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Volume 12 Number 30 Wednesday, February 14, 2007 Acting Centers for Medicare & Medicaid Services Administrator Leslie V. Norwalk Feb. 13 defended the president's fiscal year 2008 budget proposal to trim Medicare and Medicaid funding by about $101 billion over five years, including plans to reduce Medicare provider spending. In testimony to the House Ways and Means Health Subcommittee, Norwalk highlighted what she characterized as positive trends in the Medicare Advantage and Part D prescription drug programs. However, subcommittee Chairman Fortney Pete Stark (D-Calif.) said he was "disappointed with the President's budget." He added, "We're going to have to set aside this budget" and come up with something "from scratch." In her testimony, Norwalk said, "Experience with Medicare Part D to date demonstrates the great potential of market reforms to save Medicare dollars, while also promoting beneficiary choice and satisfaction." In addition, beneficiaries enrolled in Medicare managed care plans (Medicare Advantage) "have access to integrated health and prescription drug benefits, often with lower premiums and cost- sharing than under fee-for-service Medicare," she said. Committee Members Voice Skepticism Along with Stark, many Democrats on the subcommittee expressed skepticism at Norwalk's claims, questioning the value of higher payments that Medicare managed care plans often receive. Republican members of the subcommittee also voiced their concerns with the president's fiscal 2008 budget proposal, asking why the administration chose not to address problems in Medicare's physician payment formula. The proposal leaves overpayments in place for private plans, while cutting other parts of the program, Stark said. The budget would require beneficiaries to pay higher Part B premiums and would raise rates for many higher-income beneficiaries, he said. The proposal also provides more than $3 billion for health savings accounts, which primarily benefit upper-income families, while shortchanging the State Children's Health Insurance Program by $12 billion, he said. In the past, Stark said, both the president and Congress worked to ensure that Medicare remained a guaranteed retirement benefit for all of America's seniors. This latest budget proposal "is designed to convert Medicare from a program to cover all seniors to one which covers only those who have no other option." Managed Care Stark also highlighted the president's failure to reduce spending for Medicare Advantage programs, calling Medicare managed care plans "the one group that stands out as not having contributed anything" to the budget cuts. "Medicare Advantage plans have been left out of the loop, and I don't want them to feel overlooked," he quipped. Norwalk said managed care plans would be impacted under the president's budget because Medicare Advantage program benchmarks would be affected by any changes to Medicare Part A and B programs. Medicare managed care plans also provide additional benefits to beneficiaries, she added. For example, more than 85 percent of Medicare Advantage beneficiaries have access to zero premium plans, she said. On average, beneficiaries in Medicare managed care plans save $86 per month, she added. Minorities and low-income beneficiaries receive the greatest benefit from Medicare Advantage plans, Norwalk said. As a percentage, more minorities and low-income populations are enrolled in Medicare Advantage plans than in traditional fee-for- service plans, she said. Physician Payments The president's budget did not discuss the sustainable growth rate formula. For physicians, the SGR formula has led to cuts in Medicare reimbursements that will continue in 2008 and beyond. The lack of discussion prompted questions from Democrats and Republicans alike. Rep. Earl Pomeroy (D-N.D.) said the president provided a "goose egg" in terms of providing a multi-year fix to the SGR formula. Subcommittee ranking member Dave Camp (R-Mich.) said the administration could have taken a number of steps to help improve the physician payment system, such as removing drug payments from the SGR formula. Norwalk said the budget does recognize that the SGR formula "is a problem." She said CMS would like to become a "more active purchaser" of health care services to better reward efficient behavior among physicians, something the current SGR formula does not do. The full agenda of the hearing is available at http://waysandmeans.house.gov/hearings.asp on the Web. Click on the link for "Hearing on the President's Fiscal Year 2008 Budget with Acting CMS Administrator Norwalk."
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