Health reform will save Medicare billions, CMS says

Despite skepticism from Republicans, a new report concludes that the health system overhaul will more than double the life of the program.

By Chris Silva — Posted Aug. 10, 2010

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The new health system reform law will help Medicare achieve savings of nearly $8 billion by the end of 2012, according to a report by the Centers for Medicare & Medicaid Services.

CMS has been working on a number of cost-saving provisions since the law was signed in March. Those provisions include expanding the use of recovery audit contractors, ending added payments to Medicare Advantage plans and modifying payments for advanced imaging services.

By pursuing such pay reforms, Medicare will save about $418 billion over the next decade, according to the CMS report released Aug. 2. Beneficiaries should expect to see savings of about $200 a year on what their Part B premiums would have been without the new law, and about the same amount in reduced cost sharing, officials said.

CMS said the Patient Protection and Affordable Care Act is projected to more than double the life of the Medicare Trust Fund, extending its estimated insolvency date from 2017 to 2029.

"The Affordable Care Act helps us ensure the solvency of Medicare for nearly 20 years," said CMS Administrator Donald M. Berwick, MD. "But just as importantly, Medicare beneficiaries will see significant savings in their own pockets through our efforts to keep premiums and cost sharing as low as possible."

The Medicare agency said it's working to implement quality improvement initiatives during the next several years that will contribute to the savings outlined in the report, including the use of accountable care organizations under which payment systems are linked to coordinated care methods. The Congressional Budget Office has projected that the use of ACOs alone will reduce Medicare spending by nearly $5 billion during the next 10 years, CMS said.

Senate Finance Committee Chair Max Baucus (D, Mont.) said the report is proof that the health reform law is beginning to generate significant savings in Medicare. "We made strengthening and improving Medicare a huge priority as we wrote the health care law because so many seniors count on the program to stay well," he said.

But Sen. Charles Grassley (R, Iowa), the ranking Republican member of the Finance Committee, said the Obama administration is telling only half the story and that he is worried about the impact the new law will have on Medicare Advantage beneficiaries.

"The White House continues to try to persuade people that cutting more than half a trillion dollars from Medicare to fund an unsustainable new entitlement program is somehow a good thing for Medicare beneficiaries," he said. "The Administration's own actuary and CBO have said over and over again that you can't 'double-count' the Medicare cuts by claiming they extend the life of the Medicare program and at the same time fund a new entitlement program."

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