White House Estimates Quality Savings

Improvements in quality are essential elements of a national cost-containment strategy, according to a health reform position paper released August 2nd by the Obama Administration. Quality enhancements included in the Affordable Care Act are projected to account for a ten-year cost savings of $15 billion. The key quality-related provisions are: reducing hospital readmissions ($8.2 billion), reducing hospital-acquired conditions ($3.2 billion), bundling payments for end-stage renal disease services ($1.7 billion) and improving physician quality reporting ($1.9 billion). In addition to quality improvements, the three other broad cost-containment strategies include delivery system reform, appropriate pricing and modernization of finance and fighting waste, fraud and abuse. Of the ten-year total projected cost savings of $417.5 billion, the two largest items by far are reductions in payments to Medicare Advantage plans ($145 billion) and improved productivity/market basket adjustments for most provider settings ($205 billion). Affordable Care Act Update: Implementing Medicare Cost Savings is available at www.cms.gov.