Increased Medicare spending is one of the many issues that are being dealt with in the Patient Protection and Affordable Care Act enacted by the Obama administration. “Obamacare,” as the law has been called, has formulated cost-cutting measures to minimize Medicare spending by reducing payments to insurance companies and health care providers. These cost-cutting provisions, according to the President, are aimed at protecting Medicare funds, and studies say they have extended the availability of Medicare until 2024. But, some say these cost-cutting measures interfere with how medicine is practiced.
1. New medical practice arrangements, such as accountable care organization and bundled payments, are at the root of this debate. In a bundled payment system, the patient makes a one-time payment for services performed by two or more providers for one type of treatment provided over a certain span of time. For example, if someone has bypass surgery, he or she would make one combined payment, instead of making several payments: one
to the hospital, one to the anesthesiologist, and another to the surgeon.
2. This type of payment arrangement is considered to be a type of risk contracting. If the cost of services is less than the bundled payment, the physician keeps the extra. However, if the bundled payment is less than the actual cost of services, the provider is not allowed to bill for the excess.
3. Another provision is to limit Medicare spending by putting a cap on the amount of health care expenses that will be paid in a given year. The law explicitly specifies that Medicare spending cannot exceed .05 percent of the rate of GDP (gross domestic product.) A government board would execute budget cuts in the event that the cap was reached. Many doctors are not accepting new Medicare patients and reduced payment rates are thought to fuel this.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.