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Learn Your Offsets: A Glossary Of Proposed Cost-Saving Measures Learn Your Offsets: A Glossary Of Proposed Cost-Saving Measures

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Learn Your Offsets: A Glossary Of Proposed Cost-Saving Measures

As lawmakers consider ways to pay for health reform, use our glossary of potential offsets to get caught up fast. Click on each term to learn more.


Comparative Effectiveness: The federal government would fund research into available treatment options to determine the most cost-effective ones available to physicians.

Health IT: Health information technology (health IT) would digitize patient records, doctors' notes, prescription forms, test results and other information that most physicians currently record using dead trees and ink.


Medicare Cost Sharing: Under one option reviewed by the Congressional Budget Office, Medicare beneficiaries would be responsible for higher co-pays but be protected against huge medical bills in the event of a catastrophic illness. It would also restrict existing supplemental insurance policies that seniors use alongside their Medicare benefits, making beneficiaries think twice before seeking medical treatment (and lowering costs).

Medical Homes: Medical homes would pay physicians a small stipend every month to coordinate medical care for chronically ill Medicare beneficiaries, whose many doctors often don't communicate with one another and may be providing redundant or poorly planned care.

Public Option: The public option proposed by some Democrats makes a public health insurance plan available in health insurance exchanges or gateways, alongside private plans, for some uninsured Americans.



Changing Tax Exclusion For Employment-Based Health Insurance: One potential change would cap the tax exclusion of employment-based health insurance benefits at a certain value. In another plan, the value of benefits would no longer be excluded from income for tax purposes; instead, workers would receive a tax deduction that would phase out for higher-income taxpayers.

International Tax Changes: One proposed change to international tax policy would delay until 2020 a tax benefit passed by Congress in 2004 that had already been delayed once before. The benefit would have allowed multinational firms to take advantage of a more lenient foreign tax credit limitation rule for worldwide allocation of the cost of borrowing money between U.S. and foreign sources.

Plastic Surgery Tax: Elective plastic surgeries -- like botox, breast augmentations or nose reshapings -- would be taxed at 10 percent. Medically necessary reconstructive surgeries would not be taxed.

Sugary Beverage And Alcohol Tax: A sugary beverage tax would add a federal excise tax on non-diet sodas, juices and sports drinks. Standardizing federal taxes on alcohol would amount to 25 cents per ounce of alcohol, an increase of 4 to 17 cents, depending on the type of alcohol.


Surtax On The Wealthy: A surtax ("surcharge" is the language used in the House bill) on households earning more than $350,000 would impact the wealthiest 1.2 percent of Americans, and surtax rates could later increase further depending on whether they hit targets for revenue.

Tax On Insurance Companies: Under one proposal, insurance companies would be taxed to help cover the cost of health care reform. The details of the plan, including which companies would be taxed and at what rate, have not been released.

Taxes For Noncompliance: Anyone who doesn't buy health insurance or any employer who doesn't offer it at levels required by the government would be taxed as a penalty.

Quality Of Care

Expanding Disease-Management Services: The health care industry has actually jettisoned the term "disease-management services" in favor of "population health improvement;" a term that better encompasses the ever-broadening array of services related to preventing and caring for chronic conditions.

Measuring Quality Of Care: Measuring quality of care would quantify how well health care payment and delivery systems perform, with the goal of increasing competition and refocusing providers' efforts on what works best.

Preventive Service: Medical treatment that would prevent a disease or identify it at an early stage.

Provider Payment Revisions

Abolishing The SGR: The sustainable growth rate mechanism that determines how much doctors are paid by Medicare would be replaced with a formula that adjusts to the changing costs of patient care.

Bundling: Rather than paying health care providers for each service provided, a bundled payment would be a single, fixed compensation for a patient's stay and, potentially, follow-up care. This flat payment would cover all treatments and expenses, motivating hospitals to reduce cost and volume of services.

Cut Payments To Medicare Advantage: Medicare Advantage allows seniors to receive their Medicare benefits through a private health insurance plan like an HMO, PPO or private fee-for-service plan. But it overpays in relation to traditional Medicare plans. Under Democrats' proposals, the benchmarks for payments would be reduced either to the same levels as fee-for-service or an average of the providers' proposals.

Partial Capitation: Physician payments from Medicare would be made partially on a fee-for-service basis and partly as a fixed amount per patient, dependent on diagnostic and demographic factors.

Pay For Performance: Hospitals would be rewarded for meeting quality standards and receive bonuses for efficient care. Or, in a second option, physicians could opt to join a "bonus-eligible organization," which would be rewarded for providing low-cost, high-quality care or penalized for not meeting standards.

Penalties For High Readmission Rates: In order to encourage efficient, complete care on a patient's initial visit, penalties would be levied on hospitals that report higher-than-expected readmission rates.

Reduce The Annual Update Factor: The annual increase in Medicare payments would be reduced slightly in a variety of arenas (among them fee-for-service payments, inpatient operating, post-acute care, home health care and skilled nursing facilities).

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