CBO Partial Score for Medicare Title of House Discussion Draft
In case you hadn’t seen it, I wanted to pass along information about the CBO score for the Medicare title of the House Democrat discussion draft released two weeks ago. Note that this score does NOT include estimates of the cost of coverage expansions, and considers the Medicare provisions largely in isolation. Major points in this portion of the score include:
- All told, the provisions would reduce the deficit by about $152 billion over ten years. This is MUCH less than the $622 billion in Medicare and Medicaid savings proposed by the White House — largely due to additional entitlement spending within Medicare that offsets many of the savings reductions.
- The largest savings generated come from reductions in payments to inpatient hospitals (nearly $85 billion over ten years), outpatient hospital services ($21.8 billion), skilled nursing facilities ($26 billion), hospice care ($9.8 billion), inpatient rehabilitation facilities ($5.3 billion) and long-term care and psychiatric hospitals ($7.1 billion over ten years total). Provisions limiting Medicare payment for hospital readmissions would generate about $16 billion in savings, over and above the numbers outlined above.
- Home health agencies would receive a total of $56.8 billion in payment reductions over the ten-year budget window, and imaging services would be reduced by $4.3 billion due to an adjustment in projected utilization for imaging equipment.
- Medicare Advantage plans would receive a total of nearly $172 billion in cuts — $156.3 billion from reducing MA plan benchmarks to Medicare fee-for-service levels, and another $15.5 related to enhanced Secretarial authority to prevent “up-coding” by MA plans — with a small portion of those cuts offset by creation of a $9.6 billion quality bonus payment program.
- Extending the Medicaid drug rebate price control to all full-subsidy beneficiaries in the Medicare Part D program would generate $63 billion in savings. Some of this money would be spent covering the $47 billion ten-year cost of filling in the Part D “doughnut hole.” Note however that as the Democrat legislation only partially fills in the “doughnut hole” before 2019, the full cost of this spending program would lie outside of the budgetary scoring window.
- Apart from the “doughnut hole” provisions, the largest spending measures in the Democrat bill cover physician reimbursements — $228.5 billion on sustainable growth rate reform, along with an additional $2.6 billion in various adjustments and reporting incentives, and another $5 billion increase for primary care services. There is also an additional $39.6 billion to expand the low-income subsidy program within Medicare — which was already expanded once in last year’s Medicare bill — and several more minor coverage expansions, such as those relating to preventive services, with costs of up to a few billion dollars each
- Finally, on delivery system reform, CBO scores the accountable care organizations pilot program in the Democrat bill as saving $2.2 billion over ten years, while the medical home pilot program would cost $1.8 billion over the same time frame.