The Remington Report

President Obama announced a Medicare and Medicaid savings proposal that would contribute another $313 billion to the $635 billion already identified in the administration’s FY2010 budget to fund healthcare reform over the next 10 years. President Obama announced a Medicare and Medicaid savings proposal that would contribute another $313 billion to the $635 billion already identified in the administration’s FY2010 budget to fund healthcare reform over the next 10 years.

With the addition of the new proposed savings, Medicare’s Hospital Insurance Trust Fund would remain solvent until 2024, according to a fact sheet on the White House’s web site.

The Obama administration outlined the following sources of new savings to offset the cost of reform:

• Align Medicare payments with provider costs – savings of $110 billion over 10 years.

• Reduce payments to hospitals for uncompensated care as more uninsured people obtain health insurance – savings of $106 billion.

• Save $75 billion on the cost of Medicare Part D drugs, such as by reducing drug reimbursement for beneficiaries eligible for Medicare and Medicaid.

The following changes would amount to $22 billion in savings over a decade:

• Increase the equipment utilization factor for advanced imaging such as MRI and CT from 50 percent to 95 percent so that payment reflects actual usage of imaging services.

• Implement MedPAC’s 2010 recommendations for skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals based on variables such as quality, access to care, and adequacy of payment.

• Reduce waste, fraud, and abuse by scrutinizing the practices of certain physicians.

Of the $635 billion described in Obama’s FY2010 budget to create a healthcare reserve fund, $309 billion would be realized through Medicare and Medicaid savings. Those saving proposals include reducing Medicare overpayments to insurers; improving Medicare and Medicaid payment accuracy; reducing hospital readmissions; and making a portion of Medicare payments for acute inpatient hospital services dependent on hospitals’ performance on quality.