Rural health impact of various deficit reduction proposals
The Budget Control Act of 2011 (BCA) calls for $1.2-$1.5 trillion reduction in federal expenditures over the next ten years. A “Super-Committee” has been formed and tasked with developing the policies that will produce these reductions. Rural hospitals have been targeted in various proposals to the Super-Committee and to Congress as a whole. The specific payment reductions advocated by each proposal vary and a number of groups have put forward various ideas. Proposals include:
- The Congressional Budget Office (CBO): Eliminate alternative hospital designations Critical Access Hospital (CAH), Sole Community Hospital (SCH), and Medicare Dependent Hospital (MDH). This plan would reduce hospital payments by $3.8 billion in fiscal year (FY) 2012 increasing to $9.5 billion in reduced payments in FY 2021. Total cut to rural facilities over 10 years: $62.2 billion.
- President Obama: Starting in FY 2013, the President’s plan would end add-on payments for physicians and hospitals in frontier states, reduce CAH reimbursement to 100 percent of reasonable cost, and end CAH reimbursement for facilities located 10 miles or less from another hospital. Total cut to rural facilities over ten years: $6 billion.
- House Republican Leadership: While specifics of the proposal were not released, House Republican Leadership sought to cut $2 billion from frontier state add-on payments and $14 billion from rural hospital reimbursement structures. Total cut to rural facilities over 10 years: $16 billion.
- Ways and Means Democratic Staff: The Democratic Staff from the House Ways and Means Committee embraced the CBO recommendation. They erroneously argued that the elimination of these payment structures would be more equitable and in line with other payment reforms. Total cut to rural facilities over 10 years: $62.2 billion.
- Sequestration: If the Super-Committee fails to produce sufficient savings, Medicare reimbursements will be “sequestered”. An automatic cut of 2% will be instituted on all providers. Total cut to rural facilities over 10 years: $5.9 Billion.