This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

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The core of the Republican Medicare cost-reduction bill is Medicare Plus, a plan offering seniors a range of managed care plans, or HMO's, from which to choose.

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The decision was part of an "overall cost reduction plan", Mr Pincus wrote.

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The buyout plan will account for much of the cost reduction.

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