ANNOUNCE: Last Bush Budget Aims to Cut Medicare Deeply

ANNOUNCE: Last Bush Budget Aims to Cut Medicare Deeply

NAAOP

2/6/2008

NAAOP Update for February
Last Bush Budget Aims to Cut Medicare Deeply

Earlier this week, on February 4, 2008, President Bush released his last
federal budget for fiscal year 2009, which begins on October 1st. Like many
of his recent budgets, this last offering is extremely austere when it comes
to domestic spending and much more generous when it comes to defense,
homeland security and related priorities. On the Medicare front, President
Bush proposes to cut over $12 billion from that program alone in FY 2009,
largely through freezes to a whole host of health care providers. The total
number of proposed Medicare cuts over a five-year period comes to over $180
billion, not including significant cuts to Medicaid as well.

The budget does not contain sufficient detail to assess whether the O&P fee
schedule suffers the same fate as virtually all other providers under the
Medicare program, but there is nothing to suggest that the annual update is
preserved for the O&P fee schedule under Bush's proposals. As Congress works
toward passage of another Medicare bill by the end of June 2008, largely to
continue to push off an expected 10% decrease in the physician fee schedule,
this new proposal to cut hundreds of billions of dollars from Medicare will
only make the job more difficult and may lead to a dynamic where many
provider groups are playing defense rather than trying to improve Medicare
coverage and payment for their sector of the health care system.

However, with 2008 being an election year and with President Bush's
political capital on the decline, very few in Washington give the Bush
budget much credibility. In fact, Pete Stark (D-CA), Chairman of the House
Ways & Means Committee, announced last week, even before the budget was
publicly released that it was dead on arrival. Part of the reason for this
is the fact that the President was actually required under law to propose
significant cuts to Medicare. This is because of a provision included in the
Medicare Modernization Act that stated that if the government spent too much
on Medicare from general revenues (rather than from the Medicare Trust
Fund), the President would have to offer ways to cut Medicare costs. The new
budget proposals are largely in response to that legal requirement.

Members of Congress returned from the holidays in mid-January to begin the
final year of the 110th Congress and quickly began discussions on major
policy issues, including an economic stimulus package. Such a package has
already been passed in the House and the Senate is waiting until the
presidential candidates return from Super Tuesday to hold a Senate vote.
The bills will then be negotiated into one package and move to the President
for his signature. This is expected to be accomplished fairly quickly, but
may get bogged down in a conference committee.

In light of this priority issue, the Senate Finance Committee is not
expected to mark-up until April a Medicare bill that replaces the law that
expires at the end of June. This law was all that Congress could accomplish
before the holidays and consisted largely of simple extensions of policies
for a six-month period. Without Congressional action by the end of June, the
physician fee schedule will drop by 10% on July 1st. This, of course, is
untenable with a national election in November and, thus, it is widely
expected the Congress and the President will find a way to avert this deep
cut to physician fees, at least in the short term.

NAAOP will continue to closely monitor the status of the Medicare
legislation with a close eye on threats and opportunities for the O&P field.
We will continue to advocate to protect the O&P fee schedule as well as
improve the link between quality of care and qualification of provider as
the bill moves forward.

Written by: Peter W. Thomas, General Counsel, National Association for the
Advancement of Orthotics and Prosthetics (NAAOP)

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