Actuary: Cost cutting trumped policy in key Medicare regulation

Cost cutting trumped policy considerations as federal regulators designed key healthcare reform regulations that many physicians and hospitals now say are too stringent, Medicare's chief actuary told The Hill.

Over the past week, high-profile medical organizations including the Mayo and Cleveland clinics warned federal officials that they might not participate in the government's care coordination efforts because it would cost them too much. The Medicare agency on Tuesday unveiled three new initiatives aimed at bolstering accountable care organizations (ACOs), a key element of Democrats' healthcare reform law.

"That was a situation where there are healthcare policy folks and there are budget folks," Rick Foster said about why the agency ended up proposing regulations that seem unattractive to many providers. "And sometimes the budget folks are so concerned about the possibility that something might not save enough, or might cost money, that that overrides the healthcare policy folks."

According to a government analysis of the proposed ACO regulations, Medicare could potentially save as much as $960 million over three years. But critics say the regulations offer them too few incentives to participate and no federal startup help.

Foster said he expects the regulations to be modified following a comment period, perhaps later this summer.

"It wouldn't surprise me if it didn't end up getting changed somewhat to make it a more attractive proposition for ACOs to actually get into this program," he said.