2014 federal budget pitch draws mixed reactions from physician groups

President Barack Obama's proposed 2014 budget includes roughly $300 billion in Medicare savings, reforms to the sustainable growth rate, and cuts to graduate medical education.

Medical organizations representing primary care physicians (PCPs) and other doctors have mixed reactions to President Barack Obama's 2014 budget proposal, which could reduce federal spending by $400 billion over 10 years through changes to Medicare and other healthcare programs; reform the sustainable growth rate (SGR), although a replacement model is not detailed; and reduce funding for graduate medical education (GME), which groups say would threaten the future supply of PCPs in the healthcare system.

The American Academy of Family Physicians (AAFP) says it was pleased with the budget's commitment to reforms to improve patient health and quality of care as well as address health service costs. Specifically, the AAFP applauds the proposed increase on federal taxes on tobacco and provisions that would improve access for low-income families through Medicaid expansion, support of the Patient-Centered Medical Home (PCMH) model, and assistance to the elderly and disabled through Medicare physician payment reform.

"The AAFP has called for repealing the SGR, instituting a period of stable Medicare payments, with higher payment rates for primary care, while pilot projects demonstrate the quality and cost savings in the PCMH, and a transition to payment that rewards quality of care, not quantity of services," says Glen Stream, MD, MBI, FAAP, chairman of the AAFP board and former AAFP president. "These proposals have been made in the past, and Congress has not yet passed legislation to implement them. We look forward to working with Congress to ensure that meaningful physician payment reform is achieved."

Stream adds, however, that the organization is "troubled" that the proposed budget would cut funding for GME for teaching hospitals.

"Such broad and untargeted cuts would jeopardize family medicine residency programs at a time when they require critical investment to sustain the growing interest in training [PCPs]," he says. "The evidence shows that improving quality and reining in costs depend on a strong primary care foundation. We have just begun to see a turn-around in the number of students looking for family medicine residency training, but without adequate support for training these physicians, that turn-around could quickly fade."

Stream says that, historically, academic medical centers close primary care residency programs and add subspecialty training programs when faced with limited training funding.

“Between 2000 and 2013, the American medical education system closed 71 family medicine programs. The trend reversed last year, when no family medicine programs closed and seven new family medicine residency programs were accredited," he says. "A blanket cut to GME could reverse that progress. If GME funding must be reduced, we call on Congress to preserve explicit support for primary care residency programs to make sure we continue to reverse the downward spiral.”

The American Medical Association (AMA) expresses similar reactions to the proposed budget.

“We are pleased that President Obama’s 2014 budget recognizes the need to eliminate the broken Medicare physician payment formula known as the SGR and move toward new ways of delivering and paying for care that reward quality and reduce costs,” says Jeremy Lazarus, MD, president of the AMA. "The president’s proposals align with many of the principles developed by the AMA and 110 other physician organizations on transitioning Medicare to include an array of accountable payment models. It is critical for physicians to have a period of stability and the flexibility to choose options that will help them lower costs and improve the quality of care for their patients. We are encouraged that the president and members of Congress are focused this year on eliminating this failed formula and strengthening Medicare for patients now and in the future.”

But Lazarus says the GME cuts also concern the AMA.

“In 2013, 528 U.S. medical school seniors failed to match to a residency program," he adds. "As the nation deals with a physician shortage, it is important that all medical students can complete their training and care for patients.”

Vast implications

The health implications in the new budget proposal would be vast, considering the U.S. Department of Health and Human Services (HHS) commands $80.1 billion in discretionary funding to HHS-a $3.9 billion increase above the 2012 level that remained in effect throughout 2013. In terms of savings, more than $300 billion would come related to provider payments and $50 billion from seniors would be expected, with a total of $400 billion in healthcare-related savings touted throughout the budget proposal.

The savings from providers, however, come from more than $80 billion in lower payments to post-acute care providers, $25 billion in reduced bad debt payments, and an $11 billion cut to GME programs.

Other potential effects:

Primary care workforce. The budget proposal includes funding for more than 8,000 healthcare professionals in underserved areas and resources to help train another 2,800 PCPs over the next 5 years.

Electronic health records (EHRs). Obama’s proposal also calls for a greater investment in EHRs, with $26 million earmarked for the Office of the National Coordinator for Health Information Technology to offer support to advance EHR technology and spur additional adoptions.

Medicare fraud prevention. The budget proposal also seeks to continue efforts to reduce Medicare fee-for-service payment fraud and waste, and to strengthen program stability. The budget proposes $640 million in integrity funding to reduce payment errors, prevent fraud and abuse, and enhance enforcement efforts.

Direct healthcare programs. The budget proposal includes cuts to direct healthcare programs such as immunizations, because they will be covered through new programs offered under the Affordable Care Act (ACA).

Family planning. Another primary care initiative included in the proposal is the inclusion of $327 million for family planning services-up $33 million from the 2012 level-to expand access to primary care and reproductive health services for low-income women in underserved areas.

Health centers. The budget proposal also includes $3.8 billion to support health centers that will service 22 million patients in 2014 alone.

Medicare. Senior citizens would face almost $3 billion in higher Medicare premiums under the budget. The proposal calls for premium increases in Medicare Part B (outpatient medical service) and Part D (outpatient prescription drugs) for senior citizens with higher incomes.

The budget also mandates drug rebates for low-income senior citizens on Medicare, which would save a reported $123 billion, despite opposition from the pharmaceutical industry.

The budget also proposes to close the Medicare prescription "doughnut hole" by 2015-5 years ahead of a target data established in the ACA.

Hospital reimbursements. Hospital reimbursements would drop, because of the thinking that fewer uninsured patients under the ACA will mean fewer emergency department visits.

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