President Obama released a new deficit reduction plan on September 19 that includes $248 billion in Medicare reductions and $73 billion in Medicaid reductions, as compared with current law, over a ten year period. These proposals are part of the President’s submittal to the Joint Select Committee on Deficit Reduction under the Budget Control Act signed into law last month. Major proposals under Medicare include requiring rebate payments from drug manufacturers comparable to those under current Medicaid law ($135 billion in Medicare savings over a ten year period) and reductions in Medicare payments to skilled nursing facilities, long term care hospitals, inpatient rehabilitation facilities, and home health agencies ($42 billion). Other Medicare proposals include reductions in Medicare coverage of providers’ bad debts, reductions in Medicare payments for indirect medical education (IME) costs, reductions in enhanced payments to rural facilities such as critical access hospitals (CAHs), and increases in Medicare Part B and Part D premiums for higher income Medicare beneficiaries. Major proposals for savings under Medicaid include reductions in the thresholds for provider tax payments ($26.3 billion), adjustments in federal matching rates under Medicaid and the Children’s Health Insurance Program ($14.9 billion), and an adjustment to the definition of modified adjusted gross income (MAGI) to include Social Security benefits in Medicaid eligibility determinations ($14.6 billion). Other Medicaid proposals include reductions in payment limits for durable medical equipment (DME), rebasing annual state limits on disproportionate share hospital (DSH) payment adjustments, and more stringent requirements on coordination of benefits for Medicaid recipients with third party liability (TPL) coverage.