In an interview appearing in the April issue of H&HN, AHA Chairman Benjamin Chu, M.D., advises budget-makers in Washington to avoid whacking providers with another round of dramatic payment cuts (you can read the interview here and watch an excerpt of it here).
Chu, who heads up Kaiser Permanente's Southern California and Hawaii region, makes, I think, a fairly compelling argument: Hospitals, other providers and insurers are building a new delivery system that will, hopefully, produce better outcomes at a lower cost. The shift toward greater integration and value over volume is a difficult one, but the field can, he believes, make the transition and eliminate the "20 to 30 percent inefficiencies that people are talking about." Slashing reimbursements over the next couple of years, he contends, would be hasty and could undermine those efforts.
Persuading lawmakers to this way of thinking will be — check that — is going to be difficult. Deficit hawks have been circling in Washington for the past couple of years and are sharpening their focus on health care expenditures. President Obama's budget proposal yesterday is just the latest salvo in the battle between Democrats and Republicans over the country's fiscal health.
The HHS budget seeks to trim $374 billion from Medicare, roughly $306 billion of that coming from health care providers. There's also a hit to Medicaid, to the tune of $18.9 billion. While the proposal would scrap the sequester's annual 2 percent cut to Medicare payments, it also would reduce bad debt payments, trim GME and do away with cost-plus reimbursement for critical access hospitals, among other things. The Obama plan comes on the heels of Rep. Paul Ryan's budget proposal that not only aims to trim billions from Medicare, but also to turn it into a voucher-like program for seniors.
"The solution to what ails our nation's fiscal health is not further cuts to providers that care for millions of America's seniors, but creative solutions to modernize the Medicare program," AHA President and CEO Rich Umbdenstock said in reaction to the president's proposal, echoing Chu's concerns. "Hospitals are actively pursuing ways to increase value, improve performance and enhance quality and patient safety — all of which reduce costs, but they cannot carry the burden alone. The reality is that one in four hospitals operates in the red, so additional cuts will hamper their ability to provide access to the latest treatments and technologies, and could result in fewer caregivers and longer waits for care."
Umbdenstock wasn't alone in expressing concern about portions of the president's proposal. AMA President Jeremy Lazarus, M.D., also decried the plan to cut GME funding. Lazarus was also critical of bolstering the Medicare Independent Payment Advisory Board's power to rein in spending.
The president's proposal seemingly eliminates the much-dreaded sustainable-growth rate formula for physician payment. However, HHS officials in a press briefing yesterday noted that the proposal does not include any budget offsets to do so. CBO estimates that freezing the SGR would cost roughly $138 billion over 10 years. As you all know, we typically hit Thanksgiving before Congress even considers passing a one-year doc payment fix, thus continuing to kick the can down the road. There are, however, rumblings that a more comprehensive measure will be introduced soon.
Now, the chances of either the Ryan plan or Obama's budget becoming law is about as likely as my lowly Cubs' winning it all this year (despite some sick person's gruesome attempt to reverse the Billy Goat Curse). But the fact that both sides of the aisle are talking about such aggressive cuts to Medicare and Medicaid is telling. Hospital leaders have their work cut out not only to transform care delivery, but also to make their case to lawmakers.
For its part, the AHA recognizes that it can't simply lob complaints at lawmakers. The association last month offered a set of specific recommendations that "offer a road map for changing the way care is delivered and for slowing health care spending." In "Ensuring a Healthier Tomorrow," the AHA calls for a two-pronged attack: promoting and rewarding accountability and using limited health care dollars more wisely.
As the report points out, it is not an exhaustive list of fixes, but a "starting point of initiatives that stakeholders can take together."