President Bush's Fiscal Year (FY) 2009 Budget was released with significant cuts in Medicare. With a proposed Medicare budget of $413 billion, the FY 2009 budget sets forth legislative and administrative proposals to reduce spending by $12.8 billion in FY 2009 and totaling $182.7 billion in savings from 2009-2013. According to the White House, these cuts will reduce the 75-year unfunded obligation in Medicare by nearly one-third and put America on track to balance the federal budget by 2012.

Key reductions in the proposed budget are:

• Zero percent market basket/CPI update for 2009 through 2011 for hospitals, skilled nursing facilities, hospices, and ambulance services, followed by a full update less 0.65 percent annually thereafter.
• Zero percent market basket/CPI for inpatient rehabilitation facilities and ambulatory surgical centers in 2010 and 2011, followed by a full update less 0.65 percent annually thereafter
• Zero percent market basket update for home health agencies in 2009 through 2013, followed by a full market basket update less 0.65 percent annually thereafter.

In addition, all update factor reductions will be extended annually, beyond the five-year budget outlook of 2013.

The budget proposal can be viewed at http://www.hhs.gov/budget/09budget/2009BudgetInBrief.pdf.