Hospitals Push to Stop Budget Cuts to Health Care Providers

The administration wants to cut $2 billion, but the industry’s lobbying group says the cuts will end up costing taxpayers in the long run.

An auxiliary nurse assists a patient in a geriatric unit at the hospital in Angers, western France, on October 23, 2013. The Angers hospital employs 6,000 people including 980 doctors.
National Journal
Clara Ritger
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Clara Ritger
March 4, 2014, 3:07 p.m.

A hos­pit­al lob­by­ing group hopes to con­vince Con­gress to avoid mak­ing roughly $2 bil­lion in cuts to health care pro­viders, ar­guing that the health care sys­tem is gen­er­at­ing sav­ings and that slash­ing pay­ments fur­ther would jeop­ard­ize fu­ture in­nov­a­tions in care.

The Obama ad­min­is­tra­tion pro­posed the cuts Tues­day in its 2015 budget re­quest, and it in­cludes re­duc­tions in post-acute care, pay­ments for rur­al hos­pit­als, and re­im­burse­ments for care provided to Medi­care be­ne­fi­ciar­ies who don’t pay their bills. The cuts come after years of spend­ing re­duc­tions to hos­pit­als, which faced some $25 bil­lion in re­duced rev­en­ues in the pres­id­ent’s pro­pos­al last year.

The Fed­er­a­tion of Amer­ic­an Hos­pit­als, which rep­res­ents more than 1,000 health care pro­viders, is push­ing a new study to per­suade law­makers to forgo the cuts. The study, pro­duced by health care con­sult­ing firm Dob­son DaV­anzo, es­tim­ates more than $900 bil­lion in sav­ings to the Medi­care pro­gram over the next dec­ade due to cost cut­ting already be­ing gen­er­ated through changes to the way hos­pit­als and doc­tors provide care. The pro­jec­tion ex­ceeds es­tim­ates by the Con­gres­sion­al Budget Of­fice, which last month lowered its ten-year pro­jec­tions for Medi­care and Medi­caid spend­ing by $221 bil­lion.

FAH Pres­id­ent and CEO Chip Kahn said in his an­nounce­ment at the or­gan­iz­a­tion’s  an­nu­al pub­lic policy con­fer­ence that the sav­ings are the dir­ect res­ult of struc­tur­al changes to Amer­ica’s health care sys­tem that will drive down cost growth. Some of the changes he noted are the use of elec­tron­ic health re­cords, re­duc­tion in hos­pit­al read­mis­sion rates, and ad­op­tion of new care and pay­ment mod­els, in­nov­a­tions which can be traced back to pub­lic policy, in­clud­ing the Amer­ic­an Re­cov­ery and Re­in­vest­ment Act and the Af­ford­able Care Act.

“Our mis­sion now should be to stay the course, with the struc­tur­al re­forms that are driv­ing down health care costs,” Kahn said.

Hos­pit­al lead­ers Tues­day sent a copy of the re­port, along with a call to avoid new hos­pit­al pay­ment cuts, to the House and Sen­ate Budget com­mit­tees’ lead­er­ship.

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