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Cost Containment in Medicare: A Review of What Works and What Doesn't

The history of Medicare’s cost-control initiatives is reviewed in this report, written by Robert Berenson, Michael Hash, Thomas Ault, Beth Fuchs, Stephanie Maxwell, Lisa Potetz, and Stephen Zuckerman of The Urban Institute and Health Policy Alternatives Inc. for the AARP Public Policy Institute. The report reviews approaches and lessons learned from Medicare’s experience with various cost-containment strategies, including both legislative and administrative initiatives since the mid-1970s. It identifies and describes nine approaches to Medicare cost containment that represent the most prominent and extensively researched policies aimed at reducing the growth in program expenditures. The approaches discussed include payment initiatives for various types of providers; changes in Medicare coverage for new technology, benefit design, and other innovative payment policies; efforts to better manage patients with chronic conditions; private plan participation in Medicare; and initiatives to reduce fraud and abuse. The findings are based primarily on a review of the literature that was available prior to April 2008. (96 pages)

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