Congress approved a federal budget in early February that included the
first cuts to entitlement programs such as Medicare and Medicaid since
The delayed vote on the budget, projected to save $39 billion over five
years and $99 billion over a decade, was forced after Senate Democrats made
small changes to the bill the House passed in December before adjourning.
The measure cuts about 0.3 percent of federal spending over five years but
will only slightly dent the federal budget deficit. The cuts sparked
opposition from mental health advocates and others, who charged Republicans
with slashing necessary spending on programs that help the poor and aged to
partially offset tax cuts for the wealthy. Critics of the measure also will
point to provisions they say give breaks to the pharmaceutical and insurance
industries at the expense of Medicare and Medicaid beneficiaries
The measure cuts about $6.4 billion from Medicare and $4.8 billion from
The law includes a one-year freeze on Medicare physician payment rates at
the 2005 levels, which averted a scheduled 4.4 percent reduction and will cost
$7.3 billion annually. APA lobbied to block the planned cut and instead
provide a two-year 1 percent rate increase.
"We're delighted with the efforts of Congress to address the health
professional payment issue because we saw that as a potential access barrier
itself by creating a significant disincentive for Medicare patients,"
said Nicholas Meyers, director of APA's Department of Government Relations
The measure dropped provisions from the earlier Senate version to establish
new Medicare value-based purchasing programs, which track and reward good
clinical performance for physicians and other Medicare providers. Nonetheless,
the Centers for Medicare and Medicaid Services (CMS) will continue
implementation of its Physician Voluntary Reporting Program (PVRP), under
which physicians voluntarily send information to CMS about the quality of care
they provide to beneficiaries, which APA leaders worry may later develop into
a mandatory quality-reporting program. APA strongly opposes the CMS
The measure also dropped earlier language allowing marriage and family
therapists and mental health counselors to bill Medicare independently for
their services. The APA-led opposition to expanded coverage for these
providers argued that "scarce resources should be spent first on
addressing the discriminatory 50 percent coinsurance requirement for all
mental health services," according to Meyers.
The measure allows states to impose new copayments on Medicaid
beneficiaries with incomes above the federal poverty line and provides states
with considerable flexibility in redesigning their Medicaid programs.
Copayments could apply to both services and medications. APA opposed these
changes along with the rest of the mental health
"We are extremely cognizant of the impact of this, particularly on
the poor and disabled, and we are deeply concerned," said Meyers.
It includes controversial Medicaid "asset transfer" language
that would make it harder for seniors to qualify for Medicaid coverage of
their nursing home care if they have transferred any assets to children or
The law includes an APA-supported provision to allow low-income working
parents of disabled children to buy into Medicaid, even if their income
exceeds the federal poverty level.
The bill dropped an APA-supported provision for oversight requirements for
states that seek to use restrictive formulary policies for atypical
antipsychotic and antidepressant drugs.
The cost-sharing provisions could save about $1.9 billion over five years,
a figure that jumps to $9.7 billion when projected 10 years out, according to
Congressional Budget Office estimates.
The Medicare cuts came from a wide variety of sources, although significant
savings came from lower payments for some imaging services, spending on which
has grown faster than any other service in recent years.
Lawmakers also found $6.5 billion in savings through a Bush administration
plan to give higher Medicare payments to insurers that cover sicker patients
and lower payments to plans that enroll healthier beneficiaries.
The measure kept alive a fund included in the 2003 prescription drug law
designed to encourage preferred provider organizations to participate in
Medicare. An earlier version aimed to eliminate the fund, and save $5.4
billion over five years.
The measure also provides medical relief to hurricane victims and expands
some programs, including one for disabled children.
Congress approved a Department of Health and Human Services budget in
December 2005 that includes a 1 percent across-the-board cut, except for
veterans programs, from Fiscal 2005 levels. The measure included an additional
$30 million from the earlier version of the spending bill toward
implementation of the new Medicare prescription drug program.
The National Institutes of Health (NIH) received its smallest percentage
increase since 1970. The Center for Mental Health Services (CMHS) was cut by
"We knew that was coming, and Congress had to use that to trim the
budget and trim spending," said Lizbet Boroughs, deputy director of
APA's DGR. "However, when you are talking about cutting $220 million out
of an agency like NIH, that is significant."
Among the practical implications of such cuts is the decision of the
Substance Abuse and Mental Health Services Administration (SAMHSA) to reduce
the amount it can offer its grant recipients. For instance, instead of funding
85 percent of a grant application, the agency might be able to pay only 82
percent or 83 percent of an application.
There have been no specific agency statements about what trade-offs they
will make to meet the lower budget limit. The cut is also expected to trim the
rate at which the NIH approves new research grants from the 2005 rate of 22
percent to an expected rate of 19.5 percent. Similar impacts are expected at
SAMHSA and CMS.
Congress also moved to shore up mental health services for veterans by
designating $2.2 billion of the $22.5 billion Department of Veterans Affairs
medical services budget for mental health care.
"The language is very clear, and Congress was very emphatic, but now
it is up to advocacy groups to hold the VA accountable," Boroughs said
about the mental health funding designation.
The measure also instructs the VA to come up with a plan to establish
Posttraumatic Stress Disorder Clinical Teams at every medical center in part
because of concern that large numbers of soldiers returning from Iraq and
Afghanistan are suffering from the disorder. ▪