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HHS Releases 2014 Budget

April 10, 2013
by John DeGaspari
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Supports ACA implementation, EHRs, mental health services; cuts community service grants

The Department of Health and Human Services today released its 2014 budget, providing $80.1 billion in discretionary funding, $3.9 billion above the 2012 enacted level. HHS said the budget continues to invest in Affordable Care Act implementation, medical research, mental health services, and Head Start, yet savings are achieved through trade-offs such as the elimination of the Preventive Health and Health Services Block Grant, and reductions in the Low Income Home Energy Assistance Program and the Community Services Block Grant.

In prepared remarks, HHS Secretary Kathleen Sebelius said, “The budget we’re announcing today will enable us to carry out that mission effectively in 2014 and beyond.  It supports the goals of the President’s budget by making critical investments to strengthen the middle class, create jobs, and grow the economy.  It ensures that the American people will continue to benefit from the Affordable Care Act.”

She also noted that the budget contributes to the President’s balanced plan to significantly reduce the deficit in the long term, and starts with making sure programs like Medicare are put on a stable fiscal trajectory. She noted that thanks partly to reforms in the Affordable Care Act, including anti-fraud measures and new incentives for doctors to eliminate duplication and waste, Medicare spending per beneficiary grew at a historically low rate of 0.4 percent in 2012. “This slowdown reflects, in part, the successful implementation of the Affordable Care Act's $800 billion in savings provisions that strengthen the Medicare program,” she said.

Sebelius noted that the President's 2014 budget would achieve even more savings by allowing Medicare-Medicaid enrollees to get their prescription drugs at the lower Medicaid rates, resulting in savings of more than $120 billion over the next 10 years.  “In total, the budget would build on the Affordable Care Act by generating an additional $371 billion in Medicare savings over the next decade, reducing the deficit and putting Medicare on sounder financial footing,” she said.

She added that the budget also commits to reducing waste and fraud. “We’re proposing an increase in mandatory funding for our Health Care Fraud and Abuse Control program—an initiative that last year saved the taxpayers nearly eight dollars for every dollar spent on it.  And we’re investing in additional efforts, including reducing improper Medicare, Medicaid, and CHIP payments, and expanding the reach of our Office of Inspector General,” she said.

Among the budget proposals are investments in Electronic Health Records (EHRs). According to the CDC’s National Center for Health Statistics, the percentage of office-based physicians that use an EHR increased from 48 percent in 2009 to 72 percent in 2012. With EHR adoption rising, it is increasingly important that health information technology (IT) investments aim to advance EHR standards, program integrity, and technology to support interoperable exchange of health data, according to HHS. The Budget provides $26 million for the Office of the National Coordinator for Health IT to support work to advance EHR technology and standards.

In addition, the budget contains proposals that build on initiatives included in the Affordable Care Act to help extend Medicare’s solvency while encouraging provider efficiencies and improved patient care. Specifically, the Budget modifies payments to certain providers to address payments that exceed patient care costs. It also continues to crack down on fraud and incentivizes skilled nursing homes to prevent hospital readmissions.

The budget continues funding for health centers, investing $3.8 billion for health center services in 2014 to support services to an estimated 22 million patients. The Affordable Care Act provides the Health Center program with a total of $9.5 billion through 2015.

In addition, HHS said its budget supports permanent, fiscally responsible reform to Medicare’s payments to physicians. It said the Administration is committed to working with the Congress to reform Medicare physician payments to provide predictable payments that incentivize quality and efficiency in a fiscally responsible way. Noting that failing to address this issue creates uncertainty about beneficiaries’ access to care, the Administration supports a period of payment stability lasting several years to allow time for the continued development of scalable accountable payment models. Such models can take different forms, but all will have several common attributes such as encouraging care coordination, rewarding practitioners who provide high-quality, efficient care, and holding practitioners accountable through the application of financial risk for consistently providing low quality care at excessive costs.

Other highlights of the budget include:

  • Support for implementation of the Affordable Care Act’s health insurance coverage improvements through the operation, with states, of Health Insurance Marketplaces (also known as Affordable Insurance Exchanges) and the delivery of premium tax credits and cost sharing assistance to make coverage affordable.
  • Strengthening of Medicare, Medicaid, and other health programs by implementing payment innovations and other reforms that encourage high-quality and efficient care, improve program integrity, and preserve the fundamental compact with seniors, individuals with disabilities, and low-income Americans these programs represent. HHS said these improvements will save approximately $400 billion over the next decade.
  • Support for innovative medical research by providing $31 billion for the National Institutes of Health, including fulfilling the Administration’s commitment to enhancing Alzheimer’s research.
  • Investment of $1.6 billion in increased discretionary funding for Early Head Start and Child Care and additional funds to expand evidence-based, voluntary home visiting.
  • Expansion of mental health services for youth and families with a $130 million initiative to help teachers and other adults recognize signs of mental illness in young people, and training of 5,000 more mental health professionals with a focus on serving students and young adults.


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