Washington visits part of broader coalitions of academic medical centers, public hospitals.

John Stobo

With more than $1 trillion in federal spending cuts looming, University of California Health leaders urged members of Congress and the Obama administration to protect Medicare and Medicaid funding.

UC Health Senior Vice President Dr. John Stobo and Chief Strategy Officer Santiago Muñoz recently visited Washington, D.C., as part of broader coalitions of academic medical centers and public hospitals. Their message: Significant cuts to Medicare or Medicaid would disproportionately hurt teaching hospitals such as UC Health’s five academic medical centers, decreasing patient access to complex care and worsening workforce shortages of health professionals.

The timing is critical. As part of the federal debt deal, Congress seeks to cut spending by an additional $1.2 trillion to $1.5 trillion. The 12-member bipartisan congressional “super committee” must produce its deficit-reduction proposal by Nov. 23, which could include cuts to health programs such as Medicare and Medicaid. Congress must vote on the proposal by Dec. 23, after which the president will either approve or veto it. If the congressional effort fails, $1.2 trillion in spending cuts will kick in automatically, including a 2 percent reduction in payments to Medicare providers starting in 2013.

UC Health’s concerns include potential reductions in Medicare payments for training physicians. Proposals have ranged from a cut of about 60 percent nationally ($60 billion over 10 years) to 10 percent ($9 billion over 10 years). This would hurt UC, which trains nearly half of California’s medical residents and receives about $200 million a year in Medicare graduate medical education payments.

“Our concern is the 6 percent of the 5,800 hospitals that are teaching hospitals may be disproportionally penalized,” Stobo said. “Teaching hospitals do 75 percent of all physician training, 40 percent of the charity care and 28 percent of inpatient Medicaid care. It doesn’t make any sense to cut back the support to educate physicians when we already have a shortage of physicians.”

Stobo joined a coalition of about 30 academic health centers, including Emory, Johns Hopkins and New York-Presbyterian, to make the case last week in Washington for protecting their missions.

“If you want to make cuts, make sure they are equally distributed,” Stobo said.

Santiago Muñoz

Muñoz visited Washington in mid-September with a delegation of public hospitals from California and across the nation.

“We’re not out just to protect ourselves,” Muñoz said. “We’re out to protect the programs that provide access to patients.”

UC Health is one of the largest providers of Medicare and Medicaid health care services in California, with a significant concentration of services often unavailable to patients in their local communities. Medicare and Medicaid payments account for approximately one-third of UC medical center revenue – more than $2 billion a year – providing vital support to UC’s mission to teach, research and provide care to all Californians.

UC and other California public hospitals are already focused on improving quality and efficiency through provisions in the Medicaid hospital financing waiver, Muñoz said. The agreement between the state and federal governments strengthens Medi-Cal, California’s Medicaid program, which serves 7 million Californians, including children, low-income families, the disabled and the elderly. For example, the waiver’s Delivery System Reform Incentive Program is a pay-for-performance initiative that creates incentives for public hospital systems to dramatically expand upon quality improvement projects.

“We have aggressive plans in place to improve how we are providing care,” Muñoz said.

UC Health leaders plan to keep delivering their message of protecting federal health funding. The worst-case scenario, Stobo said, is if the super committee reduces Medicare and Medicaid funding, but its total cuts are less than $1.2 trillion, triggering additional automatic cuts in payments to Medicare providers.

“It’s like ‘Rocky III’ when Clubber Lang is asked his prediction for the fight. What does he say? ‘Pain.’ This is going to be like that – enough pain for everybody,” Stobo said.

Related link:
How the debt deal could affect UC Health