Medical Billing Blog

Proposed Fiscal Budget 2015 - A Healthcare Analysis

Posted by Scott Shatzman on Wed, Apr, 09, 2014 @ 07:04 AM

orl dana summers cartoon 123009b resized 600On Tuesday, March 4, the Office of Management and Budget (OMB) released the President’s budget for Fiscal Year (FY) 2015. This budget is not a binding document and will likely result in no real action. The President’s budget is considered an indication of the President’s priorities for the upcoming fiscal year. It is important to understand the budget because certain provisions of it may be included in future proposals and legislation.

 

The President’s FY 2015 Budget requests $601.8 Billion for the Centers for Medicare and Medicaid Services (CMS), a $58.1 Billion increase from the FY 2014 enacted amount. In addition to overseeing the Medicare and, Medicaid programs, CMS also manages the Children’s Health Insurance Program (CHIP), the benefits for consumers and employers through the Federal health insurance marketplace (Exchanges), the Pre-existing Condition Insurance Program (PCIP), the Early Retirement Reinsurance Program (ERRP), and the State High-Risk Pools.

 

Under the Affordable Care Act (ACA) CMS has been responsible for setting up the new Marketplace/Exchange for each State that elects not to establish its own State-based Exchange (SBE). Finally,CMS is responsible for enforcing new rights and greater accountability for consumers and providers in the private health insurance market. As the largest purchaser of health care in the United States, CMS expects to serve almost 123 million beneficiaries in the traditional programs and millions of new consumers in the private insurance market in 2015. CMS expects to distribute $953.9B in benefits in FY 2015.

 

The FY 2015 budget request for oversight and management of Exchange health plans is $390.5M, an increase of $193.6M above the FY 2014 level. In addition, CMS expects to expend $442.2M in user fees and $20.3M in reinsurance administrative contributions to fully fund marketplace oversight and management activities.

 

According to the President’s budget, CMS plans to continue its development of a coordinated quality improvement strategy aimed at adjusting payments to providers and suppliers based on quality performance.

 

$612B is allocated in mandatory funding for Medicare benefit payments, a $13.3B increase from FY 2014 funding level. Because Medicare benefits are mandatory, they are not subject to the appropriations process. The estimates are based on the FY 2015 President’s Budget, and include the effects of the sequester orders for FY 2013 and FY 2014. They do not include expected savings from Program Integrity initiatives.

 

The FY 2015 budget allocates $979M for Medicare program management, which includes claims processing claims, provider enrollment, processing appeals, responding to provider inquiries, educating providers about the program, and administering the participating physicians/supplier program. This is a $197.4M increase from FY 2014 enacted funding.

 

CMS plans to continue with MAC consolidation with the goal of reducing the number of Medicare Part A/B MACs from fifteen to ten by 2017.

 

The President proposes spending $53.5M for HIPAA Administrative Simplification (a $25M increase from FY 2014). This increase is intended to support the new administrative simplification efforts mandated by the ACA.

 

The budget includes $30.3M for ICD-10/5010 implementation. 

 

The President is requesting $318.6M in discretionary funding for the Healthcare Fraud and Abuse Control program, a $25M increase from FY 2014 levels. The HCFAC program was created to detect, prevent, and combat health care fraud, waste, and abuse. However, there is also $1.7B in mandatory funding requested through CMS and other law enforcement agencies. This mandatory funding brings the total request for HCFAC to $2.02B for FY 2015, $461.7M more than was enacted in FY 2014.

 

The President’s budget identifies several areas where the President believes money can be saved in the Medicare program.  These budget reduction initiatives include:

 

  • Medicare Bad Debt: -$30.8 billion/10 years

  • Medicare GME: -$14.6 billion/10 (Note, however, new Grant-Based GME Program below).

  • Medicare Critical Access Hospital (CAH) payments (moving from 101% of cost to 100% of cost): - $1.7 billion / 10

  • Prohibiting payment for CAHs within 10 miles of another hospital: -$600 million/10

  • Medicare Part D rebates: - $117 billion /10

  • Accelerate drug discounts for people in the donut hole: -$7.9 billion / 10

  • Cuts to post-acute providers: -$97.9 billion / 10

  • “Strengthen IPAB”: -$12.9 billion / 10

  • Increase Part B and D premiums for higher-income beneficiaries: -$52.9 billion / 10

 

As noted at the outset, the President’s budget, as with those of his predecessors is typically considered “dead on arrival.”  However, the President’s budget should not be ignored or overlooked as it is often a reasonable roadmap for the direction the Administration would like to take federal healthcare policy.

 

Thanks again to Bill Finerfrock, Matt Reiter, Lara Burt and Carolyn Bounds for the article.