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Medicare spending in 2010 was estimated to be about $528 billion according to the Congressional Budget Office. Of that amount, about $47.9 billion was improper payments. Now, the government is going after hospitals who try and game the system. Starting Monday, hospitals will face a fine if they have to many Medicare patients readmitted within 30 days of discharge due to complications. The initiative was put in place by Obamacare, and is designed to save the Medicare program some much needed money.
According to the Associated Press, up to 2,200 facilities could face fines under this system. That is close to two-thirds of the hospitals that serve Medicare patients. The fines are expected to average around $125,000 per facility.
Critics within the health care industry say the penalties are unfair, as some readmissions are beyond their control. Others believe the change has been long overdue, and doesn't go nearly far enough. Roughly 12% of Medicare patients are readmitted to the hospital for preventable problems. The threat of fines has already got hospitals changing the way they do business.
The Medicare program is in desperate need of reform. The program was scheduled to go "bankrupt" in 2016, but thanks to Obamacare its solvency has been extended to 2024. As the program is funded by payroll taxes, it can never truly go bankrupt. If changes are not made, what will happen is that the program will no longer be able to pay complete benefits. For the vast majority of seniors that rely on the program, saving it is a matter of live and death.
By pushing hospitals to cut back on readmissions, the government could save itself a lot of money. As Medicare reimbursement rates get cut, there is fear that hospitals purposely keep seniors returning for visits over and over again in order to make up for lost revenue with multiple visits. The government also hopes to weed out simple incompetence. Every dollar saved makes the program just a little bit stronger.
Ultimately, one of three major changes is going to have to be made to the program in order to make it solvent indefinitely. Either payroll taxes will have to go up, reimbursement rates will have to continue to be lowered, or benefits will have to be cut. Insuring the elderly is an expensive proposition, as the vast majority of your medical spending is likely to happen in the later years of your life. Perhaps the best way forward is a combination of slight tax increases along with changes to the payment structure. Moving towards a fee-for-results payment structure instead of the fee-for-service system we have now could alleviate much of the problem.
Any and all steps to aid our seniors must be taken. The current system will not be able to do that much longer. It is part of the social contract of America to protect and take care of the elderly. Obamacare made several necessary changes that both benefit seniors and help the solvency of the program. It is a good first step, but there is still much work to be done. This election cycle has brought Medicare issues to the forefront, and we must not put the problem on the back burner once the election is over. To many lives are on the line.