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Medicare Attack #2: Turning Direct Fee Per Service Into Managed-Care.

There has to be more to the Democrats’ 400 billion dollars in Medicare cuts than just saving money on purchasing drugs. That would only add up to 112 billion dollars. So how did they plan to make the rest of the missing 288 billion dollars in cuts? Here are a few possible sources for answers:

In a Politico article, “No Medicare Hit For Seniors? Good Luck with that.” (By Jennifer Haberkorn & Paige Winfield Cunningham.), the authors reviewed possible significant cuts to Medicare which might approximate the cuts demanded by the Republicans and proffered by the Democrats, although undefined by the latter. Their basic theme is that if either party claims that Medicare can sustain significant cuts without reducing benefits to recipients, they are being unrealistic. (I cannot access a link to their article because it is behind a paywall.)

There is another document available on the internet which does outline cuts to Medicare: The Senior Protection Plan by the Center for American Progress. The Orwellian title (Those sound like  ‘broken promises’ to seniors to me.) belies facts regarding the billions of dollars involved in each of the proposed cuts. The 49 page “deficit hawk” document is worth reading, if only to convince you that the Beltway wizards think they have a real plan. However, Haberkorn & Cunningham demonstrate the long-range implications for these proposed cuts: either beneficiaries are hit with higher copays, deductibles, premiums, and have difficulty finding insurance coverage if eligibility age is raised; or providers are zapped with reduced payments for doctors services and hospital services. If eligibility age is raised to 67 from 65 (not in the broken promises to seniors plan/s) there would be 148 billion dollars in ‘savings’, reduced by higher costs in other government healthcare programs. It would raise medical costs for those reluctantly buying insurance in the private market. In addition, in another significant cut, pharmaceutical companies would have to agree to significant cuts around 112 billion dollars.   Other smaller cuts to Medicare cuts would reduce payments for training future doctors (residencies) and payments to hospitals serving special underserved zone hospitals, such as those in rural areas. The CAP plan makes cuts sound all so painless, but the healthcare analysts show that cuts have real consequences for patients and providers.

The most significant change to Medicare found in the Orwellian “Senior Protection Plan” was a strategic move to place Medicare patients into a statewide form of HMO managed care. While advertised as more care for less money, I would describe this as the “least amount of healthcare imaginable”, especially as the organization receiving the total payment can skim 60% of the savings of not providing care they were paid to offer.

Here’s a quote:

Under the Affordable Care Act, teams of providers can form “accountable care organizations” that are accountable for all of a patient’s care. Medicare sets a target for Medicare spending for each accountable care organization. If actual spending falls below the target, accountable care organizations can keep up to 60 percent of the savings. They must meet performance targets on measures of the quality of care, and can keep higher shares of savings for higher performance.

Similarly, at a macro level, states should have the option to form “accountable care states.” Accountable care states would have a global target for all health care spending by both public and private payers. They would be encouraged and empowered to achieve savings by implementing innovative payment and delivery system reforms (including reforms to scope of practice), price transparency initiatives, and administrative efficiencies. Accountable care states would receive enhanced flexibility and implementation grants to develop and implement savings plans.

If actual health care spending falls below the global target, states would be eligible for substantial bonus payments. To receive bonus payments, states would need to meet performance targets on publicly reported measures of cost, quality, and access—and would receive higher bonus payments for higher performance. “

The other insidious reduction made is to Medicaid by mandating that HMO’s in Medicaid stick to a competitive bidding process instead of receiving a fixxed payment from States (which currently sets the standard of care). Folks, this is a race to the bottom. 71% of people in Medicaid were placed into managed care programs (as per a 2010 50 State study.) Two-thirds of the studied States reported that their members had trouble accessing services. The new healthcare law makes Medicaid available to uninsured people under 133% of the FPL. In a healthcare setting reduced through competitive bidding, and with restricted care through managed care systems, more access to Medicaid does not sound desirable or even safe for medical patients.

Reinforcing that this is the Democrat’s plan is the subsequent Tax/Spending reform report, out today, from CAP, which includes 385 billion in cuts, identified as those described above. Spending cuts begin on Page 17. Jared Bernstein, former Obama Administration economist, rolls out the CAP plan as the ‘progressive’ plan in a HuffPo post HERE. This is a classic bait-and-switch, because within this Tax reform/fiscal cliff plan lurks the “Senior Protection Plan”.

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