Debt deal triggers nerves in health industry; Medicare providers brace for cuts

Physicians, hospitals, nursing homes and home health care providers are all bracing for pain as the debt-ceiling agreement kicks in.

Politico: Medicare Providers Face Cuts
Physicians, home health practitioners and other providers could see an additional 2 percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the debt ceiling deal reached by the White House and congressional leaders late Sunday. There's also more general concern about a new congressional panel to be created by the deal that would have broad authority to cut federal spending on Medicare, Medicaid and even some parts of President Barack Obama's health care law, according to health care lobbyists and budget officials (Dobias, 8/1).

The Associated Press/Washington Post: Advocates For Seniors And Health Care Industry Fear Big Cuts Could Flow From Debt Deal
When it comes to Medicare and Medicaid, the debt deal raises more questions than it answers. The giant health care programs serving some 100 million elderly, low-income and disabled Americans were spared from the first round of cuts in the agreement between President Barack Obama and congressional leaders. But everything's on the chopping block for a powerful new congressional committee that will be created under the deal to scour the budget for savings (8/2).

The Wall Street Journal: Health Care Companies Are Infected By Severe Case Of Washington Jitters
A wide swath of nursing-home companies and other health-care providers are getting rattled by the political drama in Washington. On Monday, Medicare's plan to cut nearly $4 billion dollars in spending to nursing-home operators — an attempt to correct flaws in the agency's reimbursement rates — spooked a health care industry already on edge from the increased scrutiny of government spending. The growing push to rein in health care costs, as indicated by the debt debate, weighed on the entire health care sector, especially those companies that would feel the bite of Medicare cutbacks most directly, such as hospitals. Affected groups warned of poorer medical care for the nation's seniors as a result of any cuts. But the biggest losers Monday were the operators of nursing homes (Korn and Kamp, 8/2).

MarketWatch: Medicare Cuts Hammer The Hospital Sector
The Centers for Medicare and Medicaid Services said Friday that it planned to reduce payments to skilled-nursing facilities by 11.1 percent for fiscal 2012, cutting $3.87 billion out of the spending plan. CMS said in a note Friday that the rates "correct for an unintended spike in payment levels and better align Medicare payments with costs." The move took the market by surprise. "While the 11 percent reduction was an option as part of the initial proposal, we are still surprised CMS is implementing this magnitude of cut, and without a phase-in," Credit Suisse analyst Ralph Giacobbe said in a note to clients (Britt, 8/1).

Politico Pro: Deal 'Trigger' Could Endanger Part Of the ACA
Health reform advocates are worried that the debt deal struck by the White House and congressional leaders Sunday night opens up a path to weaken the Democrats' health law. The deal to raise the debt ceiling would task a 12-member bipartisan committee to come up with $1.5 trillion in deficit reduction and would require across-the-board cuts starting in 2013 if those efforts fail. Although Medicare providers could face as much as a 2 percent reduction in payments, Social Security and Medicaid are specifically exempted from the cuts (Millman, 8/1).

Bloomberg: WellPoint, HCA Drop On Concern Debt Agreement May Lead To Cuts In Medicare
WellPoint Inc., the largest insurer by enrollment, HCA Holdings Inc., the biggest hospital chain, and Kindred Healthcare Inc., the top nursing home operator, dropped in trading after President Barack Obama announced a debt-reduction deal that may lead to Medicare cuts. Under the plan, Medicare may face across-the-board reductions when a bipartisan congressional committee meets to trim $1.5 trillion from the deficit by Thanksgiving. If deadlocked, the committee must divide the cuts evenly among defense and domestic programs. The reduction in Medicare, the U.S. health plan for the elderly and disabled, would be aimed at provider payments, not benefits (Wechsler and Armstrong, 8/1).

Reuters: Skilled Nursing Stocks In Sick Bay On Big Medicare Cuts
Shares of skilled nursing facilities plunged on Monday, after the U.S. government announced final reimbursement rate cuts that confirmed the market's worst fears, with little reprieve in sight. On Friday, the Centers for Medicare & Medicaid Services (CMS) cut 2012 payments for skilled nursing facilities by 11.1 percent, or $3.87 billion. … The U.S. government has been under pressure to cut Medicare costs — expected to nearly double in 10 years to $1.02 trillion — as it grapples with mounting federal debt. Analysts expect the industry to lobby the Congress to mitigate the loss but expect little to come out of that (Jain, 8/1).

Modern Healthcare: Deficit-Cutting Proposal Spurs Concern
Hospital advocates are concerned that the deficit-reduction proposal contained within the $2.1 trillion debt-ceiling deal that Congress will vote on imminently will target such providers for a large amount of the required savings, but they stopped short of calling for its defeat. ... The second stage of the debt deal, which directs a 12-member congressional committee to specify $1.5 trillion in cuts by Nov. 23, has caused the greatest provider concerns. Their worry stems from the plan for a "trigger" of $1.2 trillion in 10-year cuts if the committee and Congress fail to meet the initial $1.5 trillion savings goal. Those trigger cuts, according to the White House, would include up to a 2 percent cut in Medicare provider payments (Daly and Evans, 8/1).

NPR: Still To Come: The Fight Over Medicare Cuts And Tax Hikes
The rapidly rising cost of health care is expected to be a key driver of rising government spending over the next decade. (This isn't simply due to the aging of the population; health spending is growing much faster than the economy, even after adjusting for age.) CBO Medicare accounts for both the biggest share of federal health spending. It's also a very popular program, and one that's politically very difficult to cut (Goldstein, 8/1).

CQ HealthBeat: Debt Deal's Shield Against Medicare, Medicaid Cuts
The impact of the debt ceiling legislation on Medicare, Medicaid, and the health care overhaul law may not be as great as some analysts initially feared — but all three could still take significant hits in the coming years. Even House Democrats suspicious of the agreement expressed relief Monday that the White House negotiated provisions that would exempt Medicaid and limit Medicare cuts in the event a new trigger mechanism requires across-the-board spending cuts (Reichard, 8/1).

Kaiser Health News: Health On The Hill: Medicaid Untouched, Medicare Spared - For Now—In Debt Deal
Kaiser Health News' Mary Agnes Carey talks with Jackie Judd about the lack of Medicare and Medicaid cuts in the initial round of cuts tied to the debt ceiling increase, and about what sort of cuts the programs could be open to later in the year (8/1).