President's FY 2012 Budget Released

[David Van Matre]

President Obama today released his proposal for the fiscal year 2012 federal budget. According to the White House, the proposed $3.7 trillion budget blueprint would cut deficits by $1.1 trillion over the next decade.  The budget was attacked by liberals for going too far in cutting various social programs and by conservatives for not going far enough.

 

The release of the president’s budget marks the launch of budget season on Capitol Hill. The president’s budget provides a blueprint for Congress to set spending priorities for the coming fiscal year, although Congress is not required to follow the president’s recommendations and often disregards them. During the coming days and weeks, Obama administration officials will testify before congressional panels in support of the president’s priorities.

 

Medicare and Medicaid programs generally were spared major cuts, but the budget includes many provisions of interest to NASL members, which are described in the HHS Budget in Brief.  We will provide further analysis of the budget as additional details emerge, but listed below is a summary of two key issues.

 

Physician Fee Schedule

 

The budget calls for a two-year extension of current Physician Fee Schedule rates, which would carry through the end of 2013. This would protect physician payments from cuts that are now approaching 30 percent, for two years, while the president prepares a proposal for a permanent solution to dealing with the flawed SGR formula.

 

The cost of the two-year patch would be offset by several Medicare and Medicaid measures. Primarily, the cost would be offset by enhanced Medicare and Medicaid program integrity efforts, but other offsets would include contracting changes for Quality Improvement Organizations (QIOs) and reductions in Medicare and Medicaid pharmaceutical costs.

 

Medicaid Provider Tax

 

A proposal that would hit the long term care sector would limit the ability of states to use provider taxes to pay their share of Medicaid by phasing down the Medicaid provider tax threshold beginning in FY 2015. The proposal would reduce the provider tax from 6 percent in FY 2014, to 4.5 percent in FY 2015, 4 percent in FY 2016, and 3.5 percent in FY 2017 and beyond. Restricting the use of the provider tax was one of the recommendations offered by the National Commission on Fiscal Responsibility and Reform.