Medicare Cuts To Total $120 Billion

The Patient Protection and Affordable Care Act will save Medicare $120 billion over the next five years as a result of lower payments to insurers and hospitals.  According to the Obama administration additional steps to cut fraud and abuse are providing promising results.  Medicare Deputy Administrator Jonathan Blum said that the healthcare overhaul is working, resulting in real savings and making program more efficient.  Payment reforms are improving quality, performance and slashing costs.  When President Barak Obama signed the healthcare bill, one major goal was to cut spending on Medicare.

“Just a year after passage, we are seeing savings in Medicare begin to materialize from provisions in the Affordable Care Act,”  said Donald Berwick, M.D., administrator for the Centers for Medicare and Medicaid Services (CMS).  “This work is laying the groundwork for a larger transformation of Medicare and our healthcare delivery system, from simply paying for the volume of services provided to rewarding the quality of care delivered.  We remain committed to achieving a healthcare system that pursues better care, better health, and lower cost through improvement.”

In addition to the projected savings, Medicare is on track to improve the quality of care members receive.  CMS has implemented quality improvements and delivery system efficiencies including providing new preventive benefits, tying payment to quality standards, investing in patient safety and offering new incentives to providers who deliver high-quality, coordinated care.  “These actions will produce savings, create incentives for greater efficiency in care delivery and lay the groundwork for a long-term transformation of our healthcare system as well to make it safer and prevent injuries and unnecessary readmissions to hospitals which not only harm patients but increase overall healthcare costs,” according to a CMS analysis.

Cutting Medicare spending was a priority of the healthcare overhaul that President Barack Obama signed into law in March 2010.  The law is projected by the Congressional Budget Office to reduce deficits by $143 billion, partly through almost $500 billion in cuts and savings from the Medicare program over a 10-year period.  Blum said the savings are in line with expectations by the Obama administration.  “We’re very much consistent with where we thought we would be,” he said.

The savings come at a cost, of course.  Cuts in physician reimbursement represent a 31 percent reduction. If the cuts are adjusted for practice-cost inflation, the American Medical Association says Medicare payment rates to physicians in 2013 will total less than half of what they were in 1991.  “If we can’t fix this, the impact on physicians and physician practices is going to be devastating,” said Alan C. Woodward, M.D., Massachusetts Medical Society president.  “Many practices are barely surviving now.  Coupled with the ongoing problem of soaring professional liability costs, Medicare reimbursement is a critical issue for physician-practice viability,” Dr. Woodward said.  “Failure to solve the Medicare problem will only further endanger older patients’ access to needed healthcare services.”

Writing on the White House Blog,  Deputy Chief of Staff and healthcare czar Nancy-Ann DeParle says that “Many of these reforms were made possible by the Affordable Care Act.  The new law rewards doctors and hospitals for providing high-quality care and offers new tools to help law enforcement and the Medicare program crack down on waste, fraud and abuse.  Other steps like improving care for patients with disabilities and bringing down the cost of durable medical equipment build on initiatives undertaken at CMS that will also reduce costs.  And we recently announced the launch of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety, and affordability of health care for all Americans.  Already, more than 3,000 organizations, including 1,500 hospitals, have signed a pledge to become part of the Partnership for Patients.  This has the potential to save up to $10 billion for Medicare through 2013.”

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