Keeping a Close Eye on the Medicare Budget

In early February, President Bush submitted his final federal budget for fiscal year 2009, which includes a proposed $12 billion in cuts, in the form of payment reductions and freezes, to the Medicare program.

The president is required by the Medicare Modernization Act to make a proposal to Congress on how to cut costs in the Medicare budget, once Medicare expenditures reach a certain percentage of the federal budget.

It’s relatively unlikely that this proposed budget item will have an adverse short-term impact on Medicare payments for O&P providers, hospitals, nursing homes, physicians and others.

Congress will consider a Medicare bill later in 2008 (see “Policy and Your Practice”, February 2008 O&P Almanac), but circumstances would have to be extraordinarily dire for legislators to saddle Medicare providers with major new cuts just before they go home to seek re-election.

The Democratic chairs of the House and Senate Budget Committees disapprove of the president’s budget, and key Congressional health leaders have shown little interest in new Medicare cuts this year. The Medicare bill in 2008 will most likely result in a patch-up of Medicare physician payments and therapy caps with another short-term fix until after the elections.

But in January 2009, we will have a new president and a new Congress.

If the new president is a Republican, the final Bush budget may be the starting point for the new president’s game plan.

If the new president is a Democrat, the political agenda is likely to include major health care reform to extend coverage to the uninsured, and costs would be high enough that the cuts proposed by President Bush could even be deepened.

In either scenario, these proposed cuts could become a threat.

“There is no doubt that all of us would prefer that this proposal had not been brought forward in the president’s budget…it makes us nervous, as it should,” says Tom Fise, AOPA’s executive director. “But we are more concerned about the implications of the proposed Medicare cuts 12-18 months down the road, and it will behoove us to prepare now for that.”

As always, AOPA will be prepared to move aggressively in the unlikely event that actions unfold in Congress to try to enact these new proposed extensive Medicare cuts in 2008.

Concurrently, we will keep a close eye on the legislative landscape and will take action on behalf of AOPA members when the Medicare cuts come up for serious discussion in 2009.