CBO: Defunding Health Reform Could End Medicare Part D, Eliminate Physician Payment Increases

The Hill’s Sam Baker reads through the latest Congressional Budget Office (CBO) letter on the consequences of defunding the Affordable Care Act and discovers that the GOP’s efforts could “lead to the end of Medicare coverage for prescription drugs”:

Although the Medicare drug benefit predates healthcare reform, the new law made changes to the program — most notably eliminating the so-called “doughnut hole,” in which seniors must pay for their drugs out of pocket.

If the new healthcare law is defunded, the changes to the prescription drug program could not be implemented and Medicare would be unable to offer the benefit, CBO said. […]

A permanent ban on using appropriations to implement the law could prevent Medicare from signing contracts to administer the drug benefit, known as Medicare Part D. It also wouldn’t be able to set rates for Medicare Advantage, so that program might also end.

“As contracts expired on December 31, 2012, there would probably be nothing to replace them and therefore no MA and Part D plans for Medicare beneficiaries,” CBO said. “If there were no Part D drug benefit, federal spending would decline.”

The federal government also wouldn’t be able to collect its share of drug rebates from pharmaceutical manufacturers that service Medicaid beneficiaries. As a result, “the federal government would therefore not realize savings from increased rebates or from other policies that would reduce drug spending in Medicaid,” the CBO report concludes.

A permanent prohibition on the use of discretionary funding could also undermine increases in physician reimbursement rates. Doctors would not be able to qualify for bonuses and other incentives included in the new law and “the effective result would probably be that payment rates would remain at current levels.”

In March, the CBO released a report that found that defunding the ACA piece by piece “would increase spending by $3.1 billion in fiscal year 2012 and by smaller amounts in each of the fiscal years 2013 through 2021.” “Net additional costs would total $3.9 billion over the 2011- 2016 period and $5.6 billion over the 2011-2021 period.”