What President Obama’s FY15 Budget Proposal Means for Medicare Providers

By Patrick Creagh, Marketing Specialist moneyvortex250

This past Tuesday, President Obama released his proposal for the 2015 federal budget, including $3.5 billion in cuts to Medicare providers.  Most notably from a patient payment perspective, the President has proposed $30.8 billion in cuts to bad debt payments over the next 10 years with $340 million of that coming in FY15.

While the budget will almost surely be adjusted in Congress, the proposal cements the President’s intent to transition Medicare “from a passive payer to an effective purchaser of high-quality, efficient care.”  Unfortunately for Medicare providers, especially ones with high volumes of beneficiaries such as rural hospitals, this could mean as much as a 40% decrease in reimbursement for bad debt following “reasonable” attempts to collect.

With the healthcare system as a whole navigating the choppy waters of “value-based” and “patient-centric” care, providers are now faced with an interesting paradox.  More newly insured patients (due to the Affordable Care Act) means more services and potential revenue for hospitals, but with reduced reimbursements from the government, it’s unclear at best how collection of the over $300 billion of out-of-pocket expenses Americans face each year will be affected.  At worst, Medicare providers could be crippled by bad debt.

A similar measure in last year’s proposal did not make the final budget.  However, given the costs of the ACA and large investments in Meaningful Use and other healthcare initiatives, Congress is facing more pressure than ever to find opportunities to cut costs.

Providers are understandably facing temptation to devote the bulk of their attention to ICD-10 transition and its effects on the payer-provider relationship, but patient financial responsibility must not be forgotten.  Just last week, both the Wall Street Journal and Fox Business reported on the frustration surrounding price transparency and confusing medical bills.  Patients, not payers, are responsible for a provider’s HCAHPS (patient experience) score, and soon an even larger percentage of government incentives will be tied to this number.  The best defense against bad debt is a good offense and that means clear communication with the patient before, during, and after services are performed.

How will your facility adapt?