On November 10, 2010, the National Commission on Fiscal Responsibility and Reform (the Commission) issued a draft proposal citing potential ways to reduce the federal deficit. The proposal was issued by Commission Co-Chairs Alan Simpson and Erskine Bowles and includes measures to reduce healthcare spending as a “mandatory budget option.” Over the “medium term,” the Commission proposed, among other things, to offset the cost of the “Doc Fix” by asking health providers to take responsibility for slowing the growing costs of healthcare. Among potential methods to offset the “Doc Fix,” the Commission has proposed to (1) pay less to healthcare providers, including physicians, and drug companies, and improve efficiency and quality; (2) replace cuts required by the sustainable growth rate through 2015 “with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality;” and (3) make rebates mandatory for brand-name drugs as a condition of participating in Medicare Part D. Other offsets include increasing cost-sharing in Medicare and reforming medical malpractice liability to cap non-economic and punitive damages. Potential areas of savings identified by the Commission include reducing graduate medical education and indirect medical education payments, reforming the Tricare program to increase cost sharing for retired military personnel, and increasing nominal Medicaid copays. In the long-term, the Commission recommends setting a target for total federal health expenditures after 2020 while also reviewing the costs every 2 years. If the costs grow faster than anticipated, the Commission suggested that the President and Congress consider further mechanisms to lower costs. The proposal is available by clicking here.