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Washington Highlights

Senate Finance Committee Holds Hearing on Administration’s FY 15 HHS Budget Request

April 11, 2014—Secretary of Health and Human Services (HHS) Kathleen Sebelius testified April 10 before the Senate Finance Committee on the president’s fiscal year (FY) 2015 HHS budget which calls for $402 billion in health-related cuts over 10 years. The administration proposes $354 billion in Medicare provider cuts, including nearly $15 billion in Medicare Indirect Medical Education (IME) payments, $68 billion in Medicare structural reforms, and $7 billion in Medicaid savings [see Washington Highlights, March 7].

In her testimony, Sec. Sebelius highlighted the administration’s new health care workforce initiatives stating, “The Budget makes new and strategic investments in our nation’s health care workforce to ensure rural communities and other underserved populations have access to doctors and other providers.”

The budget workforce proposal includes transferring $5.23 billion from the Medicare Hospital Insurance Trust Fund to establish a new graduate medical education grant program at the Health Resources and Services Administration (HRSA), a $3.9 billion funding increase for the National Health Service Corps, and $5.4 billion to extend the Medicaid “payment floor.”

During questioning, Sen. Robert Menendez (D-N.J.) raised concerns regarding the Centers for Medicare and Medicaid Services’ (CMS) “two midnight” policy that established new rules regarding how short hospital stays will be paid under Medicare, stating, “The rule fails to acknowledge an instance where a beneficiary needs a high level of inpatient care for shorter amount of time, even if the physician determines it’s medically necessary or appropriate” [see Washington Highlights, Aug. 9, 2013].

Sen. Menendez pointed out that serious questions around the “two midnight” rule have led CMS to enact multiple enforcement delays; prompted the introduction of his bipartisan legislation, along with Sen. Deb Fischer (R-Neb.), the Two-Midnight Rule Coordination and Improvement Act of 2014 (S.2082); and resulted in the most recent statutory delay of the rule included in the Protecting Access to Medicare Act of 2014 (P.L. 113-93).

Sen. Menendez closed by asking the Secretary if CMS’ existing authority would allow them to work with the provider community to better refine the rule without new legislation. Sec. Sebelius responded her staff would work with Sen. Menendez to determine what elements of proposed legislation could be handled on an “administrative basis.”

In his opening statement, Senate Finance Committee Chair Ron Wyden (D-Ore.) highlighted the year-long bipartisan, bicameral work to fix the Sustainable Growth Rate (SGR) stating, “Congress has made real progress on permanently repealing and replacing the broken and dysfunctional Medicare physician payment formula. The reforms agreed to would push Medicare to be driven by the quality and value of care. Today’s volume driven care isn’t good for seniors, their doctors or Medicare itself. The President’s budget proposal endorses the bipartisan, bicameral reform package, and I look forward to working with Secretary Sebelius to help push this over the finish line by years end.”

Ranking Member Orrin Hatch (R-Utah) voiced concerns with the budget request and its failure to seriously address entitlement reform saying, “the proposed budget would save a meager $414 billion over the next decade, or roughly 3.7 percent of total Medicare and Medicaid spending. And, it would do so primarily through provider cuts and government price controls. Anyone who has spent more than five minutes looking at our budget has concluded that these programs are in serious trouble,” further calling the programs “drivers of our debts and deficits.”


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

Courtney Summers
Senior Legislative Analyst
Telephone: 202-862-6042


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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