Obama's deficit reduction plan would pump up payment board, reduce Medicare and Medicaid spending

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President Obama's proposed $3 trillion new deficit-reduction plan would reduce Medicare spending by $248 billion and Medicaid spending by $72 billion over 10 years.

Administration officials say that most of the savings would be achieved by reducing Medicare overpayments to doctors and other healthcare providers. Obama's plan, released Monday, would strengthen the Affordable Care Act's controversial Independent Payment Advisory Board, the Medicare cost-containment panel, partially by letting it kick in sooner, The Hill reported.

The president's proposal offers states a “blended” payment rate for Medicaid. Currently, the government pays states separate matching rates for Medicaid and the Children's Health Insurance Program. Under the proposed payment system, the government would consolidate these into a “blended” rate.

To give states more flexibility with Medicaid, Obama's plan would allow “innovation waivers,” which would let states decide the best way to use Medicaid funds, as long as they keep the same eligibility requirements in place.

Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care, argues that this approach makes the Medicaid side of the skilled nursing facility funding equation even worse.

“This completely reinforces the need to examine the SNF funding situation holistically, not on a program-by-program basis — and we are obliged to point out this key fact,” said Rosenbloom in a statement.

“More cuts on top of the many already in effect would not only undermine quality improvement programs already benefiting seniors, but further destabilize local facilities already reeling from a series of budgetary and regulatory actions,” he added.

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