Thursday, March 26, 2009

Budget resolutions are good news for primary care, maybe health reform, but now comes the hard part

Late last night, the House Committee on Budget approved a budget resolution that provides direction to the authorizing and appropriations committees on how much they can spend in the fiscal year 2010. The resolution, which still needs to be voted on by the entire House of Representatives, creates a "budget neutral" reserve fund for health care reform, and another "current policy" reserve fund for physician payment reform, including reforms to ensure appropriate reimbursement for primary care. As I write this, the Senate Budget Committee is meeting to consider its version of the budget resolution.

First, let me give you a brief tutorial on budget resolutions. (Bear with me, a basic understanding of the arcane congressional budget process will help you understand why the resolutions matter so much.)

A budget resolution provides direction to all of the authorizing and appropriations committees on how much they are allowed to spend on programs under their jurisdiction. The resolutions leave the specific polices to the committees. For instance, a budget resolution doesn't tell the Medicare authorizing committees how to change Medicare payment rules to stay within the spending constraints set by the resolution, as long as the end result stays within the specified funding levels.

Once the Senate Committee on Budget completes action today on its resolution, both the House and Senate will have to schedule votes on their respective versions. Unlike most Senate legislation, the budget resolution can be adopted by a simple majority vote. Differences between the House and Senate versions will then be worked out in a conference of the two chambers, followed by a vote in both chambers on the joint resolution. Later in the process, the decisions made by each committee need to be "reconciled" with the funding amounts and authority specified in the resolution, a process called budget reconciliation.

Typically included within a budget resolution are funding devices called reserve funds. Reserve funds allow the committees of jurisdiction to spend more than the initial amount given to them by the resolution, but only for specific prescribed policy reasons.

There are at least two kinds of reserve funds. One type is a budget neutral reserve fund, which allows the authorizing committees to spend more than their initial allocation, but they have to offset the additional spending, dollar for dollar, with tax/revenue increases or budget cuts elsewhere on programs under their jurisdiction.

The other type is a policy reserve fund, which permits the committees to spend more than their allocated amount, with no budget offsets required, but only for policy purposes specified by the resolution.

The House resolution approved yesterday by its budget committee, and the pending Senate budget resolution, both create a budget neutral reserve fund for health care reform. This means that Congress won't be able to duck the need to find savings (likely including "provider" pay cuts and measures to make health care more efficient) and/or raise taxes to pay for health care reform. Congress, of course, will try to pay for some of this with popular reforms like paying for prevention and wellness but the Congressional Budget Office isn't likely to count these as saving much money.

The House budget resolution also creates a separate current policy reserve fund to "change incentives to encourage efficiency and higher quality care in a way that supports financial sustainability, improve payment accuracy to encourage efficient use of resource and ensure that primary care receives appropriate compensation, improve coordination of care, or hold providers accountable for their utilization patterns and quality of care." (Emphasis added.)

The pending Senate budget resolution includes a budget neutral reserve fund for Medicare improvements to "encourage physicians to train in primary care residencies and ensure an adequate supply of residents and physicians" among other purposes.

The fact that both the Senate and House versions include reserve funds to help primary care is good news indeed, although the House's approach is better because it would not require that the cost be offset by cuts somewhere else. The caveat, though, is that even in the House version, the funding allowed by the reserve fund isn't likely to be enough to increase pay for primary care and reverse pending doctor payment cuts from Medicare's sustainable growth rate (SGR) formula over the long haul. Congress may still need to find savings somewhere else to fix the SGR and also create incentives for primary care.

The bottom line is that the budget resolutions lay the groundwork for Congress to enact legislation to enact comprehensive health care reform, prevent doctor pay cuts, and raise payments for primary care doctors. Now comes the hard part: charting a political strategy to find the money to pay for all of this without losing the support of key stakeholders, and ultimately, the public.

Today's question: If health care reform and adequate pay for primary care has to be funded in a budget neutral manner, what do you think physicians should be willing to give up to pay for these reforms? What would you be willing to give up?

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