4 opportunities for healthcare savings in Obama's 2017 budget

Source: Becker’s Hospital Review

President Barack Obama shared his $4.1 trillion budget proposal earlier this month for the 2017 fiscal year, and several of the provisions offer opportunities for the government to reduce healthcare costs.

1. Medicare Advantage competitive bidding. The budget proposes a reform to payments to Medicare Advantage plans by using competition to set payment rates. Rather than bid against a government benchmark as they currently do, Medicare Advantage plans would bid against each other. These and other Medicare Advantage reforms included in the budget proposal would save about $77 billion combined over 10 years.

2. Medicare bad debt. Medicare pays 65 percent of bad debts to hospitals and other facilities, and the president’s budget would reduce that payment to 25 percent. “This would reduce the burden on taxpayers and force hospitals to be more transparent in communicating prices and payment obligations to Medicare beneficiaries,” wrote John R. Graham, a senior fellow at Independent Institute and the National Center for Policy Analysis, in a recent The Hill blog post. This proposal would save $33 billion.

3. Drug costs for the Medicare program. The budget includes a number of proposals to lower drug costs while improving transparency in the Medicare Part D program. Those proposals include increasing data collection to demonstrate the effectiveness of medications in the Medicare population and incentivizing Part D plan sponsors to better manage care provided to beneficiaries with high prescription drug costs. The proposals related to lowering drug costs for Medicare would save the program approximately $140 billion over 10 years.

4. Transparency of prescription drug pricing. HHS would have authority to require drug manufacturers to publicly disclose certain information, including research and development costs, under the budget proposal. The budget also includes three previously proposed reforms aimed at increasing access to generic drugs and biologics. Over the next 10 years, these proposals would save the federal government $21 billion.