CMS Chief Actuary’s Health Reform Estimate Sparks Medicare Payment Reform Concerns - November 24, 2009

Richard Foster, the CMS' Chief Actuary, issued an estimate of the financial effects of the recently-adopted House health reform bill, H.R. 3962, that has raised new concerns about the bill’s incorporation of annual productivity adjustments into provider market basket updates for hospitals and other institutional providers. The productivity adjustment, which is included in both H.R. 3962 and the Senate health reform bill, would base provider productivity adjustments on economy-wide productivity expectations. Foster has suggested that the estimated $282 billion in savings that will result from this provision is “unrealistic” because institutional providers are unlikely to be able to achieve such significant productivity gains. As a result, Foster reports, the provision could spur some providers to leave the program or force Congress to revisit the revised payment policy.