A bipartisan federal commission's sweeping set of proposals to reduce the federal deficit includes 20 key proposals to cut healthcare spending, such as accelerating cuts in disproportionate share payments, immediately putting hospitals under the purview of the Independent Payment Advisory Board and replacing automatic Medicare physician fee cuts with more moderate cuts.
The draft report of the National Commission on Fiscal Responsibility and Reform, which still needs to be approved by 14 of the panel's 18 members to become official, would reduce the federal deficit by nearly $4 trillion over the next decade through cuts in all major federal programs.
If the federal government does not meet the $4 trillion target, the panel recommends further cuts, such as further strengthening the Independent Payment Advisory Board, overhauling fee-for-service payments and introducing a public option to buy health insurance.
The commission will vote on final recommendations by Dec. 1. Finding a 14-member consensus on the bipartisan commission may be difficult, considering that at least two Democrats on the panel denounced some of the recommendations and conservative groups criticized the report on a number of issues, such as allowing the healthcare reform law to stand.
Here are 20 key healthcare recommendations in the report.
1. Reduce DSH payments. The panel proposed accelerating the phase-in of the disproportionate share hospital cuts in the healthcare reform law, saving $37 billion from 2012-2020.
2. Replace automatic physician fee cut. The plan would abolish the automatic Medicare physician pay cut, replacing it with "modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality."
3. Introduce tort reform. The plan would "enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law." This also includes a proposal to "pay lawyers less."
4. Put hospitals under payment advisory board. The Independent Payment Advisory Board, created by the healthcare reform law, already has the power to implement Medicare cuts unless overruled by Congress, but hospitals are initially excluded from its purview. The proposal would further strengthen the board, including immediately putting hospitals under its purview.
5. Accelerate Medicare Advantage cuts. The plan would speed up the phase-in of cuts to private insurers who operate Medicare Advantage plans, authorized under the healthcare reform law.
6. Reduce teaching payments for hospitals. The panel would reduce graduate medical education and indirect medical education funding, saving $54 billion from 2012-2020.
7. Cut bad debt payments to hospitals. The proposal would reduce Medicare payments for bad debt, saving $15 billion from 2012-2020.
8. Expand ACOs, bundling and other programs. The plan would expand accountable care organizations, bundling demonstrations and other federal programs to increase efficiency for a savings of $38 billion from 2012-2020. If projected savings from these programs are not realized, the independent advisory board would be charged with identifying further cuts.
9. Cap federal share of Medicaid payments. The commission would convert the federal share of Medicaid payments for long-term care into a capped allotment, saving $89 billion from 2012-2020.
10. Other Medicaid changes. The plan would reduce federal payments for Medicaid administrative costs, increase nominal Medicaid copays and place dual-eligible individuals in Medicaid managed care for a total savings of $43 billion from 2012-2020.
11. Nationally regulate health plans. The commission would establish national standards for regulating and administering health insurance, saving $3 billion from 2012-2020.
12. Reduce payments for brand-name drugs. The plan would require rebates for brand-name drugs as a condition of participating in Medicare Part D.
13. Accelerate home health cuts. The proposal would speed up the phase-in of home health cuts enacted by the reform law.
14. Look for $200 billion more in savings. The commission would further "identify an additional $200 billion savings in federal health spending." It did not explain what these cuts might be.
15. Make further cuts if targets aren’t met. The plan requires the president to propose further cost cuts if healthcare costs grow more than 1 percent faster than the economy after 2020.
16. Further strengthen advisory board. If initial cuts don't work, further strengthen the Independent Payment Advisory Board.
17. Overhaul fee-for-service payments. If initial cuts don’t work, "overhaul the fee-for-service system."
18. Introduce a public option. If initial cuts don't work, introduce a public option to buy health insurance, which was rejected by Congress in the final version of the healthcare reform law.
19. Raise Medicare premiums or cost sharing. If initial cuts don't work, expand premiums or increase cost-sharing for Medicare beneficiaries. The plan would "replace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B."
20. Set global healthcare spending target. If initial cuts don’t work, set a global target for total federal health expenditures and review costs every two years.
In a statement, the AHA specifically objected to accelerating DSH cuts, putting hospitals under the advisory board, reducing GME and IME funding and cutting bad debt payments to hospitals. These actions "could jeopardize hospital services for vulnerable patients and communities, particularly given that hospitals already face $155 billion in cuts as part of health reform," the AHA said.
Read the report of the National Commission on Fiscal Responsibility and Reform (pdf).
Read further coverage of payment cuts:
- AMA, Physician Organizations Urge Congress to Halt Medicare Payment Cuts
- AHA Now Backing Repeal of Independent Payment Advisory Board
The draft report of the National Commission on Fiscal Responsibility and Reform, which still needs to be approved by 14 of the panel's 18 members to become official, would reduce the federal deficit by nearly $4 trillion over the next decade through cuts in all major federal programs.
If the federal government does not meet the $4 trillion target, the panel recommends further cuts, such as further strengthening the Independent Payment Advisory Board, overhauling fee-for-service payments and introducing a public option to buy health insurance.
The commission will vote on final recommendations by Dec. 1. Finding a 14-member consensus on the bipartisan commission may be difficult, considering that at least two Democrats on the panel denounced some of the recommendations and conservative groups criticized the report on a number of issues, such as allowing the healthcare reform law to stand.
Here are 20 key healthcare recommendations in the report.
1. Reduce DSH payments. The panel proposed accelerating the phase-in of the disproportionate share hospital cuts in the healthcare reform law, saving $37 billion from 2012-2020.
2. Replace automatic physician fee cut. The plan would abolish the automatic Medicare physician pay cut, replacing it with "modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality."
3. Introduce tort reform. The plan would "enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law." This also includes a proposal to "pay lawyers less."
4. Put hospitals under payment advisory board. The Independent Payment Advisory Board, created by the healthcare reform law, already has the power to implement Medicare cuts unless overruled by Congress, but hospitals are initially excluded from its purview. The proposal would further strengthen the board, including immediately putting hospitals under its purview.
5. Accelerate Medicare Advantage cuts. The plan would speed up the phase-in of cuts to private insurers who operate Medicare Advantage plans, authorized under the healthcare reform law.
6. Reduce teaching payments for hospitals. The panel would reduce graduate medical education and indirect medical education funding, saving $54 billion from 2012-2020.
7. Cut bad debt payments to hospitals. The proposal would reduce Medicare payments for bad debt, saving $15 billion from 2012-2020.
8. Expand ACOs, bundling and other programs. The plan would expand accountable care organizations, bundling demonstrations and other federal programs to increase efficiency for a savings of $38 billion from 2012-2020. If projected savings from these programs are not realized, the independent advisory board would be charged with identifying further cuts.
9. Cap federal share of Medicaid payments. The commission would convert the federal share of Medicaid payments for long-term care into a capped allotment, saving $89 billion from 2012-2020.
10. Other Medicaid changes. The plan would reduce federal payments for Medicaid administrative costs, increase nominal Medicaid copays and place dual-eligible individuals in Medicaid managed care for a total savings of $43 billion from 2012-2020.
11. Nationally regulate health plans. The commission would establish national standards for regulating and administering health insurance, saving $3 billion from 2012-2020.
12. Reduce payments for brand-name drugs. The plan would require rebates for brand-name drugs as a condition of participating in Medicare Part D.
13. Accelerate home health cuts. The proposal would speed up the phase-in of home health cuts enacted by the reform law.
14. Look for $200 billion more in savings. The commission would further "identify an additional $200 billion savings in federal health spending." It did not explain what these cuts might be.
15. Make further cuts if targets aren’t met. The plan requires the president to propose further cost cuts if healthcare costs grow more than 1 percent faster than the economy after 2020.
16. Further strengthen advisory board. If initial cuts don't work, further strengthen the Independent Payment Advisory Board.
17. Overhaul fee-for-service payments. If initial cuts don’t work, "overhaul the fee-for-service system."
18. Introduce a public option. If initial cuts don't work, introduce a public option to buy health insurance, which was rejected by Congress in the final version of the healthcare reform law.
19. Raise Medicare premiums or cost sharing. If initial cuts don't work, expand premiums or increase cost-sharing for Medicare beneficiaries. The plan would "replace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B."
20. Set global healthcare spending target. If initial cuts don’t work, set a global target for total federal health expenditures and review costs every two years.
In a statement, the AHA specifically objected to accelerating DSH cuts, putting hospitals under the advisory board, reducing GME and IME funding and cutting bad debt payments to hospitals. These actions "could jeopardize hospital services for vulnerable patients and communities, particularly given that hospitals already face $155 billion in cuts as part of health reform," the AHA said.
Read the report of the National Commission on Fiscal Responsibility and Reform (pdf).
Read further coverage of payment cuts:
- AMA, Physician Organizations Urge Congress to Halt Medicare Payment Cuts
- AHA Now Backing Repeal of Independent Payment Advisory Board