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Administration Releases FY 2015 Budget Request

The Obama administration released its fiscal year (FY) 2015 budget request to Congress on Tuesday. The $3.9 trillion budget projects a $564 billion deficit for the year, which is a 13 percent decrease from the previous FY. The following items are of particular interest to essential hospitals:

  • Medicare Cuts: The budget request proposes more than $400 billion in Medicare savings over 10 years, more than $350 billion of which comes from reductions to provider payments, including the following:
    • Indirect Medical Education (IME) Cuts: The budget proposes $14.6 billion in cuts to Medicare IME payments over 10 years. This represents the largest ever proposed cut to IME. However, the budget proposes to create a “new [grant-funded] competitive graduate medical education (GME) program that incentivizes high-quality physician training.” This program is funded at $5.2 billion over 10 years.
    • Bad Debt Cuts: The budget proposes cuts of more than $30 billion over 10 years to Medicare payments for bad debt.
    • Strengthening IPAB: The budget proposes to “strengthen the Independent Payment Advisory Board (IPAB), saving $12.3 billion in Medicare payments over 10 years.”
    • Increased Cost-Sharing: Outside of provider payment cuts, the most significant proposed change to Medicare is increased cost-sharing in Parts B and D for high-income seniors, saving the federal government more than $50 billion over 10 years.
  • Medicaid Changes: The budget includes relatively fewer cuts to Medicaid compared to Medicare. The total aggregate federal savings for Medicaid is less than $9 billion over 10 years, including the following adjustments:
    • Rebasing Medicaid DSH in FY 2024: Consistent with previous proposals, the budget proposes to extend existing Medicaid disproportionate share hospital (DSH) cuts for an additional year, to FY 2024.
    • Medicaid/Low-Income Extenders: The budget proposes to extend the Qualified Individual and Transitional Medical Assistance programs through FY 2015. It also proposes to permanently extend express-lane eligibility.
    • Medicaid Primary Care Payment Parity Extension: The budget proposes to extend the Affordable Care Act’s (ACA’s) provision to increase Medicaid primary care payment rates to match those offered under Medicare for an additional year – through FY 2015.
  • Other Provisions:
    • FQHC Funding Changes: The budget extends the ACA’s community health centers fund through FY 2018, but reduces annual base funding for federally qualified health centers (FQHCs) by $500 million.
    • New NHSC Funding: The budget proposes to increase funding for the National Health Service Corps (NHSC).
    • Elimination of CHGME: The budget proposes to eliminate funding for freestanding children’s hospitals graduate medical education (CHGME), though it provides $100 million in funding for children’s hospitals in the aforementioned new GME grant program.

America’s Essential Hospitals is very concerned about proposed cuts to Medicare IME and Medicaid DSH rebasing, and will continue to monitor these issues closely. The association issued a press statement on March 4.

Please contact Shawn Gremminger, director of legislative affairs, at sgremminger@essentialhospitals.org or 202.585.0112 with questions.

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