Obama Budget Proposal Commits to Health Reform

The Obama Administration on Feb. 26 released a summary of its FY2010 budget to Congress, titled “A New Era of Responsibility: Renewing America’s Promise.” The budget overview includes a significant focus on health care reform, including the need for health information technology and comparative effectiveness research. It does not contain many details regarding physician payment policies, but it does recommend reforming the physician payment system to pay for quality; instituting prior authorization for imaging services; and addressing physician ownership in specialty hospitals. The budget assumes $329.6 billion to account for additional expected Medicare physician payments.

The budget sets aside a reserve fund of $630 billion over ten years that will be dedicated to financing health reform. The fund will come from tax reforms and Medicare and Medicaid reforms.

The Administration laid out eight principles for reform in the budget summary: protect families’ financial health; make health coverage affordable; aim for universality; provide portability of coverage; guarantee choice; invest in prevention and wellness; improve patient safety and quality care; and maintain long-term fiscal sustainability.

The budget serves as a blueprint for Congress as it works to develop a FY2010 budget. The Administration’s full budget plan will not be complete until later this spring. Below are the budget overview pieces of most interest to cardiology.

• Reforming the Physician Payment System to Improve Quality and Efficiency. The Administration believes that the current physician payment system, while it has served to limit spending to a degree, needs to be reformed to give physicians incentives to improve quality and efficiency. Thus, while the baseline reflects our best estimate of what the Congress has done in recent years, we are not suggesting that should be the future policy.  As part of health care reform, the Administration would support comprehensive, but fiscally responsible, reforms to the payment formula. The Administration believes Medicare and the country need to move toward a system in which doctors face better incentives for high-quality care rather than simply more care.
  
• Improving Care after Hospitalizations and Reduce Hospital Readmission Rates. Nearly 18 percent of hospitalization of Medicare beneficiaries resulted in the readmission of patients who had been discharged in the hospital within the last 30 days. Sometimes the readmission could not have been prevented, but many of these readmissions are avoidable. To improve this situation, hospitals will receive bundled payments that cover not just the hospitalization, but care from certain post-acute providers during the 30 days after the hospitalization, and hospitals with high rates of readmission will be paid less if patients are re-admitted to the hospital within the same 30-day period. This combination of incentives and penalties should lead to better care after a hospital stay and result in fewer readmissions—saving roughly $26 billion of wasted money over 10 years. The money saved will also be contributed to the reserve fund for health care reform.
  
• Address financial conflicts of interest in physician-owned specialty hospitals: savings considered negligible
  
• Ensure that Medicare makes appropriate payments for imaging services through the use of radiology benefit managers: $260 million in savings
  
• Promote efficient provision of acute care through bundled Medicare payments covering hospital and post acute settings: $17.8 billion in savings
  
• Encourage hospitals serving Medicare payments to reduce readmission rates: $8.4 billion in savings
  
• Create hospital quality incentive payments: $12 billion in savings
  
• Enable physicians to form voluntary groups that coordinate care for Medicare beneficiaries and to receive performance-based payments for coordinated care (i.e., accountable care organizations): savings are viewed as undetermined or negligible at this time
  
• Provide private sector enhancements to ensure Medicare pays accurately: $2 billion in savings

The ACC has strong positions on the provisions outlined above: The ACC is highly supportive of efforts to reform the payment system to provide incentives for quality and is also working to reduce readmission rates through better care coordination. However, the ACC supports physician-owned specialty hospitals and prefers other methods of addressing imaging utilization than the use of radiology benefit managers. Overall, the ACC strongly supports President Obama’s commitment to reforming the nation’s health care system, and looks forward to working with the Administration and Congress to implement policies that improve quality and preserve the doctor-patient relationship.

As Congress prepares the budget and further considers health care reform, the ACC needs members to convey these important messages to your representatives. Contact your lawmakers through ACC’s CardioAdvocacy Network now.