During negotiations on the debt ceiling, several healthcare related reduction proposals have been floated at one time or another as part of deficit reduction plans.  This list is by no means exhaustive and at this point, it is unclear which, if any, of these proposals are on the table, however, we thought it useful to at least highlight what is currently in play. 

In addition to the items listed below, it should be noted that targeted or across-the-board cuts to health-related discretionary programs, are in the mix.  Assuming a debt ceiling agreement is reached before August 2^nd, the agreement could leave the details of many of the proposed reductions to Congress. For example, the latest plans unveiled by Senate Majority Leader Reid and House Speaker Boehner each call for a congressional commission to identify additional deficit reductions in Medicare and Medicaid and other health programs.

The following are some of the proposals currently in play:

Raising Medicare eligibility. Raise eligibility age from 65 to 67.

Means testing. The Biden negotiations reportedly discussed saving $38 billion by means-testing Medicare premiums by freezing brackets after 2019 and increasing current cost-sharing by 10 percent. Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK) also proposed expanded means testing in a Medicare reform package.

GME/IME.  The President's deficit reduction panel (Bowles-Simpson) recommends cuts of $60 billion in these Medicare payments to teaching hospitals, starting in 2020.  An alternative proposal raised during the Biden negotiations would save $14 billion by reducing direct and indirect graduate medical education payments.

CLASS ACT repeal.   The "Gang of Six" proposal would repeal, rather than reform, the CLASS ACT.

SGR reform.  The "Gang of Six" plan calls for reform or full replacement of SGR with the $290 billion cost of reform being fully off-set by cuts to health care programs.

Medigap cuts.  Proposals would redesign Medigap to require enrollees to pay some deductible or co-insurance, up to a set out-of- pocket limit, and would ban Medigap first dollar coverage.   Another proposal would provide the option of a $530 supplemental premium for those enrollees who choose first dollar coverage.  Estimated savings: $53 billion.    

FMAP.  Establishment of a “blended rate” for FMAP.   The Administration generally supports the idea; long term care providers generally are against.

Hospital cuts.  Proposals include savings from phasing out or eliminating bad debt payments ($14 billion to $26 billion) and $14 billion through reform of rural hospital programs.  An additional $4 billion would be saved by rebasing disproportional share hospital (DSH) payments.

Home health cuts.  The  Biden group discussions included $50 billion in savings from post-acute care payments, cost sharing for SNFs and Home Health.  Members of Congress and the Administration reportedly discussed savings from co-pays and/or payment reductions.

Lab cuts.  Savings of $8.5 billion to $16 billion from the lab industry were part of the Biden discussions.   The $8.5 billion in savings would possibly come from a $1 co-pay.

Imaging cuts.  Proposals regarding imaging include projected savings of nearly $2 billion to the Medicare program.   The proposals would require prior authorization for high-cost imaging services ($1.1 billion) and change the utilization factor for advanced imaging payments ($800 million).

Wheelchair cuts. The Biden group reportedly considered a policy applying a prepayment review for power wheelchairs, saving $200 million.  The proposed policy change was prompted by a Government Accountability Office (GAO) report, which found that up to 61 percent of Medicare-funded power wheelchairs were medically unnecessary or lacked documentation to establish medical necessity.

Dual eligibles. The Biden group list includes up to $5 billion in savings from coordinating care for dual eligibles, but does not present specific policies.

Prevention and Public Health Fund.  A cut of $8 billion was under discussion by the Biden group.  This cut would not eliminate the fund; it would eliminate the increases slated for FY 2012 on.  Therefore, the mandatory appropriation to the fund, as established in the Affordable Care Act, would likely remain level-funded at either $750 million or $1 billion starting in FY 2012.  

Other savings floated:  electronic health record penalties ($1 billion), quality improvement organizations changes ($300 million), Medicaid DME payments, probably achieved through capping payments at Medicare competitive bidding rates ($5 billion); strengthening third-party liability in Medicaid ($1.4 billion), validating physician orders for high-cost/fraud risk services ($1.8 billion), reporting of items for Medicaid drug coverage ($100 million), modifications to diabetic strip pharmacy Medicare payments ($200 million).