President’s Budget Proposal Released; Includes SGR Repeal and Replacement, Site-Neutral Payment, Modifications to Accountable Care Organizations (ACOs), Lowers Spending Level Increase to Trigger Independent Payment Advisory Board (IPAB), Lowers Reimbursem 
This week, President Barack Obama released his budget proposal  for Fiscal Year (FY) 2016. While the budget proposal includes $1.092 trillion in funding overall for the Department of Health and Human Services (HHS)—an increase of about $50 billion over the enacted 2015 funding level—it proposes policies aimed at saving $423 billion in healthcare costs over the next 10 years. The President’s annual budget proposal is intended to communicate the Administration’s priorities for the year ahead, but does not set the actual budget. Congress sets the budget and allocates funding. Given that Republicans control both the House and Senate, it is unlikely that the final FY 2016 appropriations will be the same as the President’s proposal.
Specifically, the President’s proposed budget recommends repealing the flawed SGR formula and replacing it with the bipartisan, bicameral repeal and replacement proposal developed last year and supported by ASCRS•ASOA and the entire medical community.
In addition, the President’s budget includes a proposal to implement site-neutral payment by reimbursing for procedures performed in the Hospital Outpatient Prospective Payment Schedule (OPPS) at the lower Medicare Physician Fee Schedule (MPFS) or Ambulatory Surgery Center (ASC) payment rates. This proposal is to be phased in over four years beginning in calendar year 2017 and is estimated to save $25.5 billion.
The budget also seeks to increase the number of beneficiaries covered under ACOs in the Medicare Shared Savings Program (MSSP) by eliminating cost-sharing for primary care visits for beneficiaries without supplemental insurance who are covered under an ACO; allowing CMS to assign beneficiaries to MSSP ACOs in rural areas and to qualified health centers; and includes nurse practitioners, physician assistants, and clinical nurse specialists as providers in ACOs. This proposal is estimated to save $80 million over 10 years.
The budget seeks to strengthen IPAB—an unelected board tasked with cutting Medicare if costs rise above a certain level opposed by ASCRS•ASOA—by lowering the target, triggering board action in 2018 and in years after from the current threshold of gross domestic product (GDP) per capita growth plus 1 percentage point to GDP per capita growth plus 0.5 percentage points. IPAB was scheduled to take effect in 2015, but so far, Medicare expenditures have not grown at a fast enough pace to trigger action and in fact have declined. There is bipartisan support in Congress to repeal the IPAB. ASCRS•ASOA supports S. 141 to repeal IPAB. Similar legislation is expected to be introduced in the House shortly.
In an effort to decrease “excessive payments” for Part B drugs administered in-office, the budget proposes to reimburse providers at 103% of the sales price of the drug, instead of the current 106% rate. This would garner $7.4 billion in savings over 10 years.
Finally, the budget reiterates the goals of HHS’ announcement last week to increase the percentage of Medicare provider payment tied to quality and value-based purchasing. See last week’s Washington Watch Weekly  for full details.
We will keep you updated.