Democrats and the Obama administration celebrated last week's release of the Medicare trustees' report as proof that the health care law helps to shore up the program's finances, extending the solvency of the Medicare trust fund 12 years longer than last year's estimate and reducing the fund's long-term deficit by more than 3 percent of taxable payroll.
But like he did in April, Centers for Medicare and Medicaid Services actuary Richard Foster expressed concern over a major cost-saving provision in the law that would tie payment rates for certain Medicare services to overall economic productivity. "The annual price updates for most categories of nonphysician health services will be adjusted downward each year by the growth in the economywide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree -- or even approach such a level," said Foster, who concludes that the financial projections in the report are not a "reasonable expectation" for actual program operations.
Adding to the complications is the question of doctors' reimbursement, which faces a 23 percent cut under the SGR formula at the end of this year. Given the unknowns of the "doc fix" and the question if Congress will ever allow the productivity cuts to occur, CMS actuaries issued an alternative financial estimate of the program, finding that "neither of these update reductions is sustainable in the long range."
Do you think the productivity payment rate adjustments in the health care law will ever take effect? Or will they become the next SGR, with Congress maneuvering to avoid reductions in payments to Medicare goods and services? If they do take effect, how much of an impact will they have?