2015-02-10 16:21:56 UTC

White House Delivers 2016 Budget Proposal to Congress

Feb. 12, 2015

President Obama's fiscal year 2016 budget proposal contains many provisions that will impact the practice and science of medicine.

President Barack Obama released his fiscal year 2016 budget proposal, which reflects total spending of $4 trillion and projected revenues of $3.53 billion. The budget exceeds previously established spending caps and results in an overall deficit of $474 billion. However, this is the lowest deficit since 2008.

Long-term spending cuts, including $400 billion in health-care savings over the next 10 years, are expected to make up for excess spending. However, the budget figures rely on a significant drawdown in funds to HHS, while also seeking to eliminate some spending requirements associated with sequestration and revamping tax measures over the next decade. Health-care savings would result primarily from changes to provider payment structures (particularly post-acute providers), along with changes to beneficiary payments and nearly $150 billion in Medicare savings from prescription drugs.

As expected, health care continues to make up a substantial portion of federal spending. HHS is slated to spend $1.09 trillion dollars in 2016, which includes a significant increase in discretionary spending totaling $84 billion. Within HHS, NIH would receive more than $31 billion (an increase of $1 billion from 2015) and CMS would receive appropriated funding of $644 billion to administer federal health-care programs and continue implementation of the Affordable Care Act. FDA is allocated $4.9 billion overall funding, which is a 9 percent increase from FY 2015.

Key health-care elements of the president’s budget include:

  • Physician payment — as proposed, the budget would repeal the Sustainable Growth Rate formula, while also making significant changes to payment structures to save $222 billion over the next decade.
  • Medicare beneficiaries — reduces Medicare subsidies for some beneficiaries with high-resource levels, amends the Part B deductible, and creates a new premium surcharge for those enrolling in Medigap coverage.
  • Precision medicine — identifies $215 million in funding to focus on new treatments, diagnostics and preventions based on individual genetic characteristics, including a new national research group, changes to electronic health records to better interface with patient-generated data, and expanded cancer and therapeutic research.
  • Veteran’s Administration Medical and Prosthetic Research — includes $622 million in funding, which represents a 6 percent increase.
  • Independent Payment Advisory Board (IPAB) — strengthens IPAB funding, which the budget expects to result in savings of nearly $21 billion over the next decade.
  • Medicare drug costs — allows HHS to negotiate prices of biologics and high-cost Medicare prescription drugs, as well as to suspend coverage for questionable Part D prescriptions.
  • Antibiotic-resistant bacteria — builds on existing efforts to combat antibiotic-resistant bacteria by providing more than $550 million in increased spending on research and implementation.

In addition, the budget addresses many issues of interest to AGA and physicians, including changes to the Stark Law by eliminating the existing in-office ancillary services exception for physical therapy, advanced imaging, radiation oncology and anatomic pathology. The president proposes changes to prohibit many “pay for delay agreements” for drugs and biologics, while also lowering the exclusivity period for biologics from 12 years to seven years. Graduate medical education (GME) is also impacted by significant cuts to indirect medical education, which are partially offset by an additional $5.25 billion in spending for a new competitive GME program that was also proposed in 2015 and is expected to create 13,000 new residencies.

Congress will begin reviewing the president’s budget, including holding hearings with the various agencies associated with his requests. Congress will then craft its own budget resolution, which will contrast with the president’s and serve as a blueprint for spending priorities as they begin the appropriations process for fiscal year 2017. Although many believe that the president’s budget is dead on arrival given that Republicans control both houses of Congress, some provisions could gain traction, such as the increases to NIH, VA research and the precision medicine initiative that is being discussed in the context of the 21st Century Cures legislation, which examines the approval process for new technologies and treatments.

AGA will follow the budget and appropriations process and advocate for sound policies that advance the science and practice of gastroenterology.

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