Medicare and Medicaid Budget Issues

Testimony was given on issues related to the Medicare and Medicaid budgets. GAO found that: (1) since 1980, Congress has enacted at least 34 pieces of legislation that have affected Medicare and Medicaid; (2) the reconciliation bills Congress enacted between 1980 and 1986 reduced Medicare expenses by $22 billion and Medicaid expenses by about $3.8 billion; and (3) the Department of Health and Human Services' (HHS) regulatory changes to Medicare and Medicaid in the past 6 years have resulted in smaller savings. GAO believes that: (1) there should be additional changes to further reduce Medicare and Medicaid costs and to enhance the programs in areas that may have been cut too severely; (2) Congress should rebase Medicare's prospective payment system to ensure that payment rates reflect the costs hospitals incur in providing medically necessary care; (2) hospitals should continue to report their costs in the future, and Medicare should continue to audit those cost reports; (3) the modification of the cost reimbursement system, one of three options GAO proposed to the HHS prospective capital payment plan, was viable; (4) H.R. 1868 would provide better protection for program beneficiaries against unfit or unethical practitioners and combat fraud and abuse in Medicare and Medicaid; (5) Congress' actions on overpriced physician procedures present a potential for significant savings; and (6) additional Medicare savings would be available from better administration of its secondary payer program.