	Introduction

On March 23, 2010, President Obama signed into law comprehensive health care reform legislation, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as passed by the Senate on December 24, 2009, and by the House of Representatives on March 21, 2010. On March 30, 2010, the President signed into law H.R. The Reconciliation Act makes changes to a number of Medicare-related provisions in PPACA and adds several new provisions. 111-309), signed into law on December 15, 2010, also modified certain PPACA provisions affecting Medicare. CBO estimates on the Medicare-related provisions in PPACA and the Reconciliation Act indicate that absent interaction effects, net reductions in Medicare direct spending will reach close to $400 billion over the FY2010-FY2019 period. Reducing Medicare payments to hospitals that serve a large number of low-income patients, known as disproportionate share (DSH) hospitals, is expected to decrease expenditures by about $22 billion. Creating an Independent Payment Advisory Board to make changes in Medicare payment rates is expected to save approximately $16 billion over 10 years. Additionally, a new Hospital Insurance tax on taxable wages over $200,000 per year for single filers ($250,000 for joint filers) is expected to raise $87 billion from FY2013 through FY2019, and a new tax on investment income is projected to raise an additional $123 billion over 10 years. Payment Rate Changes Affecting Medicare Fee-for-Service Providers

Medicare is a federal program that pays for covered health services for most persons 65 years of age and older and for most permanently disabled individuals under the age of 65. For instance, the program provides for annual updates of Medicare payments to reflect inflation and other factors. In addition, the Reconciliation Act provided a rebate of $250 to enrollees who entered the coverage gap in 2010 and phases out the Part D doughnut hole by gradually reducing the cost-sharing during the coverage gap for both brand-name and generic drugs until it equals 25% of the negotiated price of the drug in 2020 (similar to cost-sharing under the initial coverage limit). For example, a provision in PPACA requires the establishment of a national, voluntary pilot program that will bundle payments for physician and hospital as well as post-acute care services with the goal of improving patient care and reducing spending. PPACA and the Reconciliation Act contain provisions designed to reduce direct Medicare program spending by approximately $400 billion over the next 10 years through adjustments in payments to certain types of providers, by equalizing payment rates between Medicare Advantage and fee-for-service Medicare, and by increasing efficiencies in the way that health services are paid for and delivered. Selected Medicare Provisions in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010
This appendix provides an overview of the majority of Medicare-related provisions in PPACA and the Reconciliation Act, including a brief description of the law prior to enactment, a description of the provision and, where possible, the associated CBO score for each provision. Additionally, changes made by the Medicare and Medicaid Extenders Act of 2010 (P.L. PPACA repeals this program. According to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. Funding Outreach and Assistance for Low-Income Programs. Reducing Part D Premium Subsidy for High-Income Beneficiaries. The income thresholds will be set in a similar manner to those under Part B. These advisory reports will not be subject to the rules for congressional consideration. CMS has implemented regulations requiring providers and suppliers to complete an application to enroll in the Medicare program and receive billing privileges. Enhanced Medicare and Medicaid Program Integrity Provisions.
Medicare is a federal program that pays for covered health services for most persons 65 years old and older and for most permanently disabled individuals under the age of 65. The rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy continue to challenge the program's ability to provide quality and effective health services to its 47 million beneficiaries in a financially sustainable manner.
On March 23, 2010, the President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as passed by the Senate on December 24, 2009, and the House on March 21, 2010. The new law will, among other things, make numerous statutory changes to the Medicare program. On March 30, 2010, the President signed into law H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (the "Reconciliation Act," or HCERA; P.L. 111-152), which modifies a number of Medicare provisions in PPACA and adds several new provisions. Several PPACA provisions were also modified by the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), which was signed into law on December 15, 2010.
This report, one of a series of CRS products on PPACA and the Reconciliation Act, examines the Medicare related provisions in these Acts. Estimates from CBO on PPACA and the Reconciliation Act indicate that net reductions in Medicare direct spending (absent interaction effects) will reach close to $400 billion from FY2010 to FY2019. Major savings are expected from constraining Medicare's annual payment increases for certain providers, tying maximum Medicare Advantage payments near or below spending in fee-for-service Medicare, reducing payments to hospitals that serve a large number of low-income patients, creating an Independent Payment Advisory Board to make changes in Medicare payment rates, and modifying the high-income threshold adjustment for Part B premiums. A new Hospital Insurance tax for high-wage earners will also raise approximately $87 billion over 10 years, and a new Medicare tax on net investment income, added by the Reconciliation Act, is expected to raise an additional $123 billion over 10 years.
Other provisions in PPACA address more systemic issues, such as increasing the efficiency and quality of Medicare services and strengthening program integrity. For example, PPACA requires the establishment of a national, voluntary pilot program that will bundle payments for physician, hospital, and post-acute care services with the goal of improving patient care and reducing spending. Another provision adjusts payments to hospitals for readmissions related to certain potentially preventable conditions. In addition, PPACA subjects providers and suppliers to enhanced screening before allowing them to participate in the Medicare program, and both PPACA and the Reconciliation Act increase funding for anti-fraud activities.
PPACA also improves some benefits provided to Medicare beneficiaries. For instance, Medicare prescription drug program enrollees will receive a 50% discount off the price of brand-name drugs during the coverage gap (the "doughnut hole") starting in 2011, and the coverage gap will be phased out by 2020. Other provisions expand assistance for some low-income beneficiaries enrolled in the Medicare drug program, and eliminate beneficiary copayments for certain preventive care services.
This report reflects the Medicare provisions at the time of the enactment of PPACA and HCERA. It is meant to serve as a historical reference to the complete set of Medicare provisions included in the laws, as of March 30, 2010. It will not be updated to capture subsequent legislative changes, program guidance, public notices, or rulemaking.