December 18, 2008 / 10:00 PM / in 11 years

Budget office studies impact of healthcare policies

WASHINGTON (Reuters) - Claiming back some of the rewards given to doctors for improving productivity could save the government Medicare program up to $201 billion over the next 10 years, a congressional analysis showed on Thursday.

The move, which could pressure healthcare providers to find new ways to improve productivity, would produce greater savings than adopting medical information technology, as advocated by President-elect Barack Obama, or capping medical lawsuit awards, as favored by some Republicans, the study showed.

The productivity option was one of 115 examined by the nonpartisan Congressional Budget Office in its 235-page “Budget Options, Volume 1: Health Care,” released on Thursday. The CBO does not offer recommendations.

It found that adjusting Medicare payments to doctors each year to account for productivity gains could save the government up to $201 billion over 10 years, though some of the savings could be shared with doctors as an incentive.

Obama promised during his campaign to reform the U.S. healthcare system, which is expected to cost $2.39 trillion this year — more than 15 percent of GDP.

The president-elect’s health plan includes a push to get doctors to adopt computerized medical records. Most medical records are still stored on paper and many doctors in solo practices have been slow to adopt computers because of cost.

The CBO examined requiring doctors and hospitals to use computer records to participate in Medicare. That policy would “lead virtually all hospitals and physicians to adopt electronic health record systems,” it said.

The result would be a savings of $22 billion over 10 years, the CBO forecast.

“An advantage of this option is that the expanded use of health IT would be likely to improve both the quality of health care services and health outcomes, perhaps markedly so,” the analysis said.

President George W. Bush has been an advocate for limiting medical malpractice lawsuit awards against doctors as a way of lowering the costs of healthcare.

The CBO analysis looked at capping noneconomic damages at $250,000 and punitive damages at $500,000 along with other rules.

It estimated the resulting increases in tax revenue at $1.3 billion over 10 years and a reduction in mandatory spending of about $4.3 billion in the same period.

“An argument for not making this change is that tort limits could relax health care providers’ incentive to avoid making mistakes that could injure patients,” it added.

Editing by Maggie Fox

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