White House predicts overhaul will save $8 billion for Medicare by the end of 2011

The White House says the new health law will save Medicare about $8 billion by the end of next year and $575 billion during the rest of the decade, according to a new report the Obama administration is releasing Monday, The Associated Press reports. The new analysis "provides support for the administration's position that the health care law secures and strengthens health care for seniors." The law aims to reform the payment and delivery systems in Medicare to pay for higher-quality care and also tries to use spending cuts to lower premiums by $200 annually by 2018. "Medicare spending will keep increasing, only not as fast. Under the law, spending will rise by 5.3 percent a year on average over the next decade, compared to 6.8 percent without the cuts. … The single biggest slice of the Medicare cuts is from reductions in projected payment increases to hospitals and other providers over the next 10 years. That's followed by cuts to private insurance plans that now cover about 1 out of 4 seniors. Nonpartisan government experts say those so-called Medicare Advantage plans are overpaid when compared to the cost of care in traditional Medicare" (Alonso-Zaldivar, 8/2).

Some doctors, however, are bracing for a reduction in the Medicare rates they receive, Dermatology Times/Modern Medicine reports. Unless Congress acts, dermatologists face a 6.1 percent reduction in pay for the Medicare patients they see. The dermatologists and the American Medical Association are pushing for a repeal of the "sustainable growth rate" formula used to figure out rates to pay doctors. "According to the Medicare Payment Advisory Commission (MedPAC) analysis of the [Centers for Medicare and Medicaid Services] estimate, the 2011 update of a 6.1 percent reduction, added to the cumulative impact of cuts that have been replaced with temporary increases by Congress each year since 2007, would result in a reduction in payment rates of 26.1 percent for 2011" (Gatty, 8/1).

In other Medicare news, Health News Florida reports that a company awarded 17 contracts by Medicare officials for home health equipment had to settle two fraud claims in the past eight years. "The company, Orlando-based Rotech Healthcare, paid $2 million in August 2008 to settle civil charges that it covered up Medicare over-billing in three states to avoid penalties related to an earlier fraud settlement. The previous one, which took place while the company was in bankruptcy in 2002, involved overbilling in four states, including Florida. … Florida is a major player in the competitive-bidding program, as Health News Florida has reported, because even in the pilot stage it will affect hundreds of thousands of Medicare beneficiaries and equipment suppliers in the state. … Once the kinks are worked out of the program during the pilot, competitive bidding is supposed to spread nationwide. Two years ago, the first bidding attempt had so many kinks that Congress halted it and ordered CMS back to the drawing board" (Gentry, 7/30).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.