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  • Washington Highlights

    President’s Budget Includes Major Cuts to Graduate Medical Education

    Len Marquez, Senior Director, Government Relations

    The administration Feb. 9 released its fiscal year (FY) 2017 budget request, which proposes net Medicare projected savings of $419.4 billion over the 10-year budget window, including $421 billion in Medicare provider cuts and $56 billion in Medicare structural reforms aimed at beneficiaries. Specific Medicare cuts of interest to teaching hospitals include reducing indirect medical education (IME) payments by 10 percent ($17.8 billion), strengthening the Independent Payment Advisory Board (IPAB) ($36.4 billion), and reducing Medicare bad debt payments to providers ($33 billion).

    In a Feb. 9 statement, AAMC President and CEO Darrell G. Kirch, M.D., expressed “the AAMC is extremely concerned that proposed cuts to patient care and doctor training at academic medical centers in the president’s budget will hinder efforts at real progress. Specifically, the nearly $18 billion in Medicare cuts the administration has proposed would severely impede the ability of teaching hospitals to treat the most vulnerable patients with the most complex conditions, illness, and injuries.”

    Calling the cuts “shortsighted,” Dr. Kirch also warned of the consequential impact on services “disproportionately available at teaching hospitals, like trauma centers, burn units, neonatal intensive care units, inpatient psychiatric units, and other critical services vital to local communities.” He continued, “Reducing funding to teaching hospitals not only will hinder patient access to services typically unavailable elsewhere but also will limit opportunities for new doctors to train in an environment of discovery, innovation, and cutting edge care that will benefit them no matter where they practice. This is a dangerous set of consequences that could affect all Americans.”

    Similar to past budget requests, the administration includes several Medicare structural reforms in the FY 2017 request, including increasing income-related premiums under Medicare Parts B and D ($41 billion), modifying the Part B deductible for new beneficiaries ($4.2 billion), encouraging the use of generic drugs by low-income beneficiaries ($9.6 billion), and introducing home health co-payments for new beneficiaries ($1.3 billion).

    The president’s budget request invests an additional $27.6 billion in Medicaid and the Children’s Health Insurance Program (CHIP), including a new proposal to strengthen Medicaid in Puerto Rico and other U.S. Territories ($29.6 billion), extending CHIP funding through 2019, including extending the performance bonus fund and the child enrollment contingency fund ($3.1 billion), incentivizing the 19 remaining states deferring Medicaid expansion ($2.6 billion), and reestablishing the Medicaid primary care payment increase through calendar year (CY) 2017 and including additional providers ($9.5 billion).

    Specific Medicaid savings provisions of interest include rebasing future Medicaid Disproportionate Share Hospital (DSH) allotments ($6.64 billion), tracking high prescribers and utilizers of prescription drugs in Medicaid ($770 million), and excluding authorized generics from Medicaid brand-name rebate calculations ($200 million).