Policy Options to Sustain Medicare for the Future

Table of Medicare Options and Budget Effects

This table provides information about potential budget effects for the options included in this report. In general, the estimates in the table and text are from official and publicly available government sources, including publications from the Congressional Budget Office (CBO), the Medicare Payment Advisory Commission (MedPAC), the Office of Management and Budget (OMB), and the Department of Health and Human Services Office of Inspector General (HHS OIG). In a few cases, estimates from other sources are presented and noted accordingly. Estimates may differ in terms of the budget window and the year of implementation because they were drawn from different sources and published in different years. Some of these options have potential to achieve savings but do not have estimates from the official and publicly available government sources we relied on; in such cases, we note that estimates are “not available.”  Some estimates were produced before subsequent changes in law, including provisions in the 2010 Affordable Care Act (ACA) and the American Taxpayer Relief Act of 2012.


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Daniel Budnitz et al. 2011. “Emergency Hospitalizations for Adverse Drug Events in Older Adults,” New England Journal of Medicine, November 24, 2011.

Centers for Medicare & Medicaid Services (CMS). 2012. Competitive Bidding Update—One Year Implementation Update, April 17, 2012.

Congressional Budget Office (CBO). 2010. Effects of Using Generic Drugs on Medicare’s Prescription Drug Spending, September 2010.

Congressional Budget Office (CBO). 2011a. Cost Estimate, H.R. 5, Health Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, March 10, 2011 and May 23, 2011.

Congressional Budget Office (CBO). 2011b. Cost Estimate, S. 27:  Preserve Access to Affordable Generics Act, November 2011.

Congressional Budget Office (CBO). 2011c. Long-Term Analysis of a Budget Proposal by Chairman Ryan, April 5, 2011.

Congressional Budget Office (CBO). 2011d. Reducing the Deficit:  Spending and Revenue Options, March 2011.

Congressional Budget Office (CBO). 2012a. Cost Estimate, H.R. 452:  Medicare Decisions Accountability Act of 2011, March 2012.

Congressional Budget Office (CBO). 2012b. Estimate of the Effects of Medicare, Medicaid, and Other Mandatory Health Provisions Included in the President’s Budget Request for Fiscal Year 2013, March 2012.

Congressional Budget Office (CBO). 2012c. The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan, March 2012.

Congressional Budget Office (CBO). 2012d. Medicare Baseline, March 2012.

Congressional Budget Office (CBO). 2012e. Medicare’s Payments to Physicians:  The Budgetary Impact of Alternative Policies Relative to CBO’s March 2012 Baseline, July 2012.

Congressional Budget Office (CBO). 2012f. Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services, November 2012.

Congressional Budget Office (CBO). 2012g. Raising the Ages of Eligibility for Medicare and Social Security. January 2012.

Congressional Budget Office (CBO). 2012h. Raising the Excise Tax on Cigarettes:  Effects on Health and the Federal Budget, June 2012.

Government Accountability Office (GAO). 2012. Medicare:  High-Expenditure Part B Drugs, October 12, 2012.

The Heritage Foundation. 2011. The Second Stage of Medicare Reform:  Moving to a Premium Support Program, November 2011.

HHS Office of Inspector General (OIG). 2009. Inappropriate Medicare Payments for Chiropractic Services, May 2009.

HHS Office of Inspector General (OIG). 2011. Letter to Senator Herb Kohl, October 6, 2011.

HHS Office of Inspector General (OIG). 2012a. Comparison of Fourth-Quarter 2011 Average Sales Prices and Average Manufacturer Prices:  Impact on Medicare Reimbursement for Second Quarter 2012, August 2012.

HHS Office of Inspector General (OIG). 2012b. Surety Bonds Remain an Unused Tool to Protect Medicare from Home Health Overpayments, September 27, 2012.

Medicare Payment Advisory Commission (MedPAC). 2010. Report to the Congress:  Medicare Payment Policy, March 2010.

Medicare Payment Advisory Commission (MedPAC). 2011a. Moving Forward from the Sustainable Growth Rate (SGR) System, October 2011.

Medicare Payment Advisory Commission (MedPAC). 2011b. Report to the Congress:  Medicare Payment Policy, March 2011.

Medicare Payment Advisory Commission (MedPAC). 2012a. Report to the Congress:  Medicare and the Health Care Delivery System, June 2012.

Medicare Payment Advisory Commission (MedPAC). 2012b. Report to the Congress:  Medicare Payment Policy, March 2012.

Medicare Payment Advisory Commission (MedPAC). 2012c. Staff presentation by Dan Zabinski and Ariel Winter, “Addressing Medicare Payment Differences Across Settings:  Ambulatory Care Services,” October 4, 2012.

National Commission on Fiscal Responsibility and Reform. 2010. The Moment of Truth:  Report of the National Commission on Fiscal Responsibility and Reform, December 2010.

Office of Management and Budget (OMB). 2012a. Fiscal Year 2013 Budget of the U.S. Government, February 2012.

Office of Management and Budget (OMB). 2012b. Fiscal Year 2013 Budget of the U.S. Government:  Cuts, Consolidations, and Savings, February 2012.

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List of Acronyms Used in This Report

ACA                                       Affordable Care Act (see also PPACA)

ACE                                      acute care episode

ACO                                      accountable care organization

AHRQ                                  Agency for Healthcare Research and Quality

ALS                                       amyotrophic lateral sclerosis

ARC                                      Actuarial Research Corporation

ASC                                       ambulatory surgical center

ASP                                       average sales price

AMP                                      average manufacturer price

ATRA                                    American Taxpayer Relief Act of 2012

AWP                                      average wholesale price

BBA                                        Balanced Budget Act of 1997

CAD                                        coronary artery disease

CAH                                       critical access hospitals

CAHPS                                  Consumer Assessment of Healthcare Providers and Systems (survey)

CBO                                        Congressional Budget Office

CCA                                        Commonwealth Care Alliance

C-CPI                                     chained consumer price index

CEA                                        cost effectiveness analysis

CED                                        coverage with evidence development

CHF                                        congestive heart failure

CHIP                                      Children’s Health Insurance Program

CMMI                                    Center for Medicare & Medicaid Innovation

CMS                                       Centers for Medicare & Medicaid Services

COLA                                     cost of living adjustment

COPD                                     chronic obstructive pulmonary disease

CPI                                          consumer price index

CPI-U                                     consumer price index for urban consumers

CPS                                         Current Population Survey

CPT                                        Current Procedural Terminology

CRS                                        Congressional Research Service

CT                                           computed tomography

CTA                                        computed tomography angiography

DME                                       durable medical equipment

DMEPOS                              durable medical equipment, prosthetics, orthotics, and supplies

DRG                                       diagnosis related group

DSH                                        disproportionate share hospital

D-SNP                                   dual eligible special needs plan

EHR                                        electronic health record

ESRD                                      end stage renal disease

FDA                                        Food and Drug Administration

FEHBP                                  Federal Employees Health Benefits Program

FPL                                         federal poverty level

FTC                                        Federal Trade Commission

FY                                           Fiscal Year

GAO                                       Government Accountability Office

GDP                                        gross domestic product

GME                                       graduate medical education

GRACE                                  Geriatric Resources for Assessment and Care of Elders

HCFAC                                  Health Care Fraud and Abuse Control (program)

HEALTH Act                      Help Efficient, Accessible, Low-Cost, Timely Healthcare Act

HHA                                      home health agency

HHS                                       (Department of) Health and Human Services

HI                                           Hospital Insurance (trust fund)

HIT                                         health information technology

HITECH                                Health Information Technology for Economic and Clinical Health (Act)

HIPAA                                   Health Insurance Portability and Accountability Act of 1996

HMO                                      health maintenance organization

HSA                                        hospital service area

ICU                                         intensive care unit

IME                                         indirect medical education

INTERACT                          Interventions to Reduce Acute Care Transitions

IOAS                                       in-office ancillary services

IOM                                        Institute of Medicine

IPAB                                       Independent Payment Advisory Board

IRF                                          inpatient rehabilitation facility

LCA                                         least costly alternative

LCD                                         Local Coverage Decision

LIS                                          Low-Income Subsidy

LTCH                                     long-term care hospital

LTSS                                      long term services and supports

MA                                          Medicare Advantage

MAC                                       Medicare Administrative Contractor

MCBS                                     Medicare Current Beneficiary Survey

MEDCAC                               Medicare Evidence Development and Coverage Advisory Committee

MEDIC                                    Medicare drug integrity contractor

MedPAC                                Medicare Payment Advisory Commission

MEI                                         Medicare Economic Index

MIP                                         Medicare Integrity Program

MMA                                      Medicare Modernization Act of 2003

MPRR                                     multiple procedure payment reduction

MRA                                       magnetic resonance angiography

MRI                                         magnetic resonance imaging

MTM                                       medication therapy management

NASI                                       National Academy of Social Insurance

NBI MEDIC                          National Benefit Integrity Medicare Drug Integrity Contractor

NCD                                        National Coverage Decision

NCHC                                    National Coalition on Health Care

NCHS                                     National Center for Health Statistics

NIH                                        National Institutes of Health

NSC                                        National Supplier Clearinghouse

OACT                                     Office of the (Medicare) Actuary

OIG                                         (HHS) Office of Inspector General

OMB                                       Office of Management and Budget

ONC                                       Office of the National Coordinator (for Health Information Technology)

OPD                                        outpatient department

OPM                                       Office of Personnel Management

PACE                                      Program of All-inclusive Care for the Elderly

PCORI                                    Patient Centered Outcomes Research Institute

PDP                                         prescription drug plan

PE                                           practice expense

PEN                                        parenteral and enteral nutrition

PET                                         positron emission tomography

PL                                           Public Law

PPACA                                   Patient Protection and Affordable Care Act (see also ACA)

PPO                                        preferred provider organization

PPS                                         prospective payment system

QIO                                         Quality Improvement Organization

RAC                                        Recovery Audit Contractor

RBRVS                                   Resource-Based Relative Value Scale

RTI                                         Research Triangle Institute

RUC                                        Relative (Value) Update Committee

RVU                                       relative value unit

SDM                                        shared decision making

SGR                                        Sustainable Growth Rate

SMI                                         Supplementary Medicare Insurance (trust fund)

SNF                                        skilled nursing facility

SNP                                        special needs plan

SOW                                       scope of work

SSDI                                       Social Security Disability Insurance

TEFRA                                   Tax Equity and Fiscal Responsibility Act of 1982

VBID                                       value-based insurance design

VBP                                        value-based purchasing

ZPIC                                       Zone Program Integrity Contractor

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Section 5: Medicare Program Administration

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