Various components of H.R. 3962 would alter spending for Medicare, Medicaid, and other federal health programs by making changes to payment rates and payment rules in these programs:
In total, CBO estimates that enacting those provisions would reduce direct spending by about $426 billion over the 2010-2019 period. Numerous changes to Medicare and Medicaid would reduce direct spending over the 2010–2019 period. The provisions that would result in the largest budgetary effects include these:
- Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector (other than physicians’ services), yielding budgetary savings of $229 billion over 10 years. (That calculation excludes interactions between those provisions and others—namely, the effects of those changes on payments to Medicare Advantage plans and collections of Part B premiums.)
- Setting payment rates in the Medicare Advantage program on the basis of Medicare spending per beneficiary in the fee-for-service sector and changing the way that payments to Medicare Advantage plans reflect differences in the health status of enrollees, yielding savings of an estimated $170 billion (before interactions) over the 2010–2019 period.
- Increasing Medicaid’s payment rates to physicians and other health care professionals for the provision of primary care services to Medicaid beneficiaries, costing roughly $57 billion over 10 years.
CBO expects that the Centers for Medicare and Medicaid Services (CMS) will soon announce payment rates and changes in payment rules for physicians’ services and other services that are set on a calendar year basis. Those payment rates and rules may differ from the current-law assumptions underlying CBO’s baseline projections. If so, CBO will update its estimates of Medicare spending under current law to reflect those changes and will revise these preliminary estimates of the impact of H.R. 3962 to reflect the effects of the new rules on spending under current law and under the bill. (Source)
CBO estimates that changes in spending for federal health programs in the Senate Finance mark total to about $404 billion over the 2010-2019 period.
The provisions in the Senate Finance mark that would result in the largest budget savings include:
- Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector (other than physicians’ services), yielding budgetary savings of $162 billion over 10 years. (That calculation excludes interactions between those provisions and others—namely, the effects of those changes on payments to Medicare Advantage plans and collections of Part B premiums.)
- 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, yielding savings of an estimated $117 billion (before interactions) over the 2010–2019 period.
- Reducing Medicare and Medicaid payments to hospitals that serve a large number of low-income patients, known as disproportionate share (DSH) hospitals, by almost $45 billion—composed of roughly $22 billion each from Medicaid and Medicare DSH payments.
All figures presented below are based on CBO cost estimates which can be found here:
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