The President’s Medicare Budget Proposals: It’s like Groundhog Day

Sometimes in Washington we get déjà vu. Such was the case with the President’s FY15 budget request with respect to Medicare. Overall, it aims to use savings and revenues to reduce the deficit and replace the sequestration of Medicare. Specifically, the President proposes to reduce Medicare spending by more than $402 billion between 2015 and 2024; this accounts for 25 percent of the spending reductions in the budget.

However, the likelihood of seeing these cuts become a reality is slim since Congress needs to weigh in on these changes many of which they have ignored in previous years. Some highlights from the President’s proposal include:

  • The President re-states his commitment to working with Congress to reform the physician payment system and replacing the flawed sustainable growth rate (SGR) formula. The budget also repeats the White House’s support for the implementation of alternative payment models, like accountable care organizations (ACOs). Both of these proposals were included in the FY14 budget and are included in the currently stalled SGR Repeal and Medicare Payment Modernization Act.
  • Like in past budget proposals, the President again proposes to reduce payments for Indirect Medical Education (IME) to align with patient care costs. However, the budget did include the “Targeted Support for Graduate Medical Education (GME),” a new competitive, value-based graduate medical education grant program to be funded through the Medicare Hospital Insurance Trust Fund.
  • Again the President included a provision without specifics to strengthen the Independent Payment Advisory Board (IPAB), which was authorized in the Affordable Care Act.
  • More beneficiaries would be subject to income-related premiums under Medicare Parts B and D. This is a modification of a proposal included in the President’s FY14 budget, but details were not provided. New beneficiaries would be required to pay a modified Part B deductible. While details were not provided, this may be similar to the FY14 proposal to raise the Part B deductible for new beneficiaries by $25.
  • The President addressed prescription drugs in a variety of proposals, including modifying the reimbursement for Part B drugs and shortening the length of exclusivity for biologics from 12 to 7 years. The proposal also included provisions regarding Part D drug rebates and discounts. The FY14 budget also included similar proposals in all of these areas.

While the President introduced a host of proposals that could impact Medicare, the flavor was similar to those of past budgets.Like in previous years, the President’s proposals will encounter similar obstacles, a divided Congress unlikely to take on controversial reforms as the November elections approach.

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