Early Estimates Point to Medicare Savings Under House Reform Proposal

Several Medicare provisions in the House Tri-Committee health reform discussion draft would generate gross savings of more than $500 billion over a decade, according to a preliminary estimate by the Congressional Budget Office, CQ HealthBeat reports.

However, because of spending on other provisions in the draft bill, net savings would be $152 billion, CBO estimated.

The agency noted that the estimate is tentative because other provisions in the bill that would affect Medicaid and increase insurance coverage have not yet been scored.

In addition, the report did not assess the potential impact of revisions to the physician sustainable growth rate or measures to raise revenue through higher taxes, such as higher Medicare payroll taxes or income taxes.

According to the report, savings would be generated in Medicare Part A, which covers inpatient hospital services, by freezing payment updates to skilled nursing and inpatient rehabilitation facilities, as well as by combining productivity improvements into market basket updates and reducing reimbursements to hospice care and psychiatric hospitals.

Under Medicare Part B, savings would be generated through changes to the outpatient hospital fee schedule and payments for imaging services. Under both Part A and Part B, savings would come in the form of fewer hospital admissions and payment adjustments for home health care.

Payments to Medicare Advantage plans also would be reduced.