4 reforms could save Medicare, Medicaid billions of dollars

Medicare and Medicaid are projected to grow faster than the economy over the next decade and will therefore require initiatives to reduce expenditures without harming patients, according to an Oct. 20 Health Affairs report.

Here are four possible solutions to reduce costs proposed by experts on Medicare, including current Medicare Payment Advisory Commissioners Brian Miller, MD, and Betty Rambur, PhD, RN.

  • Restructuring ambulatory payments

Pay for common ambulatory services should be the same regardless of location. So-called site neutral payments have not fully passed into congressional law but could save approximately $153 billion over a decade.

  • Reforming graduate medical education funding

Medicare pays teaching hospitals an additional amount for each inpatient stay. Such payments should be capped, the authors say, as should separate payments based on resident volumes. Such changes could save $1.28 billion annually.

  • Equalizing tax treatment of hospital investments

Nonprofit health systems should be treated in the same way as for-profit competitors in terms of their investment income, with tax payments being the same. Additional tax collected as a result could be invested in much-needed nursing training programs.

  • Improving integrity of provider taxes programs

"Provider taxes are used as a financing band aid," the authors state regarding state Medicaid funds. Improper payments are estimated at $12.3 billion annually, with a further $73.8 billion in undocumented or incomplete process payments. Efficiencies could also be improved, with consequent savings, by moving increasingly to value-based care rather than fee for service.

More details on the policy proposals can be found here.

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