Medi-Medi Spending

The Mark has numerous changes to the payment rates and rules in Medicare, Medicaid and other federal health programs. Altogether, the CBO estimates that enacting those provisions would reduce direct spending by $404 billion over the 2010-2019 period.


The provisions the CBO says would result in the largest budget savings are: Permanent reductions in the annual updates to Medicare's payment rates for most services in the fee-for-service sector (other than physicians' services), resulting in savings of $162 billion over 10 years; setting payment rates in the Medicare Advantage program on the basis of the average of the bids submitted by Medicare Advantage plans in each market, resulting in savings of an estimated $117 billion; and reducing Medicare and Medicaid payments to hospitals serving a large number of low-income patients (disproportionate share hospitals) by almost $45 billion.

The letter notes that the Chairman's Mark, as amended, is not yet converted into legislative language. Revised language could lead to significant changes in the estimates of effects on the federal budget. A final Committee vote is supposed to take place on October 13. The bill could very well change again in the Committee with amendments and possibly more political debate on what should be included in the final version, before going to the full Senate for a vote.

The CBO's analysis can be accessed at:

http://www.cbo.gov/ftpdocs/106xx/doc10642/10-7-Baucus_letter.pdf

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