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Changes to Medicare are Already Here!

Polls show that most Americans, especially seniors, are against any changes in Medicare.    Above all, people don’t want their benefits reduced.  What they don’t seem to realize is that legislation has already been passed that will, in fact, reduce their benefits.  The Patient Protection and  Affordable Care Act (PPACA) passed last year will force major changes to Medicare.  Indeed, in order to pay for the bill’s expansion of health care entitlements, a whopping half a trillion dollars must be cut from Medicare.  The provisions needed to do this are buried in the 2,700 page bill.

The scariest one is the Independent Payment Advisory Board (IPAB) found in section 3403 of the PPACA.  It’s a 15 member panel appointed by the president and commissioned to work full time to keep Medicare spending under a certain level.  However, its approach is largely limited to reducing reimbursements to medical service providers starting with physicians and later extending the reductions to hospitals and other facilities.

Every year, if Medicare costs are too high, the panel will submit a reduction plan.  Congress has to agree or pass by a  challenging 3/4 majority a plan of their own that accomplishes the same objective.  If this can’t be done within a certain period,  the reductions proposed by IPAB automatically take place without the chance of even a President’s veto. These conditions make it nearly impossible to challenge any IPAB proposal, effectively making IPAB an autonomous un-elected legislative body and stripping Congress of its authority over Medicare expenses

Richard Foster, Medicare’s respected actuary, has testified that reducing physician payments to the extent proposed would force doctors to do more with less money or quit Medicare practice altogether thereby substantially reducing seniors’ access to care.  He estimates that hospitals would also become unprofitable further endangering the health-care-scene for seniors.

IPAB is a cowardly way to cut the Medicare budget.  A group of largely anonymous bureaucrats unaccountable to no one will do the dirty work allowing legislators to escape blame for reducing seniors’ health benefits.

It doesn’t stop there.  Another way the PPACA plans to save Medicare dollars and reduce benefits is by having members obtain health care through Accountable Care Organizations (ACOs) instead of independent doctors of their own choosing.

ACOs are groups of medical personnel working together with various medical facilities.  (hospitals, clinics, labs)  that, under rules developed by Medicare, will provide integrated care for patients.  Because all the medical services provided in the ACO share the same patient information, fewer mistakes and better diagnosis are made.  Physicians working for the ACO are salaried and their time is managed by the ACO so there is no incentive to add extra visits, tests, or procedures as there is in the usual, fee-for-service system.  To control costs, Medicare will collect patient data to evaluate patient treatment and reward what they see as good, cost effective results.

The program will begin in 2012.  As ACOs become Medicare-certified, seniors will be assigned to one in their area.  Incentives will be offered to encourage seniors to join but, initially, it won’t be mandatory.

It sounds like a good idea.  Shared patient information, integrated care, lower cost, an end to unnecessary services.  What’s not to like??  Well, for starters your ACO primary doctor will recommend the ACO heart doctor when one is needed, not the acclaimed but more expensive independent heart specialist.  Expensive treatments will count against the total amount spend on a patient.  As a result, your ACO doctor will think twice before ordering one for you.  In fact, the latest technologies and procedures, in general, will not be considered unless they’re on a government approved list.  (This is also covered in another PPACA provision, the Patient-Centered Outcomes Research Institute (PCORI) which will control what treatments all doctors can use.)

Another benefit-limiting provision of the PPACA is called value based purchasing which will effect all physicians, ACO-based or not.  Medicare will evaluate physicians’ costs in treating patients compared to their peers.  To keep from being penalized, doctors will soon avoid treating patients requiring more expensive treatments or avoid more costly but effective treatments in general.

In an another example of government micromanaging medical treatment, the PPACA is paying particular attention to what they see as the overuse of imaging.  All doctors will be allowed only a limited number of advanced diagnostic imaging,  CT/MRI scans , on an individual regardless of the severity of injuries or disease or face more penalties.

These and other PPACA changes to Medicare are being readied for roll-out.  People’s fears about any future legislation that will reduce their Medicare benefits are misplaced.  It’s what’s in a law that has already passed that should be looked into.  Perhaps as people become more aware of what’s in store for them under the PPACA, they may be more open to consider more seriously the Medicare reform options being discussed today.



  1. John N says:

    Clearly this is an insurance broker website and not a very well informed one. In fact it is down right misleading.

    Yes Medicare changes are in place already and lets look at the facts of what has happened already:
    1) Preventive care with no co pays – 20.2 million seniors have already taken advantage of this in 2011 saving over $2B to date
    2) Donut hole closure – 1.2 million seniors have saved over $1B thus far this year
    3) Medicare inflation is 3.2% the lowest ever – Why? See above. Keeping folks on their meds now that they can afford them reduces hospital admissions and getting early treatment under the preventive benefit helps as well.
    4) Fraud pursuit – $5.2B saved so far and over 200 indicted. Think that the fear of being caught has an impact on potential fraudsters. A special FBI unit now focuses on this exclusively.
    5) Medicare Advantage premiums are going DOWN 4% for 2012 even with $500B in subsidies being removed over the next 1o years under ACA. Why competition?

    Now to your lies on the future.Unlike the coverage we all have with employers Medicare has no ability to manage care and it is needed to be sure that our money is better spent. Period.

    IPAB is not a rationing mechanism and ACO’s are there to lower costs by coordinating care.

    PCORI will recommend options based on research as well but again is not going to ration care but provide solid guidance to the ACOs and Doctors.

    In the end the patient will get the best and most appropriate care at lower costs.

    If you want to push the Paul Ryan vouchers and the end of Medicare go ahead but it offers only the vague promise of competition via private insurers lowering costs while moving $30 Trillion in care to the seniors side of the ledger.

    Based on 2011 results it looks like ACA is on the right track and over time will work even better for seniors without destroying the program and feeding the for profit insurers more business while hurting seniors long term.

  2. David S. says:

    Demonizing the messenger (in this case insurance brokers) and citing unsubstantiated facts is a standard ploy of those whose arguments don’t hold up under scrutiny. Cheap and free medical care are really nice things to have but they are never really cheap or free. The point is someone else has to pay for them. With annual U.S. deficits around $1.3 trillion ($4,300 per American) and national debt approaching $15 trillion ($49,500 per American) it’s time to wake up. Health entitlements already have the biggest impact on the federal budget. John N. accuses the blogger of “lies on the future” but doesn’t mention the biggest lie of all. The biggest lie is the government’s claim that the Affordable Care Act will cover 30-40 million additional people and at the same time, lower everyone’s health care costs. This defies common sense as does the ACA itself.

  3. Carole S. says:

    Thank you for your comments. Although, based on some of your statements, I’m not sure you really have read my blog.

    Regarding your comments on preventive care: There’s little evidence that preventive care saves money. To the contrary, the American Diabetes Association, America Heart Association and the American Cancer Society, in general, concluded that most of the preventive activities will substantially increase costs. The New England Journal of Medicine is quoted as saying “sweeping statements about the cost-saving potential of preventive care are over-reaching.” I don’t know where the $2 billion in savings comes from as Doug Elmendorf, Director of the Congressional Budget Office (CBO) famously responded in a letter to a member of Congress regarding the amount of cost-saving in providing preventive care: “for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.” Another factor, that should be taken into account is the fact that many seniors, in fact more than half, are financially capable of paying for at least the co-payment previously required for preventive care if not the entire cost. Why should hard working Americans struggling to pay for their own needs have to cover those individuals?

    Let’s look at the ‘donut hole closure’ which I assume refers to the gradual elimination of that portion of Medicare Part D prescription drug coverage for which seniors would otherwise be responsible.. You’ve stated that the “donut hole closure” resulted in $1 billion in senior savings so far this year. However, HHS in a recent (Sept 9) news release reports seniors saved altogether $660 million in drug discounts through Medicare Part D so far this year. I should mention, however, that I’ve never cited Medicare Part D as a financial problem in my reporting. Of all the parts of Medicare, it is, as originally written, financially successful.

    The slowdown of the rate of increase of Medicare costs this year is interesting. However, no consensus has been drawn to explain it. .

    Medicare fraud is something the Federal government should have been covering all along. Why should we have to pass a law to make it happen?

    There are no lies in my view of the future with the ACA. ‘Managing care’ is another euphemism for the government deciding what care will be available and who will receive it. And yes, that is one way to keep Medicare costs down. With the huge expansion of health care entitlements called for in the ACA, we’ll see a lot of ‘managed care’. IPAB and ACOs are just two of the tools required to do this. Your comments on these suggest you didn’t read my blog.

    Thank you again for expressing your opinion. We all are concerned about the high cost of health care even though we see different ways to solve the problem.

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