Slowed healthcare spending could save Medicare $900B

Medicare could save an additional $900 billion over the next decade thanks to slowed healthcare spending growth, according to a new report by healthcare economics consulting firm DobsonDaVanzo commissioned by the Federation of American Hospitals.

Structural changes throughout the healthcare sector will slow healthcare spending growth, the report states. The Congressional Budget Office (CBO) projects 3.8 percent spending growth in 2013, the fourth consecutive year of historically low growth, according to the report.

Medicare hospital spending per beneficiary also dropped to 0.3 percent in 2012, compared to 6 percent in 2009, the report states, and over the past year healthcare and hospital price growth dropped to 1.1 percent and 1.5 percent, respectively.

Structural changes driving the slowdown include a shift to a value-based payment system, which focuses more on population health management, episodes of care and prevention, as well as increased patient cost-sharing. Fewer hospital readmissions and healthcare-associated infections also played a role, with Medicare readmission rates falling to less than 18 percent since 2011, according to the report. Improved patient safety conditions and a shift in patient care toward the outpatient setting also contribute to the slowdown. 

"The slowdown in healthcare cost growth is more than just an artifact of the 2007-2009 recession: something has changed … Rather, the slowdown appears to reflect 'structural' changes in the United States healthcare system," CBO Director Douglas Elmendorf said. "Growth in spending for the fee-for-service portion of Medicare has slowed markedly in the past few years--apparently not because of financial turmoil and recession but because of other factors affecting the behavior of beneficiaries and providers."

A report from the Centers for Medicare & Medicaid Services credited Medicare's slow growth in 2012 in part to the Affordable Care Act, although healthcare reform had limited impact on overall spending because reforms weren't fully implemented at that point, FierceHealthcare previously reported.

To learn more:
- here's the report

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