Last month, the Medicare Trustees released their annual report on Medicare expenditures, but the CMS Office of the Actuary (pdf) released a memo last week saying the report is "clearly unrealistic" and offers an outlook that is too optimistic.
The yearly Medicare Trustees report gives an update of the Medicare program and projects expenditures and revenue under current law. However, CMS said the report incorporates mandated Medicare reductions — such as the 31 percent decrease in Medicare physician payments under the sustainable growth rate for next year — that are "implausible," according to the memo.
The CMS Office of the Actuary recommended the Medicare Trustees report include a full alternative scenario. The alternative scenario would consider adjustments to the physician payment schedule resulting from the SGR, reductions in payment updates by the increase in economy-wide productivity for most other provider categories and operations of the Independent Payment Advisory Board. The IPAB, part of the Patient Protection and Affordable Care Act, will be charged with developing proposals to reduce the Medicare growth rate below an inflation threshold.
In CMS' alternative projections for Part A, or the hospital insurance trust fund, costs would increase as a percentage of taxable payroll through the long-rang period, reaching 9.9 percent in 2085 — this is roughly 3.6 percent higher than the Medicare Trustees projected under their current law scenario. Part B alternative scenarios also place Medicare outlays far higher than current law projections.
"While the substantial improvements in Medicare's financial outlook under the Affordable Care Act are welcome and encouraging, expectations must be tempered by awareness of the difficult challenges that lie ahead in improving the quality of care and making healthcare far more cost efficient," the actuaries wrote in the memo. "The sizable differences in projected Medicare cost levels between current law and the illustrative alternative scenarios highlight the critical importance of finding ways to bring Medicare costs — and healthcare costs in the U.S. generally — more in line with society's ability to afford them."
The yearly Medicare Trustees report gives an update of the Medicare program and projects expenditures and revenue under current law. However, CMS said the report incorporates mandated Medicare reductions — such as the 31 percent decrease in Medicare physician payments under the sustainable growth rate for next year — that are "implausible," according to the memo.
The CMS Office of the Actuary recommended the Medicare Trustees report include a full alternative scenario. The alternative scenario would consider adjustments to the physician payment schedule resulting from the SGR, reductions in payment updates by the increase in economy-wide productivity for most other provider categories and operations of the Independent Payment Advisory Board. The IPAB, part of the Patient Protection and Affordable Care Act, will be charged with developing proposals to reduce the Medicare growth rate below an inflation threshold.
In CMS' alternative projections for Part A, or the hospital insurance trust fund, costs would increase as a percentage of taxable payroll through the long-rang period, reaching 9.9 percent in 2085 — this is roughly 3.6 percent higher than the Medicare Trustees projected under their current law scenario. Part B alternative scenarios also place Medicare outlays far higher than current law projections.
"While the substantial improvements in Medicare's financial outlook under the Affordable Care Act are welcome and encouraging, expectations must be tempered by awareness of the difficult challenges that lie ahead in improving the quality of care and making healthcare far more cost efficient," the actuaries wrote in the memo. "The sizable differences in projected Medicare cost levels between current law and the illustrative alternative scenarios highlight the critical importance of finding ways to bring Medicare costs — and healthcare costs in the U.S. generally — more in line with society's ability to afford them."
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