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AAMC Is Concerned the President’s Budget Could Harm Medicare Beneficiary Access

February 17, 2012—President Obama Feb. 13 released his fiscal year (FY) 2013 budget, which assumes a series of spending reductions and revenue increases that would reduce the federal deficit by $3.2 trillion over ten years. About 9 percent of the savings ($358 billion over ten years) comes from Medicare and Medicaid.  The Medicare and Medicaid cuts comprise several previously proposed by the president in his September 2011 deficit reduction bill, including a $9.7 billion (10 percent) cut to Medicare indirect medical education (IME) payments [see Washington Highlights, Sept. 23, 2011].

AAMC President and CEO Darrell G. Kirch, M.D., released a Feb. 13 statement expressing concern regarding the proposed cuts to IME funding, saying, “The cuts to teaching hospitals through the plan’s drastic reductions to Medicare will hurt beneficiaries and exacerbate the already critical shortage of doctors in the United States…. The significant cuts to Medicare indirect medical education (IME) payments proposed in the president’s budget would reduce the ability of teaching hospitals and their physicians to care for the most vulnerable in our communities—seniors and the underserved.” He also stated that the $177 million cut to children’s hospital graduate medical education assumed in the president’s FY 2013 budget blueprint “will jeopardize the supply of pediatricians and pediatric specialists that all children need” [see Washington Highlights related story].

The president’s budget also assumes the implementation in 2017 of a single federal matching rate for each state. The rate would be a “blend” of the state’s Federal Medical Assistance Percentage (FMAP) and the match made under the Children’s Health Insurance Program (CHIP). Additionally, the president’s budget assumes a phase-down of the Medicaid provider tax threshold from the current level of 6 percent in 2014 to 3.5 percent for 2017. It also assumes a rebasing of FY 2021 Medicaid disproportionate share hospital (DSH) allotments using 2020 levels. Under current law, Medicaid DSH allotments would be based on pre-Affordable Care Act levels in 2021


Len Marquez
Director, Government Relations
Telephone: 202-862-6281


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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806