Budget Control Act: Increased Funding for Fraud and Abuse Investigations and Limits on Medicare Cuts

The Budget Control Act of 2011 (BCA) (P.L. 112 – 25) authorized increased spending for Medicare fraud and abuse investigation and placed limits on the amount of reductions in Medicare spending.  So even though it was widely reported that the BCA authorized a little over $900 billion in cuts immediately and another $1.2 trillion in automatic cuts, spread equally among defense spending and Medicare later in the year, limits were placed on the amount of additional Medicare cuts.

Fraud and abuse spending increase and limits on Medicare cuts

 Cuts to Medicare are limited to no more that 2 percent, according to the Congressional Budget Office (CBO).  This 2 percent reduction in Medicare spending could be increased however, but to do so would require decreases in spending in every other area of the budget to equal the amount of increased reduction in Medicare spending.

An additional $3 billion in funding is authorized by the BCA over ten years for increased in Medicare fraud and abuse investigations.  The additional spending authority on a per year basis would range from an additional $270 million in fiscal year 2012 to an additional $496 million in fiscal year 2021.  Based on these increases in funding, CBO estimates that the amount recovered by the increase in Medicare fraud and abuse investigation to be about $3.7 billion over the 2012-2021 period.

Lack of particular cuts

 The BCA does not require any particular cuts.  There is no language that says so much has to be cut from this program or that program.  What the BCA does is impose global caps on appropriations of new discretionary budget authority that start at $1,043 billion in 2012 and reach $1,234 billion in 2021. It is left to Congress through its normal appropriation process to divvy up that amount among the various federal agencies and programs.

The caps would not apply to spending for the wars in Afghanistan and Iraqand for similar activities (sometimes referred to as overseas contingency operations). In addition, the legislation provides for adjustments to the caps in each fiscal year to account for funding designated for emergency requirements and disaster relief. The cap adjustments for disaster relief would be limited to amounts based on historical averages for such funding.