CBO Report Outlines Possible Savings in Medicare, Including Estimated $64.8B From 2008 to 2012 by Equalizing Payments to Managed Care Plans, Fee-for-Service Providers

The Congressional Budget Office has released its biennial report on policy options that contains more than 250 proposals on federal spending and revenue, including several for Medicare, CongressDaily reports. Some of CBO's Medicare savings options are similar to proposals that have been offered by President Bush, such as reduced payments to hospitals and home health care agencies, reduced rental periods for oxygen treatment and higher premiums for federal prescription drug plans. Proposals that might be "more palatable to Democrats" include eliminating subsidies to private insurers to encourage them to participate in Medicare in underserved regions, which CBO says could save $3.5 billion over 10 years, CongressDaily reports (Cohn, CongressDaily, 2/27). According to CBO, $64.8 billion could be saved between 2008 and 2012 by equalizing payments to Medicare Advantage plans and fee-for-service providers. The CBO report notes that that proposal "could lead many plans to limit the benefits they offer, raise their premiums or withdraw from the program." The CBO document also finds that between 2008 and 2012, the following savings could be obtained:

• $21.6 billion by reducing Medicare payments for "indirect" medical education costs;
  
  
• $17.8 billion by reducing payments to hospitals for inpatient care;
  
  
• $8.5 billion by reducing payments to home health agencies;
  
  
• $12.9 billion by charging copayments for home health visits;
  
  
• $11.2 billion by converting payments for "disproportionate share hospitals" into a block grant program;
  
  
• $42.2 billion by increasing the share of Medicare Part B costs that beneficiaries must pay; and
  
  
• $27.8 billion by revising other cost-sharing provisions while narrowing the scope of Medigap coverage.