Medicare cuts could mean $5.3 million loss for UI Health Care

CEDAR FALLS -- Possible federal budget cuts as part of deficit-reduction plans could mean $5.3 million in cuts to University of Iowa Hospitals and Clinics and UI Physicians in 2013, UI officials told state regents Wednesday.

Congress is working on deficit-reduction efforts and has appointed a Joint Select Committee to develop and pass a package of $1.5 trillion in additional federal spending cuts over 10 years. That committee has until Dec. 2 to submit its report to the president and Congress, and Dec. 23 is the deadline for both houses to vote on the committee bill. Congress cannot change the recommendations from that committee; Congress can vote only to approve or deny the plan, UI officials said.

If the committee's plan fails to become law, a 2 percent across-the-board spending cut will automatically go into effect for 10 years, starting in January 2013.

That would result in a $4.5 million cut to UI Hospitals and Clinics and an additional $780,000 cut to UI Physicians group, a total $5.3 million reduction to UI Health Care, UI officials told the state Board of Regents during a meeting Wednesday in Cedar Falls. The cut could end up being less or more than that, depending on what is approved, UI Vice President for Medical Affairs Dr. Jean Robillard said.

"Everything we discuss is somewhat speculative. There could be no cut at all," Robillard said. "The real question is what are we doing now to prepare for something like that."

UI Health Care officials in January will start the budgeting process for Fiscal Year 2013, Robillard said. They likely will have more information about the possible federal cuts at that time, he said, which they will take into account when planning expense reductions.

"It will be part of the budget process," Robillard said.

Most of the hospitals in Iowa have 50 percent to 60 percent Medicare utilization, while at UI Hospitals and Clinics, Medicare patients are about 30 percent of the discharges, Ken Fisher, hospital chief financial officer, said.

"While these are painful cuts, it's not nearly as painful as they will be at other community hospitals around the state," Fisher said.

A separate issue related to Medicare funding -- whether the government institutes a 10-year payment freeze for primary care physicians in the program and other reductions to payments for specialists -- could mean an additional $12 million in cuts over the next 10 years, beyond the possible loss that would come from the 2 percent across-the-boards cuts, Robillard said.

More information about those possible cuts likely won't come until the spring, Robillard said.