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House Continuing Resolution Not Good for Medicare

February 24, 2011 at 10:39 AM

The House-passed continuing resolution to fund the federal government for the rest of fiscal year 2011 would weaken Medicare by deeply cutting administrative funding and blocking implementation of numerous Medicare improvements and efficiencies in the health reform law.

The measure would cut funding for the Centers for Medicare & Medicaid Services (CMS) to operate Medicare and other programs by 13 percent below last year’s level, a reduction of $458.1 million.  Because nearly half of the fiscal year is already over, this would effectively reduce CMS funding for the remainder of fiscal year 2011 by nearly 23 percent.

This cut could substantially weaken CMS’s ability to administer Medicare efficiently and effectively — that is, to ensure that seniors receive adequate quality care and to combat waste and fraud.  For example, CMS uses administrative funds to make sure that providers are qualified to receive payments and assure that claims are accurate before they are paid.  Moreover, if Congress were to enact this cut now and then moved to freeze CMS administrative funding at this reduced level in subsequent fiscal years, the risks to CMS’s ability to administer Medicare adequately would magnify over time.

In addition, the House exacerbated these problems by adopting multiple amendments to the continuing resolution that would bar the use of any funds to implement any aspect of the Affordable Care Act during 2011.  That would prevent CMS from moving forward on the law’s Medicare-related provisions, as we noted last week.

For example, House-passed amendments would block CMS from continuing to implement the gradual closing of the “doughnut hole” in the Medicare prescription drug benefit — the coverage gap that many seniors experience for drug costs after incurring their first $2,840 in costs during a year (which Medicare covers) but before additional coverage kicks in when their drug costs surpass $6,448.  To begin to close the doughnut hole, health reform gives seniors — in 2011 —a 50 percent discount on brand-name prescription drugs, and a 7 percent discount on generic prescription drugs, while they are in the doughnut hole.

The amendments also would prevent CMS from moving forward with Affordable Care Act initiatives that could help slow the growth of health care costs, including demonstration projects to test changes in how health care is delivered in order to find ways to lower costs while maintaining or improving health care quality.  Nor could CMS take any steps to establish the Independent Payment Advisory Board (IPAB) that is scheduled to be up and running next year and is charged with identifying and recommending ways to make Medicare more efficient and thereby achieve savings.  The amendments would interfere, as well, with CMS’ ability to institute efficiencies in the reimbursement rates paid to various health care providers and private plans, as the health reform law requires; some of these efficiencies are taking effect in 2011, while others are to take effect next year.  If these measures cannot be implemented, savings will be lost.

Finally, if proponents of this legislation succeed in blocking implementation of these cost-control measures during the current fiscal year, they almost certainly will try to continue blocking implementation in subsequent years.  If that occurs, it will add increasingly to Medicare’s costs over time — and as a result, will move up the date on which Medicare’s trust fund will become insolvent, increase the premiums that Medicare beneficiaries must pay, and increase the federal budget deficit.  This is a far cry from the fiscal responsibility that supporters of the House continuing resolution say they want to promote.


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