Government

President Obama’s plan to save Medicare-why you should be concerned even if you are not on Medicare, perhaps especially if you are not on Medciare

This topic has been covered before, but it is so important it deserves more attention. Medicare is one of two significant entitlements having the greatest impact on the national debt. Regardless of ones political persuasion Medicare is well liked by most Americans. Those two factors make it very difficult to change or even to talk about in political circles, but not only talk we must, we have to change the system dramatically. That is the key word, dramatically.

I guess I am going to have a lot of free time after all

The President, while appearing to recognize the problem, seeks a near “business as usual” approach and is still willing to play the Medicare scare card for seniors. The essence of his proposal, actually the only new component is a fifteen person panel to seek ways to save money. The other components include, reducing payments to providers, eliminate fraud and abuse and the use of Accountable Care Organizations (and a total of 165 new trial initiatives in various areas).  All of which are unproven, perhaps impractical or unworkable.

Let’s focus on the 15 person board set up by the Patient Protection Affordable Care Act. What is it’s job, when can it do it and what can it not do?

Here are a few key points to consider in making your own assessment of the potential effectiveness of this approach:

    1. Proposals are to primarily focus on payments to MA and PDP plans and reimbursement rates for certain providers. That means focus not on basic Medicare, but on Medicare Advantage Plans (MA) and Prescription Drug Plans (PDP) . Payments to MA plans were already cut under the Affordable Care Act and PDP benefits were expanded at additional cost
    2. The Board will be prohibited from developing proposals related to Medicare benefits, eligibility, or financing
    3. Proposals, which will only be required in certain years, will have to meet specific savings targets.
    4. The first year the Board’s proposals can take effect is 2015.
    5.  Proposals must include only those recommendations that improve the health care delivery system, including the promotion of integrated care, care coordination, prevention and wellness and quality improvement and protect beneficiary access to care, including in rural and frontier areas.  This sounds quite incidental to cutting costs.
    6. As appropriate, each proposal is required to include recommendations that would reduce spending in Medicare Parts C and D. But what about the largest parts A and B?
    7. The Board is prohibited from making recommendations that would ration care, raise revenues, increase beneficiary premiums, increase beneficiary cost-sharing, restrict benefits, or modify eligibility.  Additionally, proposals submitted before December 2018 for implementation in 2020, cannot include recommendations that would reduce payments to providers and suppliers scheduled to receive a reduction in their payment updates in excess of a reduction due to productivity.  You have to ask yourself, what is left that can meaningful impact costs.

Let’s say in your current or past job you were charged with assuring the financial solvency of your company, division, or even department, how successful do you think you would be if you could only look at one relatively small portion of your costs and you were hampered by a half-dozen restrictions on what you could actually do to be successful, not to mention you can’t implement any changes for five years?

The next time you have a chat with Mr. Obama, ask him exactly how the Independent Payment Advisory Board will save Medicare.

Don’t take my word for all this, read the text of the Affordable Care Act related to the Independent Payment Advisory
Board for yourself:

This provision establishes an Independent Payment Advisory Board to develop and submit detailed proposals to Congress and the President to reduce Medicare spending. The Board is to consist of 15 members with expertise in health care financing, delivery, and organization. All members are to be appointed by the President and confirmed by the Senate. Proposals are to primarily focus on payments to MA and PDP plans and reimbursement rates for certain providers. The Board will be prohibited from developing proposals related to Medicare benefits, eligibility, or financing. Proposals, which will only be required in certain years, will have to meet specific savings targets. Recommendations made by the Board automatically go into effect unless Congress enacts specific legislation to prevent their implementation. The first year the Board’s proposals can take effect is 2015.

Scope of Proposals. The provision lays out a number of specific fiscal and policy criteria which the Board will be required to meet in making its recommendations. When developing and submitting proposals, the Board is required, to the extent feasible, to (1) prioritize recommendations that would extend Medicare solvency and target reductions to sources of excess cost growth; (2) include only those recommendations that improve the health care delivery system, including the promotion of integrated care, care coordination, prevention and wellness and quality improvement and protect beneficiary access to care, including in rural and frontier areas; (3) consider the effects of changes in provider and supplier payments on beneficiaries; consider the effects of proposals on any provider who has, or is projected to have, negative profit margins or payment updates; (4) consider the unique needs of individuals dually eligible for Medicare and Medicaid, and (5) include recommendations for administrative funding to carry out its recommendations.

As appropriate, each proposal is required to include recommendations that would reduce spending in Medicare Parts C and D. Reductions could be obtained by reducing Medicare payments for administrative expenses to MA and PDP plans, denying or removing high bids for drug coverage from the calculation of the monthly bid amount for Part D plans, and reducing performance bonuses for MA plans. Recommendations may not target the base beneficiary premium percentage or the full premium subsidy for Part D plans.

The Board is prohibited from making recommendations that would ration care, raise revenues, increase beneficiary premiums, increase beneficiary cost-sharing, restrict benefits, or modify eligibility.  Additionally, proposals submitted before December 2018 for implementation in 2020, cannot include recommendations that would reduce payments to providers and suppliers scheduled to receive a reduction in their payment updates in excess of a reduction due to productivity.

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