure thanks to rising uninsured rates and Medicaid expansion rejections. About $122 million would go toward targeted rural health programs, such as efforts to improve access to care and health outcomes, and maintain funding for Rural Hospital Flexibility grants.

Meanwhile, the 340B drug discount program, which has been making headlines recently, would get $10 million, $6 million more than the 2012 figure.

For more:
- check out the proposed FY 2014 budget for HHS
- read the AAMC statement
- here's the NAPH statement

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