In its final draft report, yet to be voted on by members, the federal deficit commission proposes long-sought reforms like ending the automatic Medicare physician fee-cut but also suggests cuts like lowering teaching hospital payments and putting hospitals under the new payment advisory board.
To find more savings, the report also calls for tort reform, moving more aggressively with accountable care organizations and expediting state Medicaid waiver applications.
The 18-member panel, called the National Commission on Fiscal Responsibility and Reform, will vote on the report on Friday. A minimum of 14 votes would be needed and commission chairmen have already acknowledged they might not have the votes. The document is an update of the chairmen's own draft report, which was released on Nov. 10.
As part of proposed cuts in all sectors of the federal government, here are 12 key proposed cuts in healthcare.
1. Replace automatic physician fee cut. CMS would replace the sustainable growth rate with a new payment formula that "encourages care coordination across multiple providers and settings and pays doctors based on quality instead of quantity of services." But the payment system could not cost more than would have been allowed under the SGR formula. While CMS develops the new formula, physician fees would be frozen through 2013 and cut by 1 percent in 2014.
2. Introduce malpractice reform. The commission would not cap non-economic damages, as physicians and hospitals have wanted, but it would unleash an array of reforms, such as specialized "health courts," a statute of limitations on lawsuits and "safe haven" rules for providers who follow best practices of care.
3. Reduce payments to teaching hospitals. The proposal would limit graduate medical education payments to 120 percent of the national average salary paid to residents in 2010 and reduce the indirect medical education adjustment.
4. Cut Medicare payments for bad debts. The report would gradually reduce Medicare support to hospitals and other providers for unpaid deductibles and copays owed by beneficiaries.
5. Give states flexibility to control Medicaid costs. The commission would expedite state Medicaid waiver applications to control costs and improve quality.
6. Test a premium support system. Such a system would offer seniors a fixed subsidy, adjusted by geographic area and by individual health risk, to purchase health coverage from competing insurers. The approach would be piloted in the Federal Employees Health Benefits program.
7. Move faster with ACOs and other new programs. CMS should "aggressively" move ahead with accountable care organizations, including introduction of downside risk to ACOs and bundled payment pilots.
8. Put hospitals under the payment advisory board. Hospitals should be put under the purview of the Independent Payment Advisory Board when it starts in 2015, instead of waiting for five years as the healthcare reform law directs.
9. Limit healthcare spending growth. Starting in 2020, healthcare spending would be limited to GDP plus 1 percent. Only action by the president and Congress would allow growth to exceed the targets.
10. Bar states from using taxes to enhance Medicaid payments. States would be restricted from imposing taxes on hospitals and other Medicaid providers to enhance the federal share of Medicaid payments.
11. Beef up efforts to reduce Medicare fraud. The commission would provide CMS with additional statutory authority and increased resources to combat waste, fraud and abuse.
12. Simplify cost-sharing for Medicare beneficiaries. The report proposes to establish a single $550 deductible and 20 percent coinsurance for Part A and Part B.
AHA reaction
In a statement, the AHA disagreed with subjecting hospitals to the new payment board, cutting teaching payments and capping national healthcare expenditures. It noted that hospitals already face $155 billion in cuts as part of healthcare reform.
The AHA also cautioned against moving ahead too fast with ACOs and bundling, because "these are untested ideas that should not be broadly implemented until significant evaluation occurs."
Comparing the draft to the chairmen's previous report, the AHA commended the commission for dropping a proposal to speed up DSH payment cuts to hospitals but criticized it for dropping a proposed cap on non-economic damages in malpractice cases.
"We know that these recommendations will undergo further discussion, and we will work to achieve changes that ensure the health care needs of Americans are met," the AHA statement concluded.
Read the deficit commission's report (pdf).
Read the AHA statement on the federal debt commission report.
Read more coverage of the deficit commission report.
- Federal Debt Panel Proposes 20 Major Cuts for Hospitals, Physicians
- Separate Deficit Panel Releases Report, Pushes More Costs Onto Medicare Beneficiaries
To find more savings, the report also calls for tort reform, moving more aggressively with accountable care organizations and expediting state Medicaid waiver applications.
The 18-member panel, called the National Commission on Fiscal Responsibility and Reform, will vote on the report on Friday. A minimum of 14 votes would be needed and commission chairmen have already acknowledged they might not have the votes. The document is an update of the chairmen's own draft report, which was released on Nov. 10.
As part of proposed cuts in all sectors of the federal government, here are 12 key proposed cuts in healthcare.
1. Replace automatic physician fee cut. CMS would replace the sustainable growth rate with a new payment formula that "encourages care coordination across multiple providers and settings and pays doctors based on quality instead of quantity of services." But the payment system could not cost more than would have been allowed under the SGR formula. While CMS develops the new formula, physician fees would be frozen through 2013 and cut by 1 percent in 2014.
2. Introduce malpractice reform. The commission would not cap non-economic damages, as physicians and hospitals have wanted, but it would unleash an array of reforms, such as specialized "health courts," a statute of limitations on lawsuits and "safe haven" rules for providers who follow best practices of care.
3. Reduce payments to teaching hospitals. The proposal would limit graduate medical education payments to 120 percent of the national average salary paid to residents in 2010 and reduce the indirect medical education adjustment.
4. Cut Medicare payments for bad debts. The report would gradually reduce Medicare support to hospitals and other providers for unpaid deductibles and copays owed by beneficiaries.
5. Give states flexibility to control Medicaid costs. The commission would expedite state Medicaid waiver applications to control costs and improve quality.
6. Test a premium support system. Such a system would offer seniors a fixed subsidy, adjusted by geographic area and by individual health risk, to purchase health coverage from competing insurers. The approach would be piloted in the Federal Employees Health Benefits program.
7. Move faster with ACOs and other new programs. CMS should "aggressively" move ahead with accountable care organizations, including introduction of downside risk to ACOs and bundled payment pilots.
8. Put hospitals under the payment advisory board. Hospitals should be put under the purview of the Independent Payment Advisory Board when it starts in 2015, instead of waiting for five years as the healthcare reform law directs.
9. Limit healthcare spending growth. Starting in 2020, healthcare spending would be limited to GDP plus 1 percent. Only action by the president and Congress would allow growth to exceed the targets.
10. Bar states from using taxes to enhance Medicaid payments. States would be restricted from imposing taxes on hospitals and other Medicaid providers to enhance the federal share of Medicaid payments.
11. Beef up efforts to reduce Medicare fraud. The commission would provide CMS with additional statutory authority and increased resources to combat waste, fraud and abuse.
12. Simplify cost-sharing for Medicare beneficiaries. The report proposes to establish a single $550 deductible and 20 percent coinsurance for Part A and Part B.
AHA reaction
In a statement, the AHA disagreed with subjecting hospitals to the new payment board, cutting teaching payments and capping national healthcare expenditures. It noted that hospitals already face $155 billion in cuts as part of healthcare reform.
The AHA also cautioned against moving ahead too fast with ACOs and bundling, because "these are untested ideas that should not be broadly implemented until significant evaluation occurs."
Comparing the draft to the chairmen's previous report, the AHA commended the commission for dropping a proposal to speed up DSH payment cuts to hospitals but criticized it for dropping a proposed cap on non-economic damages in malpractice cases.
"We know that these recommendations will undergo further discussion, and we will work to achieve changes that ensure the health care needs of Americans are met," the AHA statement concluded.
Read the deficit commission's report (pdf).
Read the AHA statement on the federal debt commission report.
Read more coverage of the deficit commission report.
- Federal Debt Panel Proposes 20 Major Cuts for Hospitals, Physicians
- Separate Deficit Panel Releases Report, Pushes More Costs Onto Medicare Beneficiaries