According to a report released on April 23 by CMS’s Office of the Actuary, PPACA is expected to save Medicare more than $200 billion through 2016. Most of the savings are expected to result from tying provider reimbursement to improvements in productivity ($85 billion) and from reductions in payments to private insurers that offer Medicare Advantage plans ($68 billion). Improving patient safety by reducing readmissions and hospital-acquired conditions is expected to save $10 billion, and the implementation of new anti-fraud policies is expected to save another $7.8 billion. CMS also expects that Medicare beneficiaries will save $59.4 billion in premiums and other out-of-pocket costs.
In a statement, Marilyn Tavenner, CMS’s acting administrator, said, “In the short term, both taxpayers and beneficiaries will save billions thanks to the health care law. Over the long run, the Affordable Care Act will allow us to invest in new models of providing care that will save money and deliver higher quality care.”
The Medicare Advantage payment reductions will bring payments to private insurers who offer MA plans in line with what it costs traditional Medicare to cover its enrollees. Before PPACA, MA plans were paid about 14% more per patient than traditional Medicare’s per-patient cost.