The Bush administration's budget proposal for fiscal 2008 could be bad news for physicians and hospitals.
The proposal, sent to Congress on Feb. 5, seeks about $600 billion in net outlays to finance the Centers for Medicare and Medicaid Services including Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP), a $29.2 billion increase over projected 2007 levels. However, the budget also includes legislative proposals that would trim about $4.3 billion from the Medicare program for the fiscal year and $252 billion over 10 years.
In addition, it also calls for Medicaid reforms that would result in about $28 billion in savings in that program over 10 years.
The president's plan outlines a number of provider payment changes, including reducing the update factor for inpatient hospitals, outpatient hospitals, hospices, and ambulance services 0.65% each year starting in fiscal year 2008; freezing the update for skilled nursing facilities and inpatient rehabilitation facilities in 2008; freezing updates for home health agencies in 2008; and reducing the update for ambulatory surgical centers for 0.65% starting in 2010.
The proposed budget does not address payments to physicians under Medicare, calling into question whether physicians will get relief from a projected 5%–10% cut in Medicare reimbursement slated for January 2008. However, Leslie Norwalk, acting administrator for CMS, said she has “no doubt” that proposals to address the sustainable growth rate formula—which is used to determine physician payments under Medicare—will be on the table for discussion with Congress.
The reductions in entitlement programs such as Medicare, Medicaid, and Social Security are necessary to avoid tax increases, deficits, or cuts in benefits, President Bush wrote in an accompanying statement to Congress.
But the fate of the Bush proposal already is in doubt in the Democrat-controlled Congress.
“I doubt that Democrats will support this budget, and frankly, I will be surprised if Republicans rally around it either,” Rep. John Spratt (D-S.C.), chairman of the House Budget Committee, said in a statement.
Physicians' groups also took aim at the proposed budget. Dr. James T. Dove, president-elect of the American College of Cardiology, said the budget fell short in several areas, particularly in the lack of proposals to fix the physician payment formula. “Unless we can work together to put in place a more sustainable payment system for physicians, patients will suffer,” Dr. Dove said in a statement.
Officials at the American Medical Association echoed those comments in their reaction to the president's budget request. “Over the next 8 years, Medicare payments to physicians will be slashed by nearly 40%, while practice costs increase about 20%. Without adequate funding, physicians cannot make needed investments in health information technology and quality improvement, and seniors' access to health care is placed at risk,” Dr. Cecil B. Wilson, AMA board chair, said in a statement.
The proposed budget also includes a small increase for the National Institutes of Health. The fiscal year 2008 request seeks $28.9 billion, a net increase of $232 million over projected fiscal year 2007 spending. It also includes a $7 million increase for the National Heart, Lung, and Blood Institute, taking the institute's budget to $2.925 billion.
The President's budget request highlights increases in the trans-NIH road map activities, which target gaps in biomedical research that need to be addressed by multiple NIH institutes. The budget proposal also nearly doubles funding to $31 million for a program for new research investigators. NIH officials estimate they will make 175 awards as part of this program in fiscal year 2008.
However, the ACC and the American Heart Association said the request was inadequate to fund priorities at NIH. The increase falls short of inflation and will hurt research efforts as young investigators choose more profitable careers in the private sector, according to the American Heart Association.
Officials at ACC said the lack of funding at NIH will hurt basic, clinical, and translational research and even make it harder for the cardiovascular community to put together sound clinical guidelines. “As Medicare attempts to move toward a system that rewards physicians based on quality and efficiency, this investment in medical research will be critical,” Dr. Dove said in a statement.