A tax increase and lower payments to Medicare Advantage plans are expected to cut the Medicare budget by $400 billion over ten years. I found a summary of provisions on the Kaiser Family Foundation website.
The Senate bill, which the House of Representatives will vote on this weekend…
*Increases the Medicare Part A (Hospital Insurance) payroll tax in 2013 by 0.9% (from 1.45% to 2.35%) on earnings over $200,000/individual, $250,000/couple; funds deposited into the Medicare Part A Trust Fund. This should bring in $86.8 billion in new revenue.
*Establishes new Independent Payment Advisory Board and requires the Board to submit a proposal with recommendations for reducing Medicare spending, while maintaining quality and access, if Medicare per capita growth rates exceed targets, beginning in January 2014. Requires proposals to be automatically implemented unless Congress enacts alternative proposals that achieve same level of savings, or the Secretary had implemented recommendations in the prior year.
*Reduces payments to hospitals with excess preventable readmissions and hospital-acquired infections.
*Establishes pilot programs for bundling payments for post-acute care.
*Establishes new standard fraud liability in Federal health care programs; expands the Recovery Audit Contractors program to Medicaid, Medicare Advantage, and Part D.
On the Health Beat blog I found the following information related to Medicare Advantage plans:
The bill will freeze Medicare Advantage payments in 2011. Then, beginning in 2012, the provision reduces Medicare Advantage benchmarks relative to current levels.
In high-spending areas, insurers will be paid 95% of what it would cost Medicare to care for patients. In low-cost areas, they will be paid 115% of what it would cost Medicare to provide coverage. The changes will be phased in over three, five, or seven years, depending on the level of payment reductions. My comment: Florida and California are high-cost areas while Arizona is on the low end of payments to Medicare Advantage plans. This could be good news for southern Arizona.
The provision also creates an incentive system to increase payments to high-quality plans by at least 5%. In addition, Medicare Advantage Plans would have to spend at least 85% of revenue on medical costs or activities that improve quality of care, rather than profit and administration.