Health care providers wary as ‘super committee’ tackles debt

WASHINGTON–The debt-reduction deal passed by Congress this week may have eased concerns about default, but it has ratcheted up anxiety on other fronts–particularly among health care providers.

Doctors, hospitals, and others in the health care industry are deeply worried about how the agreement–in particular, a second phase of deep spending cuts to be outlined later this year–could impact their financial stability and patients’ access to care.

“There’s a huge amount of uncertainty,” said Dr. David S. Katz, president of the Connecticut State Medical Society. He said that while the scope of the pain to be inflicted on health care providers is not yet clear, they are certain to take a hit because of the way the agreement is structured.

“With the way this table is set, the only way to squeeze lemonade out of this lemon is [for Congress to create] a lower fee structure for all providers” who serve Medicaid and Medicare patients, Katz said. That will make it harder for doctors to serve those patient populations, further curbing access to needed health services.

Under the debt deal, Congress agreed to create a 12-member bipartisan, bicameral “super committee” tasked with finding at least $1.5 trillion in debt-reduction measures before Thanksgiving. The panel can look at entitlement reform and tax increases to reach that goal.

Medicare and Medicaid account for nearly one-quarter of all federal spending, and the costs of those two health care programs are on the rise. So they will be key targets in any serious debt-reduction package considered by the committee.

If the special committee fails to agree on a $1.5 trillion in savings, or if Congress can’t pass whatever the panel comes up with, then $1.2 trillion in automatic spending cuts will go into effect. And while the triggered cuts will not touch Medicaid, it will hit Medicare providers, who are slated to get a 2 percent reduction in reimbursements.

Either way–through a super committee agreement or via the automatic cuts–“there’s cause for concern,” said Patty Charvat, a spokeswoman for the Connecticut Hospital Association.

Marie Watteau, a spokeswoman for the American Hospital Association, said the automatic cuts would cost hospitals across the country $45 billion over nine years. The AHA tried to argue, in the short window before the deal was approved, that Medicare should not be subject to the triggered cuts, but to no avail.

Now, the hospital association and other health care groups are turning their attention to the special committee. Congressional leaders have about two weeks to appoint the 12 members, and whoever sits on that panel will be the target of an intense, already-launched lobbying campaign.

Interest groups will be scrambling to shape and limit whatever cuts that panel comes up with. And it’s far from clear whether a deal produced by the committee will be better, or worse, than the 2 percent triggered Medicare cuts.

“That’s the question of the day,” said Charvat. “We don’t know.”

Charvat noted that the special committee will almost certainly look at other recent debt-reduction proposals on the table, such as the one generated by President Obama’s bipartisan fiscal commission. The commission’s report recommended tackling health care spending in a myriad of ways.

For example, the commission proposed cuts to graduate medical education funding. Right now, Medicare gives teaching hospitals supplemental funding to cover costs of providing residents with their graduate medical education.

The commission’s proposed cuts would cost Connecticut hospitals $95.6 million a year, said Stephen Frayne, the hospital association’s lobbyist. He said it could hamper efforts to enlist and educate new doctors in Connecticut at a time when such access to both primary care and specialty physicians is strained.

“Obviously as the funding for these programs goes down, one has to assess again your ability to be able to continue to provide that training,” Frayne said.

The commission also called for limiting the ability of states to levy provider taxes on hospitals, such as the one Connecticut recently adopted. Those provisions are used to help cover the costs of Medicaid, a joint federal-state program. Many states currently impose a levy on hospitals, nursing homes, or other health care providers, and then they devote that funding stream to Medicaid payments that flow back to those providers.

So any change in provider taxes could affect both state budgets and hospitals’ bottom lines. “Cuts in Medicare or Medicaid at this point in time for Connecticut hospitals would be very, very worrisome,” Charvat said. “That’s makes it really challenging to meet the needs of your community, with all this volatility and uncertainly.”

Katz took a similar view. Asked whether he thoughts the triggered cuts would be better than whatever the committee comes up with, Katz said: “That’s a tough one. That’s like a choice between Scylla and Charybdis.”

He was referring to the Greek myth, in which Odysseus was forced to choose between steering his ship closer to one of two perils: Scylla, a rock shoal, or Charybdis, a whirlpool. Sailing too close to either could mean death, Odysseus picked Scylla so he would only lose a few men instead of his entire ship.

Which deal would be the health providers’ Scylla?

“If I had to make a choice like that, I’d probably go with the known entity of 2 percent, as opposed to the unknown entity of what these politicians–in parenthesis clowns–could come up with,” Katz quipped. “Because I think they could always come up with something that’s worse that 2 percent.”

No matter what, he added, this agreement has put health providers on edge. “Providers, and more importantly patients, are going to be sitting white-knuckled” as the implications of the debt deal unfold, Katz said.