What's at Stake in the New Medicare Bill

The physicians will not have their income reduced -- and, in fact, a small increase will occur in 2009 -- but the private insurers offering MA plans will see a reduction. AHIP naturally does not support this, and cautions that there will be negative effects on the elderly.

Democrats say that this is nonsense, and that as MA currently receives reimbursement levels reportedly up to 17% above Medicare rates, they will not be losing anything -- just reducing their profits on the plans.

UnitedHeath Group(UNH Quote), ironically the provider of choice to the AARP, recently announced that it was stopping marketing some Medicare Advantage special needs plans that it had been operating because of reduced earnings.

This new law will ensure that the pressure on the company, which recently announced 4,000 job cuts, will not go away. The second-quarter earnings reports will show whether it's the only insurer under pressure.

This law includes much more than a simple restructuring of Medicare costs and expenses.

A controversial new competitive bidding process for the supply of durable medical equipment was due to have gone into place on July 1. This process would have limited the supply of items such as beds, chairs and walkers to approved suppliers, rather than to any supplier who met the pricing requirements for Medicare.

Interestingly, 75% of suppliers who had bid for the status failed to be selected.

The Centers for Medicare and Medicaid Services (CMS) believes that there should be no controversy about the limiting of suppliers, and that there are considerable savings to be made, estimated at $1 billion a year, not only for the government but also for the recipient of the equipment.