government

CMS actuaries doubt spending caps will work

NEWS IN BRIEF — Posted May 28, 2012

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Studies by Medicare actuaries have concluded that physicians and hospitals will not be able to achieve the savings levels assumed by the national health system reform law.

The inability to meet spending expectations, along with the likelihood that Congress will override a roughly 30% cut to Medicare physician rates under the sustainable growth rate for 2013, means that actual expenditures will exceed projections in the latest annual report from Medicare’s trustees, according to the Centers for Medicare & Medicaid Services Office of the Actuary. The office prepared a separate report offering alternative scenarios to scheduled cuts under the SGR and spending caps that will be enforced by the Medicare Independent Payment Advisory Board.

For instance, the 2011 trustees report showed Part B expenditures at $220.5 billion for 2012. But that figure included a 29% SGR cut, which Congress delayed for one year. Spending for the year now is expected to reach $246.9 billion.

“The sizable differences in projected Medicare cost levels between current law and the illustrative alternative scenarios highlight the critical importance of finding ways to bring Medicare costs — and health care costs in the U.S. generally — more in line with society’s ability to afford them,” the actuaries’ report said.

In 2011, the Part B benefit, which includes physician services, represented just less than 3.7% of the nation’s gross domestic product. Alternative fiscal projections suggest that benefit spending could reach 10% of GDP by 2080. Current law would limit those expenditures to only 6.7% of GDP.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2012/05/28/gvbf0528.htm.

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