The Obama administration said it has identified an additional $313 billion in savings, primarily from Medicare, which will translate into lower federal payments to hospitals. The lions share of the cuts will come from measures that would pay hospitals less as they become more efficient, reductions in federal subsidies that they receive for treating uninsured patients and better prescription drug pricing.
In a conference call with reporters, White House budget chief Peter Orszag detailed the savings: $110 billion by incorporating productivity adjustments into the way Medicare pays providers; $106 billion from disproportionate-share hospital payments; $75 billion by better Part D pricing; and $22 billion in other savings. All numbers are projected over 10 years.
According to an advance transcript of President Barack Obamas June 13 weekly address, These savings will come from commonsense changes. For exampleif more Americans are insured, we can cut payments that help hospitals treat patients without health insurance. If the drugmakers pay their fair share, we can cut government spending on prescription drugs. And if doctors have incentives to provide the best care instead of more care, we can help Americans avoid the unnecessary hospital stays, treatments and tests that drive up costs.
The $313 billion in projected savings is on top of the $635 billion the Obama administration has already carved out as part of a down payment to pay for healthcare reform this year, Orszag said, adding that the combined dollar amount is in the ballpark of what Congress expects to pay for legislation. I think the provider groups have acknowledged in the discussions that theyve had with the president that efficiencies are possible, Orszag said.
He said that the proposals would save Medicare beneficiaries some $43 billion in Part B premiums.
Other savings would come from implementing payment adjustments recommended by the Medicare Payment Advisory Commission, including those for skilled-nursing facilities, inpatient-rehabilitation facilities and long-term, acute-care facilities.
Measures to cut back fraud and abuse in Medicare and Medicaid and lower physician payment rates for imaging services are also part of the plan.