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Roughly 15 percent of Medicare Part A providers might end their participation in the program.

Welcome to VoteFacts.  During the health care summit, held a few months before the health care law was passed, Congressman Paul Ryan said that the Chief Actuary of the Center for Medicare and Medicaid Services (Richard S. Foster) said that "as much as 20 percent of Medicares providers will either go out of business or will have to stop seeing Medicare beneficiaries."  We thought you might want to focus on some facts relating to this subject.  (You can watch the video in its entirety by dragging the start button backward)

Here are some bullet points and the links to reports by the Chief Actuary of Medicare and Medicaid Services (CMS) on this subject and the new health care law:

Health care providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).  Simulations by the Office of the Actuary suggest that roughly 15 percent of Medicare Part A providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments.  CMS, Page 10

• Over time, unless health care providers could alter their use of inputs to reduce their cost per service correspondingly, Medicare's payments for health services would fall increasingly below providers' costs.  Providers could not sustain continuing negative margins and would have to withdraw from serving Medicare beneficiaries or shift substantial portions of Medicare costs to their non-Medicare, non-Medicaid payers.  Under such circumstances, lawmakers would probably override the productivity adjustments, much as they have done to prevent reductions in physician payment rates.   CMS, Page 217

Absent other changes, the lower Medicare payment rates would result in negative total facility margins for an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies by 2019, and this percentage would reach roughly 25 percent in 2030 and 40 percent by 2050CMS, Page 217  (Note:  This CMS report was issued 2 years after this Paul Ryan statement was made)

•  It is possible that health care providers could improve their productivity, reduce wasteful expenditures, and take other steps to keep their cost growth within the bounds imposed by the Medicare price limitations. For such efforts to be successful in the long range, however, providers would have to generate and sustain unprecedented levels of productivity gains—a very challenging and uncertain prospect.  CMS, Page 218

Medicare is a hot-button issue in this election cycle and we will be sure to help you focus on facts that relate to it even more in the future.  But for today, how do you vote?

VoteFacts original post date:  August 20, 2012

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