CBO report: Medicare payment shift could save $65 billion

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The government could save about $65 billion between 2008 and 2012 by equalizing payments to Medicare Advantage plans and fee-for-service providers, according to a new Congressional Budget Office report.

The biennial report also offers other possible savings options for Medicare between 2008 and 2012. These options include: $42.2 billion in savings by increasing the share of Medicare Part B costs that beneficiaries must pay; $12.9 billion by charging copayments for home health visits; and $17.8 billion by reducing payments to hospitals for inpatient care. Medicare pays a substantial portion of long-term care costs.

The CBO report notes that while paying the same for Medicare Advantage plans and fee-for-service-providers could save money, the proposal "could lead many plans to limit the benefits they offer, raise their premiums or withdraw from the program."
The report is available at http://mirror1.cbo.gov/ftpdocs/78xx/doc7821/02-23-BudgetOptions.pdf.