Oct. 24—Chances that a recently convened congressional budget conference will come to a significant debt agreement over the next six weeks appear remote, but a deal of any size could include several provider cuts, according to a health policy expert.
Legislation that resolved the 16-day government shutdown and lifted federal borrowing limits for several months also established a congressional panel to develop a consensus long-term debt reduction deal by Dec. 13.
There is little chance the bipartisan group of legislators will have any more success in enacting a broad debt-reduction plan than any of the other debt panels that have produced recommendations in recent years, said Chad Mulvany, director of healthcare finance policy, strategy and development for HFMA.
The small possibility of a deal is driven by the desire of to enact some form of debt reduction before the 2014 elections, he said. The desire to find replacements for the $1.2 trillion in nine year spending reductions already enacted by the so-called sequester deal of 2011 is a motivator for both sides of the aisle as well, Treasury Secretary Jack Lew said in a Thursday speech.
A variety of large-scale cuts would be needed to achieve the approximately $1 trillion in spending reductions and new tax revenue required to lift the debt ceiling past the midterm elections.
Among the most likely healthcare cuts to be included in any deal were those included in President Barack Obama’s 2014 budget, Mulvany said. The largest provider cuts included in that budget was about $79 billion in reductions to post acute care providers.
Hospital cuts in the budget included $25.5 billion reduction in Medicare bad debt payments. Also proposed by Obama were $3.1 billion in Medicaid disproportionate share hospital payment cuts.
Any deal could be further complicated by the expected push by some members of Congress and many provider organizations for it to include repeal of Medicare’s sustainable growth rate (SGR) formula. That cost control mechanism has required successive physician payment cuts, which Congress has generally averted at the last moment with replacement cuts elsewhere in government spending.
It will cost $175 billion over 10 years to enact legislation aimed at replacing the SGR, according to the nonpartisan Congressional Budget Office, and that cost could consume some of the healthcare savings included in the president’s budget.
Publication Date: Thursday, October 24, 2013