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Major Cuts in Provider Pay Recommended by White House Commission

Cheryl Clark, for HealthLeaders Media, November 11, 2010

But some of the biggest cuts are proposed for the healthcare sector, in part to pay for the repeal of the sustainable growth rate formula (SGR) that would cut physician payment by 23% Dec. 1 and another 1.9% Jan. 1. They include:

  • While repealing the SGR, the proposal would also result in gradually lowering payments to doctors over the next 10 years (with a pay freeze for the next two or three), amounting to savings of $10 billion by 2015 and $24 billion by 2020. Other strategies would improve physician efficiency and reward quality.
  • Expanding powers of the new Independent Payment Advisory Board to impose federal cuts in hospital pay for patients covered by Medicare and Medicaid, which the board now can't impose until 2020. Raise the IPAB's savings target to 1.5% instead of .5% in 2015. Also, eliminate the trigger that could de-activate IPAB by 2019 and allow it to impose payment reductions even when Medicare spending does not exceed price index growth rates.
  • Accelerating phase-in of disproportionate share payment (DSH) cuts to hospitals, Medicare Advantage cuts and home health cuts, which would save $9 billion.
  • Directing the Centers for Medicare and Medicaid Services to establish a new payment system starting by 2015 to reduce healthcare costs and improve quality.

American Hospital Association president and CEO Richard Umbdenstock commended the commission's co-chairs for taking up the task, but said some of its suggestions "could jeopardize hospital services for vulnerable patients and communities, particularly given that hospitals already face $155 billion in cuts as part of health reform."

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