Thursday, July 9, 2009

Administration Letter Calls for More Medicare Savings

OMB Director Orszag delivered a letter to House Democrat leaders at a meeting on health legislation last night.  In it, Orszag notes the White House’s support for the “discussion draft” released by the leadership two weeks ago, but states that “a deficit-neutral health reform that expands coverage…is not enough, because it would perpetuate a system in which best practices are far from universal and costs are too high.”  As a result, the letter asks House leaders to “consider additional savings from Medicare and Medicaid disproportionate share hospital payments and further delivery system reforms, including changes to the process through which Medicare policies are set.”  This last phrase likely refers to the Administration’s proposal to allow MedPAC to make binding recommendations on cost reductions that could have force of law — a measure that would create a de facto new Federal Health Board.  The MedPAC proposal has been opposed by independent experts, including former CBO Director and MedPAC Vice Chairman Robert Reischauer, who called the idea a “terrible mistake.”

The letter from OMB Director Orszag calling for additional Medicare payment changes comes at the same time as a front page article in this morning’s Washington Post reports that a group of hospital executives is soon planning to go public in their criticisms of the $155 billion savings “deal” the American Hospital Association publicly agreed to yesterday.  As always, staff are encouraged to reach out to provider constituents in your Members’ districts to inform them about the changes being proposed, and the White House’s apparent insistence in letting a board of unelected bureaucrats determine Medicare payment policies.