CMS Actuary Foresees Medicare Savings From Health Care Reform Law

Provisions in the federal health reform law that curb excessive payments to some private insurers and implement new anti-fraud policies will help save Medicare more than $200 billion through 2016, according to a report released Monday by CMS' Office of the Actuary, Modern Healthcare reports (Zigmond, Modern Healthcare, 4/23).

The bulk of the savings -- about $150 billion -- is expected to come from payment policy changes that would lower reimbursements to health care providers and private insurers, The Hill's "Healthwatch" reports.

The overhaul also is expected to produce about $59.4 billion in savings through 2016 for seniors through reduced cost-sharing and premium. The report also suggests that the overhaul could produce substantial long-term savings, in part by transforming the health care system into one that focuses on quality of care, rather than quantity (Baker, "Healthwatch," The Hill, 4/23).

Savings Estimates in the Report

The report predicts savings through 2016 of:

• About $7.8 billion, by launching antifraud initiatives;
• About $41 billion through 2016, through expanded benefits, reduced payments for hospital-acquired conditions, reduced readmissions and lower premium subsidies (Bristol, CQ HealthBeat, 4/23);
• About $68 billion, by reducing excessive payments to MA plans; and
• About $85 billion, by changing provider payments to boost productivity (Modern Healthcare, 4/23).

In addition, the report outlines savings of about $10 billion through 2013, from efforts to improve patient safety. Additional savings would be generated as the health reform law gradually closes the Medicare prescription drug "doughnut hole" and expands access to certain preventive services without co-pays, the report says (CQ HealthBeat, 4/23).