Trustees issue report on Medicare spending, remaining challenges

Medicare expenditures totaled 3.6% of the gross domestic product in 2010 and would reach about 5.6% of the GDP by 2035 and 6.2% by 2085 under current law, according to the 2011 Medicare Trustees Report issued by the Centers for Medicare and Medicaid Services.

If physician payment reductions are overridden and other constraints on physician payments are pre-empted, spending could reach 10.7% of the GDP by 2085, the report said.

The Medicare Hospital Insurance Trust Fund, or Medicare Part A, is expected to remain solvent until 2024, according to the report.

"Without the reforms of the Affordable Care Act, the Medicare HI Trust Fund would expire in just 5 years - in 2016," according to a news release from CMS. "The report issued today shows these reforms added 8 years of solvency. CMS is implementing critical reforms to improve care and reduce costs and improve the overall health of Medicare's beneficiaries and the Trust Fund."

Medicare benefits paid in 2010 totaled $516 billion, income totaled $486 billion and expenditures totaled $523 billion. Assets held in special U.S. Treasury securities totaled $344 billion, the report said.

The annual Medicare physician payment is slated to be reduced nearly 30% in 2012, "despite the virtual certainty that Congress will override this reduction," according to the report.

"The Medicare Trustees Report leaves no doubt that the time to repeal the Medicare physician payment formula is now - to keep from digging a deeper financial hole and to preserve access to care for patients," J. James Rohack, MD, immediate past president of the American Medical Association, said in a news release.

The AMA calls for repealing the sustainable growth rate, a key component of annual physician payment updates, enacting a 5-year period of stable Medicare physician payments and testing demonstration and pilot projects that would establish a new payment system, Dr. Rohack said.

Catherine Cohen, American Academy of Ophthalmology vice president for governmental affairs, echoed Dr. Rohack's statement.

"The Academy is working with the AMA, the American College of Surgeons and others to move Congress to repeal the faulty Medicare physician pay formula," Ms. Cohen said. "We are calling for a five-year period of stability as we move toward a reformed Medicare physician payment system in 2017-2018. Critical to this successful transition is maintenance of adequate reimbursement for ambulatory surgery."

The 2011 Medicare Trustees Report is available here.