The Congressional Budget Office has released a document detailing numerous “budget options”--scenarios and cost reductions for cutting various federal programs over the next five years--that lawmakers will be considering. CQ Healthbeat News examines several of the proposed options for cutting Medicare. One option sure to get attention by Democrats is that by making payments to Medicare Advantage plans equal to reimbursements received by fee-for-service providers, Medicare can realize a savings of $64.8 billion from 2008 to 2012. The drawback is that equalizing reimbursement might lead some Medicare Advantage plans to offer fewer benefits, raise premiums, or drop out of the program, according to the CBO. Another option is to reduce by 1 percentage point the increases hospitals will receive in FY08 for inpatient care, thereby saving $17.8 billion over five years. Freezing reimbursement to home health agencies at 2007 levels would lower Medicare spending by $8.5 billion, while charging copays for home health visits--a strategy that has been proposed several times before--would save $12.9 billion over five years.
The CBO also outlines the savings potential of using a block grant to pay disproportionate share hospitals (savings of $11.2 billion), and reducing the adjustment for indirect medical education costs to teaching hospitals from 5.35% to 2.2% (savings of $21.6 billion). And if Medicare beneficiaries rather than providers are the target of Medicare cuts, increasing seniors’ share of Medicare Part B from 25% to 30% would save $42.2 billion over five years; creating a combined deductible for Medicare Part A and Part B would save $11.6 billion over the same period. Download the document.
