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Obama's FY15 budget proposal: What's in it for long-term care?

March 5, 2014
by Pamela Tabar, Editor-in-Chief
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President Obama’s proposed $3.9 trillion budget for 2015 keeps the spotlight shining on healthcare, with particular focus on quality care incentives, bundled payment initiatives, healthcare information teachnology (HIT) programs and waste-reduction incentives.

The proposed budget, introduced yesterday, allocates $77 billion to the U.S. Department of Health and Human Services, nearly a billion less than last year.

One of the budget’s primary focuses is in strengthening Medicare through "enhancements to proposals addressing payments to skilled nursing facilities, Medicare Advantage plans, and program integrity." The budget includes new proposals to encourage value-based purchasing and quality care initiatives, as well as intentions to shore up the Medicare Part D drug programs by fast-tracking the closure of the donut hole (by 2016 instead of 2020) and by increasing the fight against prescription drug abuse.

Payment bundling plays a key role in the reform initiatives, including payment bundles for post-acute care (PAC). "We support the President’s approach to PAC-only bundles and his understanding that PAC providers are best positioned to appropriately manage patient care in PAC settings," said Mark Parkinson, president and CEO of the American Health Care Association and the National Center for Assisted Living (AHCA/NCAL), in a statement. "We support the President's proposal for payment equalization for certain conditions treated in both inpatient rehabilitation facilities and skilled nursing care centers."

To combat elder abuse, the budget includes $25 million in new funding for intitiatives under the ACA’s Elder Justice Act, which serves as a federal resource for the detection, prevention and understanding of elder neglect and abuse as well as the prosecution of discovered cases.

The budget proposal allots $1.8 billion for HIT, reaffirming last year’s emphases on electronic health records, electronic data exchange and technological advancements in care delivery.

Dementia research gets a boost, as the budget proposes $30 billion for the National Institutes of Health, which will include increased funding for the BRAIN Initiative, a multi-agency research project on neurology and brain disorders.

Home health also is brought into the mix in the president’s budget, which proposes adding a home health copayment for beneficiaries beginning in 2018. The National Association for Home Care & Hospice (NAHC) strongly opposes this move, saying it will endanger essential home care services.

"Previously enacted changes will cut Medicare spending on home health services by more than $100 billion over the next 10 years—while less than $20 billion is spent each year," said NAHC President Val J. Halamandaris in a statement. "As a result of these cuts, Medicare will pay home health agencies less than their costs, meaning that 41 percent of all Medicare home health agencies will be under water in 2014, and 60 percent by 2017."

Yet the president’s budget proposal also includes further cuts to Medicare reimbursements, agitating the waters at many skilled nursing facilities, especially for-profit ones. "The math doesn’t add up, especially when the Medicare Payment Advisory Commission (MedPAC) concluded that overall margins for the skilled nursing profession are only 1.8 percent," said AHCA/NCAL’s Parkinson.

Final approval of the federal budget for 2015 is required by the end of September.

Read the president’s 2015 proposed budget as released March 4.