President Releases Proposed 2013 Federal Budget

On February 13, 2012, President Obama released his administration’s federal budget proposal for Fiscal Year 2012–2013. Of interest to those involved in school health care is an overall increase in Medicaid spending, with funds directed toward increasing coordination of care and provider oversight. The President also reported that his administration will not support transforming Medicaid into state block grants. Additionally, the proposed budget cuts Department of Education funding for the National Assessment of Educational Progress and the National Institute on Disability and Rehabilitation Research.


President Obama’s proposed 2013 federal budget calls for ongoing changes to Medicaid as part of the implementation of the Affordable Care Act (ACA) of 2010, commonly known as health care reform. The ACA’s goals, which are supported by the proposed budget, include improved efficiency in operations and coordinated delivery of health care services as well as increased oversight of providers. The goals do not include changing Medicaid into state block grants. Proposed budget line items for the Department of Health and Human Services (HHS) include:

  1. an increase of $1 billion for Centers for Medicare and Medicaid (CMS) discretionary funding, from an estimated $3.7 billion in 2012 to $4.8 billion in 2013 (Funding in 2011 was $3.5 billion.)
  2. no change in $311 million in funding to detect fraud and abuse
  3. a total increase of $28 billion in mandatory and proposed Medicaid and CHIP funding, from $265.3 billion estimated for 2012 to $293.1 billion for 2013 (When measured from 2011, however, the increase for 2013 falls to $10 billion. Spending in 2011 was $283.6 billion.)


In general, the proposed HHS budget strives to save $364 billion by funding health care reforms that promote efficient care and improve the integrity of the programs. Proposed expenditures to help reach these goals include $610 million for reducing payment error rates and for more effectively monitoring providers, records, and high-cost services and supplies. The proposed budget also asserts Medicaid’s status as payer of last resort, affirming that third-party insurers and health plans will be held responsible for primary payment for services delivered to their beneficiaries.

Additional components of the proposed budget that are intended to make Medicaid’s operations more efficient include

  1. requiring states to monitor billing patterns, reject all claims for which a third-party insurer is legally liable, and consolidate auditing programs for clearer reporting on Medicaid payments and outcomes
  2. blending the matching rate in each state for Medicaid and CHIP, a process that would appear to have no impact on school-based Medicaid programs in states such as California, where there is no enhanced federal matching rate. This process would begin in 2017.
  3. restricting payments to a state for durable medical equipment (DME) to Medicaid beneficiaries. These Medicaid payments may not exceed the state’s DME payments for Medicare beneficiaries.


Also of interest to school health professionals are the 2013 proposed budget’s cuts of funding to the Department of Education for the National Assessment of Educational Progress and the National Institute on Disability and Rehabilitation Research.

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Updates on the 2013 federal budget as it develops, including: summaries, charts, and additional research resources on the NY Times website…