CMS: Economic crisis may break Medicare by 2016

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The Centers for Medicare & Medicaid Services (CMS), in outlining ways to reduce costs in the Medicare Fee-For-Service (FFS) program, reported that the Medicare Part A Hospital Insurance Trust Fund may be depleted in seven years, due in part to the current economic crisis.

CMS issued the Quality Measurement, Resource Use Measurement and Value-Based Purchasing Roadmaps on Friday in the hopes to improve the current healthcare system and the FFS program in particular.

Healthcare currently represents one-seventh of the economy with spending totaling more than $2 trillion annually, according to the agency.  By 2017, the United States is expected to spend roughly $4 trillion on healthcare: 21 percent of gross domestic product. 

“These documents are intended to offer a vision for the future and potential options for CMS to pursue to improve the quality and value of healthcare delivered in the United States and to shift the Medicare FFS program away from paying providers based solely on the volume of services and instead paying them for quality and value of care,” said CMS Acting Administrator Kerry Weems.

CMS said that Medicare costs “are continuing to skyrocket as well.”  Last spring, the Medicare Part A Trust was projected to go bankrupt in 2019. The agency said its Medicare chief actuary recently observed that because of the current economic crisis, this date could be moved three years earlier to 2016.

“It is incumbent on us to use the lessons we’ve learned with many of the tools we have implemented to help the nation’s healthcare leaders as they look to improve the healthcare system in a time that’s even more critical because the projected rate of growth in healthcare costs is climbing at an unsustainable rate,” Weems said.

The papers outline the activities that CMS has undertaken to implement value-driven healthcare, including summaries of the various projects to test the policy and concepts. The papers provide steps to implement quality and resource use measurement to improve the delivery of care and offer a roadmap to assist in implementing value-based purchasing for Medicare’s FFS payment systems.

The papers are also intended to provide information to policy makers about the demonstrations and pilot programs that are already underway and to articulate the overarching principles guiding further efforts.