VNAA Analysis of President Obama's Fiscal Year 2014 Budget
Thursday, April 11, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

On Wednesday, April 10, the White House released its proposed budget, the Fiscal Year 2014 Budget of the U.S. Government. This budget sets the President’s spending priorities for the coming year, and includes proposals to repeal the “sequester” cuts and trim federal spending.
Home Health Copay
We are disappointed to see the President’s budget includes the establishment of a Medicare home health copay. This language is similar to the language included in the President’s budget last year (FY13). Of note, the budget does not contain a proposal that would alter the global cost-sharing structure of Medicare, such as combining deductibles for Part A and Part B.

Introduce Home Health Copayments for New Beneficiaries: This proposal would create a co-payment for new beneficiaries of $100 per home health episode, starting in 2017. Consistent with MedPAC recommendations, this co-payment would apply only for episodes with five or more visits not preceded by a hospital or inpatient post-acute stay. Home health services represent one of the few areas in Medicare that do not currently include some beneficiary cost-sharing. This proposal aims to encourage appropriate use of home health services while protecting beneficiary access. [$730 million in savings over 10 years]. Fiscal Year 2014 Budget of the U.S. Government, Page 39.

While there are few specific details, the budget also includes changes to post-acute providers more broadly. 

Adjust Payment Updates for Certain Post-Acute Care Providers: This proposal would gradually realign payments with costs by reducing the market basket updates for Inpatient Rehabilitation Facilities (IRFs), Long-Term Care Hospitals, SNFs and Home Health agencies, by 1.1 percentage points beginning in 2014 through 2023. These adjustments build on recommendations from MedPAC that Congress eliminate the payment updates for each of these provider types. Payment updates for these providers would not drop below zero under this provision. [$79.0 billion in savings over 10 years]. Fiscal Year 2014 Budget of the U.S. Government, Page 38.

Implement Bundled Payment for Post-Acute Care Providers: Beginning in 2018, this proposal would implement bundled payment for post-acute care providers, including long term care hospitals (LTCHs), IRFs, SNFs, and home health providers. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors will be set to produce a permanent and total cumulative adjustment of -2.85% by 2020. Beneficiary coinsurance would equal levels under current law. [$8.2 billion in savings over 10 years]. Fiscal Year 2014 Budget of the U.S. Government, Page 38.

Maternal and Child Health Medicaid
The budget also further key initiatives of the Affordable Care Act. It protects Medicaid funding against structural reforms or deep cuts. It also includes additional resources for key initiatives such as programs that support home visiting.

Home Visiting.The Budget extends and expands this voluntary evidence-based program that has shown to be critical in improving maternal and child health outcomes in the early years, leaving long-lasting, positive impacts on parenting skills; children’s cognitive, language, and social-emotional development; and school readiness. The Budget proposes a long-term $15 billion investment beginning in FY 2015. Fiscal Year 2014 Budget of the U.S. Government, Page 22.

Waste Fraud and Abuse
The President’s budget reaffirms his commitment to curbing waste, fraud and abuse in Medicare and Medicaid and he dedicates resources to those programs.

Rurual Issues
On April 10, the American Hospital Association (AHA) released a statement regarding the President’s budget citing that the reduction in funding of critical access hospitals (CAHs) will hinder care for people in rural communities. To read AHA’s statement, please click here.

More specifically and as introduced in past budgets, the President’s proposal would decrease payments to CAHs from 101% to 100% and eliminate the CAH status for facilities 10 miles away, or less, from another facility. In 2011, the Congressional Budget Office (CBO) also identified this measure as a possible deficit reduction option. By limiting the CAH distinction, it is believed this could impact 61 hospitals and result in $4 billion in savings. 

Next Steps
It is unclear what action, if any, Congress will take on the President’s proposals during the upcoming year. VNAA will advocate with key Members of Congress to support proposals where we agree and against those that will harm vulnerable beneficiaries and our home health and hospice providers who serve them.  For more information on the budget, click here.

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