Medicare 'productivity adjustment' cuts are not likely to last, panelists say

Share this content:

Medicare cuts in the form of “productivity adjustments” may not be sustained beyond 10 years and may need to be reversed, a panel of healthcare experts said recently.

Panelists questioned the productivity adjustments in an Aug. 6 briefing sponsored by the American Enterprise Institute, a think tank. Under the healthcare reform law, more than $500 billion dollars will be cut to Medicare providers over the next 10 years. They largely will be in the form of market-basket update reductions. These productivity adjustments are based on the premise that providers will be able to reduce costs and provide more efficient care.

But panelists expressed doubts that the cuts could continue beyond a decade, the Bureau of National Affairs reported. Gail Wilensky, administrator of the Health Care Financing Administration (now the Centers for Medicare & Medicaid Services), said they could lead to a “challenged industry.” She also questioned whether the new Independent Payment Advisory Board, called for in the law, would be effective.