The White House has released its proposed budget for FY10, which includes a proposal to establish a $630 billion healthcare reserve fund to finance healthcare reforms over the next 10 years.
The budget describes the reserve fund as a “first step,” acknowledging that $630 billion will “not be sufficient to fully fund comprehensive reform.” Half of the reserve would be funded by more affluent taxpayers (e.g., couples filing jointly with a combined income of $250,000 or more), including a 28 percent cap on itemized deductions. The other half would be funded by savings generated from proposed accountability, efficiency, and quality initiatives.
Two of the efficiency and quality proposals directly affect hospitals. The first would move Medicare payments to hospitals from fee-for-service to a bundled payment system that would fund hospitalization plus 30 days of post-hospitalization care. Hospitals with high rates of readmission would receive reduced payments if patients were readmitted during the 30 days following the initial hospitalization. The budget summary projects that this bundled payment system would save $26 billion over 10 years. The second proposal would link payments to hospitals for acute inpatient services to performance on specified quality initiatives. Projected savings for the quality initiative are $12 billion over 10 years.
“The reforms broadly proposed by President Obama, though lacking great detail at this time, do contain components supported within HFMA’s principles of payment reform. However, we need to see HHS’s detailed budget and CMS’s proposed rule to fully appreciate their impact,” said Richard L. Clarke, president and CEO of HFMA. “Both bundled payments and pay-for-performance are monumental shifts and should be implemented in a phased and thoughtful manner. To work, bundled payments require tightly integrated networks of hospitals, physicians, and other care providers. Integration at this level does not exist today in most healthcare delivery systems, and will take time to evolve. Pay-for-performance approaches are consistent with HFMA’s principles of reform, but the sequencing of implementation must allow time for providers to adapt. We must not deprive some hospitals of the resources they need to improve. A better approach is rewarding relative improvements, allowing underperforming facilities time and resources to change.”
Read the Office of Management and Budget’s summary of major budget provisions (see pp. 25-30 for healthcare reform) and the Department of Health & Human Services budget fact sheet.
