Health Information Management

News: Medicare money set to run out sooner than expected

CDI Strategies, May 26, 2011

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2024. Thirteen years. That’s how long Medicare’s trust fund is expected to last, according to the 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. The new estimate says insolvency will occur five years earlier than last year’s prediction due to the slowdown in the national economy, among other concerns, according to AHA News Now.

The report does indicate some fiscal improvements to the fund due to the lower expenditures and additional tax revenues associated with the Patient Protection and Affordable Care Act. A new analysis from CMS released Thursday, May 12, indicates the Act could result in $120 billion in Medicare savings. In a May 13 blog post, Kathleen Sebelius, Secretary of Health and Human Services indicated that the savings could actually save the Medicare Trust Fund.
According to the CMS analysis titled “Strengthening Medicare: Better Health, Better Care, Lower Costs,” Affordable Care Act savings through 2015 include:
  • Reforming provider payments -- rewarding quality of care: $55 billion
  • Improving patient safety -- lowering hospital readmissions and hospital-acquired conditions: $10 billion
  • Value initiatives associated with durable medical equipment: $2.9 billion
  • Reducing excessive Medicare payments to insurance companies: $50 billion
The report highlights additional steps to reform healthcare including:
  • Better coordinated care for individuals enrolled in Medicare and Medicaid
  • Creation of the Center for Medicare and Medicaid Innovation to test innovative payment and service delivery models
  • Promotion of Accountable Care Organizations
  • Broader value-based purchasing programs
  • Creation of the Independent Payment Advisory Board to recommend ways to best improve quality of care for Medicare beneficiaries while lowering costs
  • Expanding use of Electronic Health Records
  • Administrative simplification
  • Medicare Advantage payment reform
  • Enhanced program integrity, fraud, waste, and abuse prevention work
  • Promoting prevention and wellness

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