Health Center Federal Policy, Uncategorized

President’s Budget- Taking a Walk on the Entitlement Side

If you’ve read NACHC’s release on the FY2013 President’s Budget, then you know what it outlines for health centers. But what about other programs? This week, we’ll take you through how the budget treated the health entitlement programs—specifically Medicaid and Medicare- and next week we’ll cover other areas of interest for health centers.

In general, Medicare and Medicaid are protected against any fundamental restructuring. But there are some policies proposed that result in potential reductions in federal spending; this could mean cuts to states, providers, and beneficiaries. Medicare and Medicaid spending reductions total about $360 billion over 10 years.

To people following the inside-the-beltway policy back and forth, the budget’s health entitlement proposals will look very familiar. The major Medicare and Medicaid proposals included in the FY13 budget were recycled from the proposal the President put forward for consideration in the deficit reduction talks last fall.

The proposals outline cuts to Medicare providers—such as hospitals and post-acute care providers like skilled nursing facilities—to streamline the way services are delivered, and to assess penalties for hospital readmissions. It includes some higher out-of-pocket costs for Medicare beneficiaries, such as co-pays for home health services and higher cost sharing for higher income beneficiaries. It also calls for a realigning of the way Medicare pays for prescription drugs for low-income beneficiaries.

The budget leaves the Medicaid entitlement intact; no block grants or caps. It does, however, include changes in how Medicaid would pay states for their federal Medicaid share. As we saw in the President’s previous proposal, this includes limiting Medicaid provider taxes and simplifying the federal Medicaid and CHIP payment formula into a so-called “blended rate” for FMAP. The Medicaid savings also include cuts to spending on certain medical devices, as well as changes to DSH payments.

Also of note: the President included significant new funding for CMS to implement and deliver health reform. Conversely, he proposed reducing funding to the mandatory Prevention and Public Health Fund by $4.5 billion. (This fund is separate from the mandatory Health Center Fund).  

While many of these proposals may not become law right away, this package of savings is likely to be revisited in future conversations as a “pay for” or for deficit reduction efforts.


  1. It is hard to believe that cutting programs in Medicare or reducing payments to hospitals, etc. will reduce the country’s budget. For example, I have a husband who is in a skilled nursing facility. Were it not for medicare I don’t know what we would do. I am, because of my health issues, unable to provide for him. He needs 24 hour care. Additionally, I don’t even like the fact that Medicare is considered an “entitlement”. I worked all of my adult life, paid into social security, from which they take my medicare co-pay payment. It just seems like America no longer cares for their sick and elderly.

  2. The cost of Medicare will begreatly reduced if the operations are streamlined so these are more efficient. Our safety net clinic has been a Medicare provider for the last 6 months but have not received any payment due to technicalities in the process that could have been avoided if Medicare’s staff were more efficient. I think more efficient operations will save Medicare a whole lot of money.

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