President Obama released his proposed fiscal year 2010 budget outline, which includes several proposals directly affecting hospitals while creating a “reserve fund” for future health care reform proposals. The White House blueprint also calls for $316 billion in savings to the Medicare program over ten years.

Following is an outline of the provisions being proposed in President Obama’s budget:

Proposals Directly Affecting Hospitals

• Reduces Medicare payments to hospitals with high readmission rates (savings of $8.430 billion over ten years).
• Bundles payments for hospital care and post-acute care (savings of $17.840 billion over ten years).
• Creates new quality incentive payments for hospitals (savings of $12.090 billion over ten years).
• Includes $329.6 billion for future Medicare physician update payments.

Other Proposals of Interest

• Establishes competitive bidding for Medicare Advantage (savings of $176.6 billion).
• Allocates $6 billion within the National Institutes for Health to support cancer research.
• Designates $330 million to reduce the shortage of health care providers in medically underserved areas by expanding loan repayment programs for physicians, nurses, and dentists.
• Allocates $73 million to improve rural health care access and quality. 
• Builds upon the Health Information Technology and Comparative Research provisions contained in the American Recovery and Reinvestment Act.
• Proposes to ensure appropriate Medicaid payments via the use of the National Correct Coding Initiative (savings of $620 million over ten years).

The President’s budget proposal also calls for the creation of a “reserve fund” of $630 billion over ten years to be designated for health care reform proposals intended to lower costs and expand coverage. The budget summary states that half of the funding will come from “new revenue” and the other half from “savings” proposals. 

The U.S. House and Senate Budget Committees, along with the appropriate authorizing committees, will hold hearings about the administration’s budget. So far, the documents released to the public offer few details about the specifics of the proposal.

Additional information about the President’s budget is available through the Office of Management and Budget and the Department of Health and Human Services (pdf).

HAP Fact Sheet: Economic Recovery—Federal Investment in Hospitals

The Economic Crisis and Its Impact on Pennsylvania Hospitals—First Quarter Update, March 2009
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The Economic Crisis and Its Impact on Pennsylvania Hospitals
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• PA Hospitals Continuing to Adjust to Worsening Economic Crisis
  News Release
• Impact of the Economy on Pennsylvania Hospitals—Updated Findings
  HAP Memo
• President Obama’s Fiscal Year 2010 Budget Proposal
  HAP Memo
• American Recovery and Reinvestment Act of 2009
  HAP Memo
• American Recovery and Reinvestment Act (H.R. 1)
  HAP Memo
• Economic Downturn Imperils Pennsylvania Hospitals
  News Release
• Inclusion of FMAP in Economic Recovery Package
  HAP Memo
• Impact of the Economy on Hospitals
  HAP Memo