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HHS FY2016 Budget in Brief


Centers for Medicare & Medicaid Services (CMS): Medicare

Centers for Medicare & Medicaid Services

The Centers for Medicare & Medicaid Services ensures availability of effective, up-to-date health care coverage and promotes quality care for beneficiaries.

CMS Medicare Budget Overview

(Dollars in millions)

Current Law Outlays and Offsetting Receipts 2014 2015 2016 2016
+/- 2015
Benefits Spending (gross) /1 590,441 613,530 672,599 +59,069
Less: Premiums Paid Directly to Part D Plans /2 -7,455 -8,437 -10,212 -1,776
Subtotal, Benefits Net of Direct Part D Premium Payments 582,986 605,093 662,386 +57,293
Related Benefit Expenses /3 14,833 14,195 14,104 -91
Administration /4 8,350 8,766 8,834 +68
Total Outlays, Current Law 606,169 628,054 685,324 +57,270
Premiums and Offsetting Receipts -94,476 -97,603 -101,805 -4,203
Current Law Outlays, Net of Offsetting Receipts 511,693 530,451 583,519 +53,068
Prevent Reduction in Medicare Physician Payments (Net) 0 5,337 8,786 +3,449
Adjusted Baseline Outlays, Net of Offsetting Receipts 511,693 535,788 592,305 +56,517

 

Proposed Law 2014 2015 2016 2016
+/- 2015
Medicare Proposals, Net of Offsetting Receipts /5 0 630 -2,413 -3,043
Program Management 0 0 630 +630
Total Medicare Proposals, Net of Offsetting Receipts 0 630 -1,783 -2,413
Savings from Program Integrity Investments /6
0 0 -811 -811
Total Net Outlays, Adjusted Baseline, Savings from Program Integrity Investments and Proposed Law 511,693 536,418 589,711 +53,293
Mandatory Total Net Outlays, Proposed Policy /7 505,307 529,991 582,972 +52,981

Table Footnotes

1/ Represents all spending on Medicare benefits by either the Federal government or other beneficiary premiums.   Includes Medicare Health Information Technology Incentives.

2/ In Part D only, some beneficiary premiums are paid directly to plans and are netted out here because those payments are not paid out of the Trust Funds.

3/ Includes related benefit payments, including refundable payments made to providers and plans, transfers to Medicaid, and additional Medicare Advantage benefits.  

4/ Includes CMS Program Management, non-CMS administration, HCFAC, and QIOs. 

5/ Represents all scorable costs and savings under PAYGO rules of legislative proposals that affect the Medicare trust funds, including transfers to Medicaid of $370 million in FY 2015 and $775 million in FY 2016 to extend the Qualified Individuals (QI) Program.

6/ Includes non-PAYGO savings from HHS and Social Security program integrity investments on the Medicare baseline.

7/ Removes total Medicare discretionary amount: FY 2014- $6,386 million; FY 2015- $6,427 million; and FY 2016- $6,739 million.

CMS Medicare Programs and Services

In FY 2016, the Office of the Actuary has estimated that gross current law spending on Medicare benefits will total $672.6 billion.  Medicare will provide health insurance to 57 million individuals who are 65 or older, disabled, or have end-stage renal disease.

The Four Parts of Medicare

Part A ($195.4 billion gross fee‑for‑service spending in 2016):  Medicare Part A pays for inpatient hospital, skilled nursing facility, home health related to a hospital stay, and hospice care.  Part A financing comes primarily from a 2.9 percent payroll tax paid by both employees and employers. 

Generally, individuals with 40 quarters of Medicare‑covered employment are entitled to Part A without paying a premium, but most services require a beneficiary co‑payment or coinsurance.  In 2015, beneficiaries pay a $1,260 deductible for a hospital stay of 1–60 days, and $157.50 daily coinsurance for days 21–100 in a skilled nursing facility. 

Part B ($171.2 billion gross fee‑for‑service spending in 2016):  Medicare Part B pays for physician, outpatient hospital, end-stage renal disease, laboratory, durable medical equipment, certain home health, and other medical services.  Part B coverage is voluntary, and about 91 percent of all Medicare beneficiaries are enrolled in Part B.  Approximately 25 percent of Part B costs are financed by beneficiary premiums, with the remaining 75 percent covered by general revenues. The standard monthly Part B premium is $104.90 in 2015, the same as the 2014 and 2013 premium.  The Part B deductible remains unchanged at $147.  Some beneficiaries pay a higher Part B premium based on their income: those with annual incomes above $85,000 (single) or $170,000 (married) will pay from $146.90 to $335.70 per month in 2015.

Since 2005, Medicare Advantage enrollment has significantly increased from 5.8 million to a projected 18.3 million in 2016.

Part C ($198.0 billion gross spending in 2016):  Medicare Part C, the Medicare Advantage program, pays plans a capitated monthly payment to provide all Part A and B services, and Part D services, if offered by the plan.  Plans can offer additional benefits or alternative cost sharing arrangements that are at least as generous as the standard Parts A and B benefits under traditional Medicare.  In addition to the regular Part B premium, beneficiaries who choose to participate in Part C may pay monthly plan premiums which vary based on the services offered by the plan and the efficiency of the plan. 

Healthcare-Associated Infections

CMS in partnership with the Centers for Disease Control and Prevention, the Agency for Healthcare Research and Quality, and the Office of the Secretary is working to improve patient safety and reduce the national rate of hospital-acquired catheter-associated urinary tract infections.  The goal is to reduce the national standardized hospital-acquired catheter-associated urinary tract infection ratio by 10 percent by September 2015 over the current March 2013 infection ratio baseline of 1.02 per 1,000 days of treatment.

In 2015, Medicare Advantage enrollment will total approximately 17 million.  Over the past ten years, Medicare Advantage enrollment as a percentage of total enrollment has increased by 138 percent. CMS data confirm that beneficiary access to a Medicare Advantage plan remains strong and stable in 2015 at 99 percent, premiums have remained stable, Medicare Advantage supplemental benefits have increased, and enrollment is growing faster than traditional Medicare.

Part D ($108.0 billion gross spending in 2016):  Medicare Part D offers a standard prescription drug benefit with a 2015 deductible of $320 and an average estimated monthly premium of $32.  Enhanced and alternative benefits are also available with varying deductibles and premiums.  Beneficiaries who choose to participate are responsible for covering a portion of the cost of their prescription drugs.  This portion may vary depending on whether the medication is generic or a brand name and how much the beneficiary has already spent on medications that year.  Low‑income beneficiaries are responsible for varying degrees of cost-sharing, with co‑payments ranging from $0 to $6.60 in 2015 and low or no monthly premiums. 

In 2016, the number of beneficiaries enrolled in Medicare Part D is expected to increase by about 3.5 percent to 43.7 million, including about 12.6 million beneficiaries who receive the low‑income subsidy.  In 2015, approximately 58 percent of those with Part D coverage are enrolled in a stand‑alone Part D prescription drug plan, 37 percent are enrolled in a Medicare Advantage Prescription Drug Plan, and the remaining beneficiaries are enrolled in an employer plan or the Limited Income Newly Eligible Transition plan.  Overall, approximately 90 percent of all Medicare beneficiaries receive prescription drug coverage through Medicare Part D, employer‑sponsored retiree health plans, or other creditable coverage.

The Affordable Care Act closes the Medicare Part D coverage gap, or “donut hole,” through a combination of manufacturer discounts and gradually increasing federal subsidies.  Beneficiaries fall into the coverage gap once their total drug spending exceeds an initial coverage limit ($2,960 in 2015), until they reach the threshold for qualified out-of-pocket spending ($4,700 in 2015), at which point they are generally responsible for five percent of their drug costs.  Prior to the Affordable Care Act, beneficiaries were responsible for 100 percent of their drug costs in the coverage gap. 

Medicare Enrollment
(Enrollees in millions)

Group 2014 2015 2016 2016
+/- 2015
Aged 44.6 46.3 47.9 1.6
Disabled 8.9 9.0 9.1 +0.1
Total Beneficiaries 53.5 55.3 57.0 +1.7

Under the Affordable Care Act, in 2016, non-Low-Income Subsidy beneficiaries who reach the coverage gap will pay 45 percent of the cost of covered Part D brand drugs and biologics, and 58 percent of the costs for all generic drugs in the coverage gap.  Cost‑sharing in the coverage gap will continue to decrease each year until beneficiaries are required to pay only 25 percent of the costs of covered Part D drugs in 2020 and beyond. 

In 2014, more than 5 million beneficiaries reached the coverage gap and saved more than $4.7 billion on their medications.  These savings averaged about $941 per person. Cumulatively since enactment of the Affordable Care Act, 9.4 million beneficiaries have saved a total of $15 billion on prescription drugs.

The FY 2016 Budget includes a package of Medicare legislative proposals that will save a net $423.1 billion over 10 years.  The proposals are scored off the President’s Budget adjusted baseline, which assumes a zero percent update to Medicare physician payments.  These reforms will strengthen Medicare by more closely aligning payments with the costs of providing care, encouraging health care providers to deliver better care and better outcomes for their patients, and improving access to care for beneficiaries.  The Budget includes investments to reform Medicare physician payments and accelerate physician participation in high-quality and efficient healthcare delivery systems.  Finally, it makes structural changes in program financing that will reduce Federal subsidies to high income beneficiaries and create incentives for beneficiaries to seek high value services.  Together, these measures will extend the Hospital Insurance Trust Fund solvency by approximately five years.

2016 Legislative Proposals

The FY 2016 Budget includes a package of Medicare legislative proposals that will save a net $423.1 billion over 10 years.  The proposals are scored off the President’s Budget adjusted baseline, which assumes a zero percent update to Medicare physician payments.  These reforms will strengthen Medicare by more closely aligning payments with the costs of providing care, encouraging health care providers to deliver better care and better outcomes for their patients, and improving access to care for beneficiaries.  The Budget includes investments to reform Medicare physician payments and accelerate physician participation in high-quality and efficient healthcare delivery systems.  Finally, it makes structural changes in program financing that will reduce Federal subsidies to high income beneficiaries and create incentives for beneficiaries to seek high value services.  Together, these measures will extend the Hospital Insurance Trust Fund solvency by approximately five years.

Encourage Delivery System Reform

Reform Medicare Physician Payments to Promote Participation in High-quality and Efficient Health Care Delivery Systems: This proposal would accelerate physician participation in high-quality and efficient health care delivery systems by repealing the Medicare Sustainable Growth Rate formula and reforming Medicare physician payments in a manner consistent with the reforms included in recent bipartisan, bicameral legislation [$44.0 billion in costs over 10 years]

Encourage Efficient Care by Improving Incentives to Provide Care in the Most Appropriate Ambulatory Setting: The Budget proposes to improve incentives to provide ambulatory care in the most appropriate clinical setting.  Evidence suggests that in recent years, billing of many ambulatory services has been shifting from physicians’ offices to the usually higher paid hospital outpatient department setting, increasing Medicare spending and beneficiary cost-sharing.  This proposal helps mitigate the financial implications of this trend by lowering payment for services provided in off-campus hospital outpatient departments under the Outpatient Prospective Payment System to either the Medicare Physician Fee Schedule-based rate or the rate for surgical procedures covered under the Ambulatory Surgical Center payment system.  These changes would be phased in over four years beginning in CY 2017, and Secretarial authority would be provided to adjust payments in the event beneficiary access problems arise.  [$29.5 billion in savings over 10 years]

Implement Bundled Payment for Post-Acute Care:  Beginning in 2020, this proposal would implement bundled payment for post-acute care providers, including long‑term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health providers.  Payments would be bundled for at least half of the total payments for post-acute care providers.  Rates based on patient characteristics and other factors will be set so as to produce a permanent and total cumulative adjustment of -2.85 percent by 2022.  Beneficiary coinsurance would equal that under current law (e.g., to the extent the beneficiary uses skilled nursing facilities, they would be responsible for the current law coinsurance rate).  [$9.3 billion in savings over 10 years]

Allow CMS to Assign Beneficiaries to Federally Qualified Health Centers and Rural Health Clinics Participating in the Medicare Shared Savings Program: This proposal would allow the Secretary to assign more Medicare fee-for-service beneficiaries to Federally Qualified Health Centers and Rural Health Clinics that participate in an Accountable Care Organization under the Medicare Shared Savings Program.  Federally Qualified Health Centers and Rural Health Clinics are important providers of primary care services and part of the safety net for the nation’s health care system.  This proposal could result in assignment of a greater number of Medicare fee-for-service beneficiaries to Accountable Care Organizations and would stimulate greater interest in the program by Federally Qualified Health Centers and Rural Health Clinics and support the program’s goals to improve quality of care for Medicare fee-for-service beneficiaries while reducing overall growth in costs. [$80 million in savings over 10 years]

Expand Basis for Beneficiary Assignment for Accountable Care Organizations to include Nurse Practitioners, Physicians Assistants, and Clinical Nurse Specialists.  This proposal would allow the Secretary to base beneficiary assignment in the Medicare Shared Savings Program on a broader set of primary care providers.  Under the proposal, beneficiaries would be able to be assigned to an Accountable Care Organization on the basis of services delivered by nurse practitioners, physician assistants and clinical nurse specialists.  Statute requires that assignment of beneficiaries to an Accountable Care Organization be based on their utilization of primary care services provided by physicians.  Expanding the assignment of beneficiaries to nurse practitioners, physician assistants and clinical nurse specialists, in addition to physicians, could broaden the scope of Accountable Care Organizations to better reflect the types of professionals that deliver primary care services to fee-for-service beneficiaries.  Further, it could result in a greater number of Medicare fee-for-service beneficiaries being assigned to Accountable Care Organizations that rely on non-physician practitioners for a majority of primary care services, such as those in rural or underserved areas.  [$60 million in savings over 10 years]

Allow Accountable Care Organizations to Pay Beneficiaries for Primary Care Visits up to the Applicable Medicare Cost Sharing Amount: This proposal would allow Accountable Care Organizations participating in two-sided risk models to pay beneficiaries for a primary care visit.  Beneficiaries with no supplemental insurance would have all or part of their cost sharing covered by the Accountable Care Organization, and beneficiaries with supplemental insurance, would receive a payment from the Accountable Care Organization.  Participation is voluntary, and no additional payments will be made to the Accountable Care Organization to cover the costs of this investment.  [No budget impact]

Medicare Physician Payment Reform

The Budget adopts the following policies for reforming the way Medicare pays physicians, consistent with recent bipartisan, bicameral legislation:

  • Terminates the Sustainable Growth Rate formula for updating physician payments;
  • Provides a period of stability while promoting participation in alternative payment models that encourage high quality, efficient care; and
  • Streamlines value-based incentives for those physicians remaining outside of alternative payment models.

Establish a Hospital-Wide Readmissions Reduction Measure: This proposal would make revisions to the Hospital Readmissions Reduction Program to allow the Secretary to use a comprehensive Hospital-Wide Readmission Measure that encompasses broad categories of conditions rather than discrete applicable conditions.  The Secretary would be permitted to make adjustments determined necessary to accurately measure readmissions and implement the program in a budget neutral manner. [No budget impact]

Establish Quality Bonus Payments for Part D Plans:  This proposal would allow Medicare to revise the Part D plan payment methodology to reimburse plans based on their quality star ratings.  Plans with quality ratings of four stars or higher would have a larger portion of their bid subsidized by Medicare, while plans with lower ratings would receive a smaller subsidy.  This proposal is modeled after the Medicare Advantage quality bonus program, but would be implemented in a budget neutral fashion.  It would not impact risk corridor payments, reinsurance, low-income subsidies, or other components of Part D payments.  [No budget impact]

Expand Sharing Medicare Data with Qualified Entities:  The Affordable Care Act includes a provision which allows CMS to make Medicare Parts A, B, or D claims data available to qualified entities for the purpose of publishing reports evaluating the performance of providers and suppliers.  This proposal would expand the scope of how qualified entities can use Medicare data beyond simply performance measurement.  For example, entities would be allowed to use the data for fraud prevention activities and value-added analysis for physicians.  In addition, qualified entities would be able to release raw claims data, instead of simply summary reports, to interested Medicare providers for care coordination and practice improvement.  This proposal includes additional resources for CMS by making claims data available to a qualified entity for a fee equal to Medicare’s cost of providing the data.  [No budget impact]

Extend Accountability for Hospital-acquired Conditions This proposal would require hospitals to code conditions as “present on arrival” at a hospital instead of “present on admission” to the hospital for the purposes of Medicare Hospital Acquired Conditions payment policy and quality reporting.  [No budget impact]

Implement Value-Based Purchasing for Additional Providers:  This proposal would implement a budget neutral value-based purchasing program for several additional provider types, including skilled nursing facilities, home health agencies, ambulatory surgical centers, hospital outpatient departments, and community mental health centers beginning in 2017.  At least two percent of payments must be tied to the quality and efficiency of care in the first two years of implementation, and at least five percent beginning in 2019.  [No budget impact]

Make Permanent the Medicare Primary Care Incentive Payment in a Budget Neutral Manner: Beginning CY 2016, this proposal would convert the temporary 10 percent primary care incentive payment program enacted under the Affordable Care Act into a permanent program that is budget neutral within the Medicare Physician Fee Schedule.  Under current law, the program is due to expire after CY 2015.  Making this temporary program permanent would provide valuable long‑term incentives for the provision of primary care services.  [No budget impact]

Increase Value in Medicare Provider Payments

Eliminate the 190-day Lifetime Limit on Inpatient Psychiatric Facility Services: The 190-day lifetime limit on inpatient services delivered in specialized psychiatric hospitals is one of the last obstacles to behavioral health parity in the Medicare benefit. Beginning in FY 2016, this proposal would eliminate the 190-day limit and more closely align the Medicare mental health care benefit with the current inpatient physical health care benefit.  Many beneficiaries who utilize psychiatric services are eligible for Medicare due to a disability, which means they are often younger beneficiaries who can easily reach the 190-day limit over their lifetimes.  Therefore, this proposal would expand the psychiatric benefit and bring parity to the sites of service, while also containing the additional costs of removing the 190-day limit.  [$5.0 billion in costs over 10 years]

Align Medicare Drug Payment Policies with Medicaid Policies for Low‑Income Beneficiaries:  Currently, drug manufacturers are required to pay specified rebates for drugs dispensed to Medicaid beneficiaries.  In contrast, Medicare Part D plan sponsors negotiate with manufacturers to obtain plan‑specific rebates at unspecified levels.  Analysis has found substantial differences in rebate amounts and prices paid for brand name drugs under the two programs, with Medicare receiving significantly lower rebates and paying higher prices than Medicaid.  Prior to the establishment of Medicare Part D, manufacturers paid Medicaid rebates for drugs provided to the dual eligible population.  This proposal would allow Medicare to benefit from the same rebates that Medicaid receives for brand name and generic drugs provided to beneficiaries who receive the Part D Low‑Income Subsidy, beginning in 2017.  The proposal would require manufacturers to pay the difference between rebate levels they already provide Part D plans and the Medicaid rebate levels.  Manufacturers would also be required to provide an additional rebate for brand name and generic drugs whose prices grow faster than inflation.  [$116.1 billion in savings over 10 years]

Adjust Payment Updates for Certain Post‑Acute Care Providers:  This proposal reduces market basket updates for inpatient rehabilitation facilities, long-term care hospitals, and home health agencies by 1.1 percentage points in each year 2016 through 2025.  Payment updates for these providers would not drop below zero as a result of this proposal.  This proposal will reduce market basket updates for skilled nursing facilities under an accelerated schedule, beginning with a -2.5 percent update in FY 2016 tapering down to a      -0.97 percent update in FY 2023. [$102.1 billion in savings over 10 years]

Increase the Minimum Medicare Advantage Coding Intensity Adjustment:  Starting in 2017, this proposal changes the yearly increase to the minimum coding intensity adjustment from 0.25 percentage points to 0.67 percentage points until the minimum adjustment plateaus at 8.76 percent in 2021 and thereafter.  [$36.2 billion in savings over 10 years]

Reduce Medicare Coverage of Bad Debts:  For most institutional provider types, Medicare currently reimburses 65 percent of bad debts resulting from beneficiaries’ non‑payment of deductibles and coinsurance after providers have made reasonable efforts to collect the unpaid amounts.  Starting in 2016, this proposal would reduce bad debt payments to 25 percent over 3 years for all providers who receive bad debt payments.  This proposal would more closely align Medicare policy with private payers, who do not typically reimburse for bad debt.  [$31.1 billion in savings over 10 years]

Strengthen the Independent Payment Advisory Board to Reduce Long-term Drivers of Medicare Cost Growth:  The Independent Payment Advisory Board has been highlighted by economists and health policy experts as a key contributor to Medicare’s long‑term solvency when implemented.  Under current law, if the projected Medicare per capita growth rate exceeds a predetermined target growth rate, the Independent Payment Advisory Board will recommend policies to Congress to reduce the Medicare growth rate to meet a specified target.  To further moderate Medicare cost growth, this proposal would lower the target rate for triggering Board action applicable for 2018 and after from gross domestic product per capita growth plus 1 percentage point to gross domestic product per capita growth plus 0.5 percentage points.  [$20.9 billion in savings over 10 years]

Better Align Graduate Medical Education Payments with Patient Care Costs:  MedPAC has found that existing Medicare add‑on payments to teaching hospitals for the indirect costs of medical education significantly exceed the actual added patient care costs these hospitals incur.  This proposal would partially correct this imbalance by reducing these payments by 10 percent, beginning in 2016.  In addition, the Secretary would be granted the authority to set standards for teaching hospitals receiving Graduate Medical Education payments to encourage training of primary care residents and emphasize skills that promote high-quality and high-value health care.  [$16.3 billion in savings over 10 years]

Accelerate Manufacturer Drug Discounts to Provide Relief to Medicare Beneficiaries in the Coverage Gap:  Prior to the passage of the Affordable Care Act, beneficiaries were responsible for the full cost of their medications while in the Medicare Part D coverage gap.  The law closes this gap by 2020 through a combination of manufacturer discounts and federal subsidies.  Currently, beneficiaries in the Medicare Part D coverage gap receive a 50 percent discount from pharmaceutical manufacturers on their brand drugs.    Beginning in plan year 2017, this proposal would increase manufacturer discounts to 75 percent, effectively closing the coverage gap for brand drugs three years earlier than under current law.  The phase-out for generic drugs would continue through 2020.  [$9.4 billion in savings over 10 years]

Modify Reimbursement of Part B Drugs:  To reduce excessive payment of Part B drugs administered in the physician office and hospital outpatient settings, this proposal lowers payment from 106 percent of the average sales price to 103 percent of average sales price starting in 2016.  If a physician’s cost for purchasing the drug exceeds average sales price + 3 percent, the drug manufacturer would be required to provide a rebate such that the net cost to the provider to acquire the drug equals average sales price + 3 percent minus a standard overhead fee to be determined by the Secretary.  This rebate would not be used in calculating average sales price.  The Secretary would also be given authority to pay a portion or the entire amount above average sales price in the form of a flat fee rather than a percentage, with the modification to be made in a budget neutral manner relative to average sales price + 3 percent.  [$7.4 billion in savings over 10 years]

Align Employer Group Waiver Plan Payments with Average Medicare Advantage Plan Bids:  Beginning in payment year 2017, this proposal would establish payment amounts for Employer Group Waiver Plans based on the average Medicare Advantage plan bid in each individual market.  [$7.2 billion in savings over 10 years]

Exclude Certain Services from the In-Office Ancillary Services Exception:  The in-office ancillary services exception to the physician self-referral law was intended to allow physicians to self-refer for certain services to be furnished by their group practices for patient convenience.  While there are many appropriate uses for this exception, certain services, such as advanced imaging and outpatient therapy, are rarely furnished on the same day as the related physician office visit.  Additionally, there is evidence that suggests that this exception may have resulted in overutilization and rapid growth of certain services.  Effective calendar year 2017, this proposal would seek to encourage more appropriate use of ancillary services by amending the in-office ancillary services exception to prohibit referrals for radiation therapy, therapy services, advanced imaging, and anatomic pathology services, except in cases where a practice is clinically integrated and required to demonstrate cost containment, as defined by the Secretary.  [$6.0 billion in savings over 10 years]

Encourage Appropriate Use of Inpatient Rehabilitation Facilities:  This proposal would adjust the standard for classifying a facility as an inpatient rehabilitation facility.  Under current law, at least 60 percent of patient cases admitted to an inpatient rehabilitation facility must meet one or more of 13 designated severity conditions.  This standard was changed to 60 percent from 75 percent in the Medicare, Medicaid, and SCHIP Extension Act of 2007.  Beginning in 2016, this proposal would reinstitute the 75 percent standard to ensure that health facilities are classified appropriately based on the patients they serve.  [$2.2 billion in savings over 10 years]

Reduce Critical Access Hospital Reimbursements from 101 Percent of Reasonable Costs to 100 percent of Reasonable Costs:  Critical access hospitals are small, rural hospitals that provide their communities with access to basic emergency and inpatient care.  Critical access hospitals receive enhanced cost‑based Medicare payments (rather than the fixed‑fee payments most hospitals receive).  Medicare currently pays critical access hospitals 101 percent of reasonable costs.  This proposal would reduce this rate to 100 percent beginning in 2016.  [$1.7 billion in savings over 10 years]

Prohibit Critical Access Hospital Designation for Facilities that are Less Than 10 Miles from the Nearest Hospital:  Beginning in 2016, this proposal would prevent hospitals that are within 10 miles of another hospital from maintaining designation as a critical access hospital and receiving the enhanced rate.  These hospitals would instead be paid under the applicable prospective payment system.  [$770 million in savings over 10 years]

Closing the Coverage Gap
Medicare Part D Coverage Gap Cost-Sharing by Year/1

Year Percent Cost Sharing Paid by Enrollee for Branded Drugs (Current Law) Percent Cost Sharing Paid by Enrollee for Branded Drugs (Proposed Law) Percent Cost Sharing Paid by Enrollee for Generic Drugs (Proposed and Current Law)
2010 /2 100% 100% 100%
2011 50% 50% 93%
2012 50% 50% 86%
2013 47.5% 47.5% 79%
2014 47.5% 47.5% 72%
2015 45% 45% 65%
2016 45% 45% 58%
2017 40% 25% 51%
2018 35% 25% 44%
2019 30% 25% 37%
2020 25% 25% 25%
2021 25% 25% 25%
2022 25% 25% 25%

1/ Savings only apply to applicable beneficiaries who do not receive the low income subsidy.
2/ Percent cost sharing does not include a $250 rebate for each beneficiary who hits the coverage gap in 2010.

Require Mandatory Reporting of Other Prescription Drug Coverage:  Although health plans offered by employers and unions are required by Medicare secondary payer-related law to report enrollment information on certain active employees, there is no requirement for other group health plans that offer a prescription drug benefit to report their plan enrollees with drug coverage to HHS or the Part D plan sponsors. This proposal would extend mandatory reporting requirements to include prescription drug coverage. This would ensure that all prescription drug coverage provided by group health plans that is primary to Medicare coverage is communicated to HHS and to Part D sponsors, thereby permitting sponsors to comply with the statutory Medicare secondary payer requirements.  [$480 million in savings over 10 years]

Expand Coverage of Dialysis Services for Beneficiaries with Acute Kidney Injury: This proposal would expand the Part B scope of benefits to cover short-term scheduled dialysis at a Medicare-certified End Stage Renal Disease facility for the treatment of acute kidney injury.  This proposal would make payment for these services by designating facilities, both freestanding and hospital-based, as providers when billing for dialysis to treat patients with an acute kidney injury.  [$200 million in savings over ten years]

Allow the Secretary to Negotiate Prices for Biologics and High Cost Prescription Drugs: The Administration looks forward to working with Congress to address growing pharmaceutical costs. The Budget proposes one potential solution that would give the Secretary the authority to negotiate with manufacturers to determine drug prices under the Part D program for biologics, as well as high-cost drugs eligible for placement on a plan’s specialty tier.  As a condition of participation in the Part D program, manufacturers must engage in negotiations with HHS. As part of the negotiation, manufacturers would be required to supply HHS with all data and information necessary to come to an agreement on price.  The final price would be indexed to the Consumer Price Index and plan sponsors would be permitted to negotiate additional discounts off this price.  HHS will monitor for increased introductions of physician administered drugs and excess price inflation for Part D drugs currently on the market.  [No budget impact]

Clarify the Medicare Fraction in the Medicare DSH Statute: This proposal would clarify that individuals who have exhausted inpatient benefits under Part A or who have elected to enroll in Part C plan should be included in the calculation of the Medicare fraction of hospitals’ Disproportionate Share Hospital patient percentages.  [No budget impact]

Establish Authority for a Program to Prevent Prescription Drug Abuse in Medicare Part D: HHS requires Part D sponsors to conduct drug utilization review, which assesses the prescriptions filled by a particular enrollee.  These efforts can identify overutilization that results from inappropriate or even illegal activity by an enrollee, prescriber, or pharmacy. HHS’s statutory authorities to take preventive measures in response to this information are limited. This proposal would give the HHS Secretary the authority to establish a program in Part D that would require that high-risk Medicare beneficiaries only utilize certain prescribers and/or pharmacies to obtain controlled substance prescriptions, similar to many state Medicaid programs. The Medicare program would be required to ensure that beneficiaries retain reasonable access to services of adequate quality.  [No budget impact]

Modify the Documentation Requirement for Face-to-face Encounters for Durable Medical Equipment Claims:  Currently, a physician must document a beneficiary’s face-to-face encounter with a physician or non-physician practitioner as a condition for Medicare payment for an order.  This proposal would modify that requirement by allowing certain non-physician practitioners to document the face-to-face encounter.  [No budget impact]

Suspend Coverage and Payment for Questionable Part D Prescriptions and Incomplete Clinical Information: This proposal would provide the Secretary authority to suspend coverage and payment for drugs prescribed by providers who have been engaged in misprescribing or overprescribing drugs with abuse potential.  The Secretary would also be able to suspend coverage and payment for Part D drugs when those prescriptions present an imminent risk to patients.  In addition, the proposal would provide the Secretary authority to require additional information on certain Part D prescriptions, such as diagnosis codes, as a condition of coverage.  [No budget impact]

Medicare Proposal: Increase Income Related Premiums under Part B and D

Current Law President’s Budget 2016 Proposal
Modified adjusted gross income threshold (MAGI) Applicable premium percentage (Percentage) MAGI Percentage
Less than $85,000 25 percent for Part B; around 25.5 percent for Part D Less than $85,000 25 percent for Part B; around 25.5 percent for Part D
More than $85,000 but not more than $107,000 35% More than $85,000 but not more than $107,000 40%
More than $107,000 but not more than $160,000 50% More than $107,000 but not more than $133,500 52.5%
More than $133,500 but not more than $160,000 65%
More than $160,000 but not more than $214,000 65% More than $160,000 but not more than $196,000 77.5%
More than $214,000 80% More than $196,000 90%

The table reflects MAGI thresholds for Medicare beneficiaries who file an individual tax return with income.

Medicare Structural Reforms

Increase Income Related Premiums under Medicare Parts B and D:  Under Medicare Parts B and D, certain beneficiaries pay higher premiums based on their higher levels of income.  Beginning in 2019, this proposal would restructure income-related premiums under Medicare Parts B and D by increasing the applicable percent for calculating the lowest income-related premiums by five percentage points, from 35 percent to 40 percent of program costs, and creating new tiers every 12.5 percentage points until capping the highest tier at 90 percent.  The proposal maintains the current income thresholds associated with these premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums.  This proposal would help improve the financial stability of the Medicare program by reducing the federal subsidy of Medicare costs for those who need the subsidy the least.  [$66.4 billion in savings over ten years]

Encourage the Use of Generic Drugs by Low-Income Beneficiaries:  Beginning in plan year 2017, this proposal would induce greater generic utilization by lowering copayments for generic drugs.  Brand copayments would be increased to twice the level required under current law.  The Secretary would have the authority to exclude brand drugs in therapeutic classes from this policy if therapeutic substitution is determined not to be clinically appropriate or a generic is not available.  Brand drugs could be obtained at current law cost-sharing levels if beneficiaries successfully appeal.  In addition, the change in cost-sharing would be applied to low income beneficiaries receiving a partial subsidy upon reaching the catastrophic coverage level.  Beneficiaries qualifying for institutionalized care, who currently face no copayments, would be excluded from these changes.  [$8.9 billion in savings over 10 years]

Introduce a Part B Premium Surcharge for New Beneficiaries who Purchase Near First-dollar Medigap Coverage:  Medicare requires cost-sharing for various services, but Medigap policies sold by private insurance companies provide beneficiaries with additional coverage for these out-of-pocket expenses.  Some Medigap plans cover all or almost all copayments, even for routine care.  This practice gives beneficiaries less incentive to consider the cost of services, leading to higher Medicare costs and Part B premiums.  This proposal would introduce a Part B premium surcharge for new beneficiaries who purchase Medigap policies with particularly low cost‑sharing requirements, starting in 2019.  Other Medigap plans that meet minimum cost-sharing requirements would be exempt.  The surcharge would be equivalent to approximately 15 percent of the average Medigap premium (or about 30 percent of the Part B premium).  [$4.0 billion in savings over 10 years]

Modify the Part B Deductible for New Beneficiaries:  Beneficiaries who are enrolled in Medicare Part B are required to pay an annual deductible ($147 in calendar year 2015).  This deductible helps to share responsibility for payment of Medicare services between Medicare and beneficiaries.  To strengthen program financing and encourage beneficiaries to seek high-value health care services, this proposal would apply a $25 increase to the Part B deductible in 2019, 2021, and 2023 respectively for new beneficiaries beginning in 2019.  Current beneficiaries or near retirees would not be subject to the revised deductible.  [$3.7 billion in savings over 10 years]

Introduce Home Health Copayments for New Beneficiaries:  This proposal would create a co‑payment for new beneficiaries of $100 per home health episode, starting in 2019.  Consistent with MedPAC recommendations, this co‑payment would apply only for episodes with five or more visits not preceded by a hospital or inpatient post‑acute stay.  Home health services represent one of the few areas in Medicare that do not currently include some beneficiary cost-sharing.  This proposal aims to encourage appropriate use of home health services while protecting beneficiary access.  [$830 million in savings over 10 years]

Increase the Availability of Generic Drugs and Biologics

Prohibit Brand and Generic Drug Manufacturers from Delaying the Availability of New Generic Drugs and Biologics:  Beginning in 2016, this proposal would prohibit anticompetitive pay-for‑delay agreements between branded and generic pharmaceutical companies.  This proposal increases the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into anticompetitive agreements which block consumer access to safe and effective generics.  This proposal would save money in Medicare and Medicaid.  [$10.1 billion in Medicare savings over 10 years]

Modify Length of Exclusivity to Facilitate Faster Development of Generic Biologics:  This proposal would increase competition for biological products by reducing the number of years (from 12 to 7) that a drug company has exclusivity or monopoly pricing power and prohibits additional years of exclusivity due to minor formulation changes.  The proposal also modifies how Part B pays for biosimilar and innovator biological products.  For these products, reimbursement would be based on the weighted average sales price of the reference biological product and all of its biosimilars, plus 6 percent.  This proposal would save money in Medicare and Medicaid.  [$4.4 billion in Medicare savings over 10 years]

Reforming the Medicare Appeals Process

Provide Office of Medicare Hearings and Appeals and Departmental Appeals Board Authority to Use Recovery Audit Contractor Collections: This proposal would expand the Secretary’s authority to retain a portion of Recovery Audit Contractor recoveries for the purpose of administering the recovery audit program.  This proposal will allow program recoveries to fully fund related appeals at the Office of Medicare Hearings and Appeals and the Departmental Appeals Board.  [$1.3 billion in costs over 10 years]

Establish a Refundable Filing Fee: This proposal would institute a refundable, per claim filing fee for providers, suppliers, and State Medicaid agencies, including those acting as a representative of a beneficiary, at each level of Medicare appeal.  This filing fee would allow HHS to invest in the appeals system to improve responsiveness and efficiency.  Fees will be returned to appellants who receive a fully favorable appeal determination.  [No budget impact]

Establish Magistrate Adjudication for Claims with Amount in Controversy Below New Administrative Law Judge Amount in Controversy Threshold: This proposal would allow the Office of Medicare Hearings and Appeals to use attorney adjudicators for appealed claims below the federal district court amount in controversy threshold ($1,460 in calendar year 2015 and updated annually), reserving Administrative Law Judges for more complex and higher amount in controversy appeals.  [No budget impact]

Expedite Procedures for Claims with No Material Fact in Dispute: This proposal would allow the Office of Medicare Hearings and Appeals to issue decisions without holding a hearing if there is no material fact in dispute.  These cases include appeals, for example, in which Medicare does not cover the cost of a particular drug or the Administrative Law Judge cannot find in favor of an appellant due to binding limits on authority.  [No budget impact]

Increase Minimum Amount in Controversy for Administrative Law Judge Adjudication of Claims to Equal Amount Required for Judicial Review: This proposal would increase the minimum amount in controversy required for adjudication by an Administrative Law Judge to the Federal Court amount in controversy requirement ($1,460 in 2015).  This will allow the amount at issue to better align with the amount spent to adjudicate the claim.  Appeals not reaching the minimum amount in controversy will be adjudicated by a Medicare magistrate.  The minimum amount in controversy would increase consistent with the amount in controversy set for Federal Court.  [No budget impact]

Remand Appeals to the Redetermination Level with the Introduction of New Evidence: This proposal would remand an appeal to the first level of review when new documentary evidence is submitted into the administrative record at the second level of appeal or above.  Exceptions may be made if evidence was provided to the lower level adjudicator but erroneously omitted from the record, or an adjudicator denies an appeal on a new and different basis than earlier determinations.  This proposal incentivizes appellants to include all evidence early in the appeals process and ensures the same record is reviewed and considered at subsequent levels of appeal.  [No budget impact]

Sample and Consolidate Similar Claims for Administrative Efficiency: This proposal would allow the Secretary to adjudicate appeals through the use of sampling and extrapolation techniques.  Additionally, this proposal would authorize the Secretary to consolidate appeals into a single administrative appeal at all levels of the appeals process.  Parties who are appealing claims included within an extrapolated overpayment, or consolidated previously, will be required to file one appeal request for any such claims in dispute.  [No budget impact]

Other Proposals

Clarify Calculation of the Late Enrollment Penalty for Medicare Part B Premiums: This proposal would clarify that the cap on increases to the Part B premium, commonly referred to as the hold harmless provision, does not apply to the calculation of the Part B late enrollment penalty, but applies only to the annual increase to the basic Part B premium.  The hold harmless provision imposes a cap on increases to the basic Part B premium based on the amount of the cost-of-living adjustment increase in a beneficiary’s Social Security benefits.  This clarification is consistent with current CMS practice.  [No budget impact]

Affordable Care Act Highlights Strengthening Medicare

The Affordable Care Act takes numerous steps to strengthen the quality, accessibility, and sustainability of care provided to Medicare beneficiaries.

Accountable Care Organizations: Accountable Care Organizations are a transformative aspect of the Affordable Care Act.  Accountable Care Organizations are groups of doctors, hospitals, and other health care providers who join together voluntarily to deliver coordinated, high quality care to the patients they serve.  Coordinated care helps ensure that beneficiaries get the right care at the right time, with the goal of avoiding unnecessary duplication of services, preventing medical errors, and reducing Medicare costs.  CMS has launched a four-part Accountable Care Organization (ACO) initiative from provisions of the Affordable Care Act: the Medicare Shared Savings Program, the Advance Payment ACO Model, the Pioneer ACO Model, and the ACO Investment Model. In total, there are 424 Medicare ACOs as of January 2015.  These ACOs are working to improve the care experience for more than 7.8 million Medicare fee-for-service beneficiaries nationwide.  Savings from CMS’s ACO programs have already reached $417 million.  On December 1, 2014, CMS released a new proposal to further strengthen the Medicare Shared Savings Program.  The proposed rule reflects input from program participants, experts, consumer groups, and the stakeholder community at large. 

Improving Quality and Value:  Medicare continues its transformation from a passive payer to an effective purchaser of high‑quality, efficient care.  The Affordable Care Act established a value‑based purchasing program for hospitals and required CMS to develop plans to implement value‑based purchasing for skilled nursing facilities, home health agencies, and ambulatory surgical centers.  Implementing these provisions will continue to be a high priority for CMS in FY 2016, which will be the fourth year of quality‑based payment adjustments for hospitals, and will include patient mortality measures for the first time. 

CMS continues to move beyond payment for volume to payment aligned with quality, using the CMS Quality Strategy as the overall framework.  The Medicare Quality Improvement Organizations work toward the goals of lower costs through improvement by providing assistance to acute care facilities, outpatient departments, ambulatory surgery centers, critical care hospitals, psychiatric facilities, cancer hospitals, and physicians in reporting clinical quality measures for purposes of public reporting and, in the case of hospitals, value based purchasing.

The Affordable Care Act also required CMS to implement a quality‑based bonus payment for Medicare Advantage plans based on a five‑star rating system beginning in 2012.  In 2015, the number and market share of four or five‑star plans continue to increase significantly, demonstrating that the rating system has begun to encourage quality improvement.  

Highlights of the Protecting Access to Medicare Act

On April 1, 2014, the President signed the Protecting Access to Medicare Act into law.  The law prevented an estimated reduction in physician payments of over 20 percent due to the Sustainable Growth Rate Formula by applying a 0.5 percent update for physician payments through the rest of Calendar year (CY) 2014 and a zero percent update for the first three months of CY 2015.  The 12-month patch itself was estimated by the Congressional Budget Office (CBO) to cost $15.8 billion over 11 years (FY 2014- FY 2024).  However other provisions in the law, including extenders, Medicare savers, and other health provisions reduced the CBO estimate to an overall savings of $1.2 billion over 11 years.

Medicare Extenders: The Protecting Access to Medicare Act included additional provisions that extended current Medicare payment policies for 12 months.  Some examples of these policies include extending: the exceptions process for outpatient therapy caps; the work geographic practice cost index floor at 1.0; and the add-on payments for ambulance services.  CBO estimated the cost of all the Medicare extenders to be approximately $2.0 billion over 11 years (2014 – 2024).  

Mandatory Savings:  The Act also included some provisions that reduced expenditures.  CBO estimated the total savings (including Medicare and Medicaid) from these provisions at $22.1 billion over 11 years.  Major Medicare savers include:

  • Skilled Nursing Facility Value-based Purchasing: The Act establishes a value-based purchasing program for Medicare nursing facilities to begin FY 2019. 
  • Clinical Laboratory Payments: The Act improves Medicare policies for clinical diagnostic laboratory tests by linking Medicare payment for laboratory tests to private sector payment rates. 
  • End Stage Renal Disease Payments: The Act revises the Medicare End Stage Renal Disease prospective payment system by: delaying the date that oral only drugs are included in the payment system bundle from CY 2016 to CY 2023; reducing the market basket percentage used to increase payments for renal dialysis services; and adding specific measures to the Quality Incentive Program specific to the results from oral only drugs.
  • Computed Tomography Services: The Act establishes quality incentives for the provision of computed tomography services.  It also requires the Secretary to establish a program that promotes appropriate use criteria for advanced diagnostic imaging.  
  • Misvalued Physician Services: The Act expands the list of criteria the Secretary can use to identify potentially misvalued services under the physician fee schedule and sets a target for identifying misvalued services in specified years.  If CMS meets or exceeds the target, the reduced expenditures that result from the adjustments to the misvalued services are redistributed in accordance with the physician fee schedule budget neutrality adjustment. 

Highlights of the Improving Medicare Post-Acute Care Transformation Act of 2014

The Improving Medicare Post-Acute Care Transformation Act mandates that CMS develop and implement a post-acute care standardized and interoperable measurement tool to allow comparison of data across settings.  The law defines Medicare post-acute care as long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health services.

The Act also establishes a quality reporting program for skilled nursing facilities starting in FY 2018 that reduces market basket payments by two percent for nursing homes that fail to report assessment and quality data.  The law also provides funds to improve the accuracy of the five-star rating system on the Nursing Home Compare website by requiring the use of payroll data to measure nursing home staffing levels. 

Medicare Quality Improvement Organizations

The mission of the Quality Improvement Organization program is to improve the effectiveness, efficiency, economy, and quality of services delivered to Medicare beneficiaries.  The Organizations are experts in the field working to drive local change which can translate into national quality improvement.  The current five year contract cycle, or 11th Statement of Work, began on August 1, 2014 and provides approximately $549.2 million in FY 2016 and $4 billion over 5 years.

The 11th statement implements for the first time several changes to the program enacted in the Trade Adjustment Assistance Extension Act of 2011.  For instance, there are now 14 Quality Innovation Network contracts and five Beneficiary and Family Centered Care contracts in accordance with Institute of Medicine recommendations to separate the case review and quality technical assistance work, and reorganize the geographic scope of the contracts.  Formerly, in prior statements of work, there was one organization per state performing both case review and quality work.

Major Planned Activities

Clinical Quality Improvement:  The key goals for FY 2016 are improving the health status of communities; delivering patient-centered, reliable, accessible, and safe care; and better care at lower costs.  Through improving cardiac health, reducing disparities in diabetic care, using immunization information systems and meaningful use of health IT to improve prevention coordination, CMS aims to improve the health status ofbeneficiaries.  These goals will also be achieved by efforts to reduce healthcare‑associated infections, healthcare‑associated conditions in nursing homes, and hospital readmissions and adverse drug events.

Estimated Quality Improvement Organization Funding
 11th Statement of Work (2014-2018)
Dollars in Millions

Clinical Quality Improvement  
Subtotal, Clinical Quality Improvement width="52%"$839.9  
Value-based Purchasing Support Contracts and Quality Measures $1,129.4
Infrastructure, Coordinating Centers, and Special Initiatives $568.0

Beneficiary and Family-centered Care

$402.5
Other Support Contracts and Staff $1,100.6
Subtotal $4,040.4

Value Based Purchasing Support Contracts and Quality Measures:  The program supports the hospital value-based purchasing andreadmission reduction programs, as well as the physicianquality reporting system.  Additionally, this fundingsupports long-term care hospital, inpatient rehabilitation facility, hospice, ambulatory surgical center and cancer hospitalpublic reporting programs.

Beneficiary and Family Centered Care:  This traditional case review work includes handling beneficiary complaints, concerns related to early discharge from health care settings, and patient and family engagement.  In the three year 10th Statement of Work (2011-2014), the organizations resolved more than 200,000 concerns and appeals received from beneficiaries and their families.

Other Support Contracts and Staff:  This work supports consumer assessment of healthcare providers and systems surveys, quality information for compare websites, the quality improvement and evaluation system, and staff.

FY 2015 Medicare Legislative Proposals

Dollars in millions

(Negative numbers reflect savings and positive numbers reflect costs)

Encourage Delivery System Reform 2016 2016-2020 2016-2025
Reform Medicare Physician Payments to Promote Participation in High-quality and Efficient Health Care Delivery Systems 430 9,090 43,990
Encourage Efficient Care by Improving Incentives to Provide Care in the Most Appropriate Ambulatory Setting -6,740 -29,500
Implement Bundled Payment for Post-Acute Care  -430 -9,260
Allow CMS to Assign Beneficiaries to Federally Qualified Health Centers and Rural Health Clinics Participating in the Medicare Shared Savings Program -20 -80
Expand Basis for Beneficiary Assignment for Accountable Care Organizations to include Nurse Practitioners, Physicians Assistance, and Clinical Nurse Specialists -10 -60
Allow Accountable Care Organizations to Pay Beneficiaries for Primary Care Visits up to the Applicable Medicare Cost Sharing Amount 
Establish a Hospital-Wide Readmissions Reduction Measure 
Establish Quality Bonus Payments for High-Performing Part D Plans
Expand Sharing Medicare Data with Qualified Entities
Extend Accountability for Hospital-acquired Conditions
Implement Value-Based Purchasing for Additional Providers
Make Permanent the Medicare Primary Care Incentive Payment in a Budget Neutral Manner

 

Increase Value in Medicare Provider Payments 2016 2016-2020 2016-2025
Eliminate the 190-day Lifetime Limit on Inpatient Psychiatric Facility Services 400 2,150 5,000
Align Medicare Drug Payment Policies with Medicaid Policies for Low-Income Beneficiaries -32,790 -116,130
Adjust Payment Updates for Certain Post-Acute Care Providers -1,600 -25,170 -102,070
Increase the Minimum Medicare Advantage Coding Intensity Adjustment -6,780 -36,240
Reduce Medicare Coverage of Bad Debts -370 -10,530 -31,080
Strengthen the Independent Payment Advisory Board to Reduce Long-term Drivers of Medicare Cost Growth -20,879
Better Align Graduate Medical Education Payments with Patient Care Costs -1,000 -6,700 -16,260
Accelerate Manufacturer Discounts for Brand Drugs to Provide Relief to Medicare Beneficiaries in the Coverage Gap -2,490 -9,430
Modify Reimbursement of Part B Drugs -320 -2,880 -7,380
Align Employer Group Waiver Plan Payments with Average Medicare Advantage Plan Bids -2,730 -7,160
Exclude Certain Services from the In-Office Ancillary Services Exception -2,120 -6,020
Encourage Appropriate Use of Inpatient Rehabilitation Facilities -170 -1,010 -2,230
Reduce Critical Access Hospital Reimbursements from 101 Percent of Reasonable Costs to 100 percent of Reasonable Costs -110 -710 -1,730
Prohibit Critical Access Hospital Designation for Facilities that are less than 10 Miles from the Nearest Hospital -50 -320 -770
Require Mandatory Reporting of Other Prescription Drug Coverage -10 -170 -480
Expand Coverage of Dialysis Services for Beneficiaries with Acute Kidney Injury -10 -90 -200
Allow the Secretary to Negotiate Prices for Biologics and High Cost Prescription Drugs
Clarify the Medicare Fraction in the Medicare DSH Statute
Establish Authority for a Program to Prevent Prescription Drug Abuse in Medicare Part D
Modify the Documentation Requirement for Face-to-face Encounters for Durable Medical Equipment Claims
Suspend Coverage and Payment for Questionable Part D Prescriptions and Incomplete Clinical Information

 

Medicare Structural Reforms 2016 2016-2020 2016-2025
Increase Income Related Premiums under Medicare Parts B and D -7,880 -66,410
Encourage the Use of Generic Drugs by Low-Income Beneficiaries  -3,090 -8,860
Introduce a Part B Premium Surcharge for New Beneficiaries who Purchase Near First-dollar Medigap Coverage -310 -3,970
Modify the Part B Deductible for New Beneficiaries -120 -3,740
Introduce Home Health Copayments for New Beneficiaries -70 -830

 


Increase the Availability of Generic Drugs and Biologics
2016 2016-2020 2016-2025
Prohibit Brand and Generic Drug Manufacturers from Delaying the Availability of New Generic Drugs and Biologics (Medicare impact) -690 -4,070 -10,060
Modify Length of Exclusivity to Facilitate Faster Development of Generic Biologics (Medicare impact) -910 -4,400

 

Medicare-Medicaid Enrollee Proposals 2016 2016-2020 2016-2025
Allow for Federal/State Coordinated Review of Duals Special Need Plan Marketing Materials
Create Pilot to Expand PACE Eligibility to Individuals Between Ages 21 and 55
Ensure Retroactive Part D Coverage of Newly-Eligible Low Income Beneficiaries
Establish Integrated Appeals Process for Medicare-Medicaid Enrollees

 

Reforming the Medicare Appeals Process 2016 2016-2020 2016-2025
Provide Office of Medicare Hearings and Appeals and Department Appeals Board Authority to Use Recovery Audit Contractor Collections 127 635 1,270
Establish a Refundable Filing Fee
Establish Magistrate Adjudication for Claims with Amount in Controversy Below New Administrative Law Judge Amount in Controversy Threshold 
Expedite Procedures for Claims with No Material Fact in Dispute       
Increase Minimum Amount in Controversy for Administrative Law Judge Adjudication of Claims to Equal Amount Required for Judicial Review 
Remand Appeals to the Redetermination Level with the Introduction of New Evidence 
Sample and Consolidate Similar Claims for Administrative Efficiency

 

Other Proposals 2016 2016
-2020
2016
-2025
Extend the Qualified Individuals Program through CY 2016 (Medicare interaction)/1 775 975 975
Clarify Calculation of the Late Enrollment Penalty for Medicare Part B Premiums
Reduce Fraud, Waste, and Abuse in Medicare 140 1,038 2,559
Interactions/2 45 1,782 18,348
Total -2,413 -102,470 -423,087

Table Footnotes

1/ States pay Medicare Part B premium costs for Qualified Individuals (QIs) that are in turn offset by a reimbursement from Medicare Part B.  Costs of the proposal to extend the QI program are reflected in Medicare outlays.

2/ Adjusts for savings realized through IPAB and other Medicare interactions. 

 

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Content created by Office of Budget (OB)
Content last reviewed on February 2, 2015
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