Medicare

The government faces strong obstacles to bringing Medicare expenditures under control. Broad-based payment system reforms have slowed overall spending, but Medicare growth rates remain higher than overall inflation. And although more reforms may be needed, their nature is the subject of much debate. There is less dispute, however, that Medicare pays too much for some services and supplies. Fiscal pressures have led private and state-government payers increasingly to negotiate discounts with providers and to manage the form and the volume of care. Medicare has not exercised its potential market power in similar fashion when buying some services, such as rehabilitation therapy. GAO suggests that the government change the reimbursement policies for these excessively costly services to ensure that it is acting as a prudent buyer. Also, greater vigilance over wasteful or inappropriate payments could better protect Medicare against fraudulent and abusive billings from providers.