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Volume 12 Number 243
News: Medicare The Senate Dec. 18 by unanimous consent approved legislation (S. 2499) providing physicians a six-month Medicare payment increase and extending funding for the State Children's Health Insurance Program until March 2009. The $6 billion bill also includes extensions of Medicare policy and cuts spending for Medicare managed care plans, but only by $1.5 billion. The bill is expected to be taken up and approved by the House Dec. 19. A presidential veto is considered unlikely. The bill is the culmination of several months' work by the Senate Finance Committee, but the final legislation does not come close to mirroring the initial wishes of many members of the committee or that of the House, which passed sweeping Medicare legislation (H.R. 3162) in August as part of a bill reauthorizing SCHIP for five years. Cancels Scheduled Pay Cut The bill would provide doctors a 0.5 percent payment increase through June 30, 2008, cancelling a 10.1 percent cut scheduled to take effect Jan. 1, 2008. Congress will have to address the issue again in mid-2008 to avoid yet another payment cut for doctors from taking effect July 1, 2008. The measure contains numerous provisions extending current Medicare payment policy, including an extension to June 30, 2008, of the nursing home therapy cap exception. It also includes a permanent freeze at 60 percent of the compliance threshold for inpatient rehabilitation facilities, regulatory relief for long-term care hospitals, and extension of the qualified individual, or QI program. The package also would impose a six-month delay on the implementation of proposed Medicaid regulations from the Centers for Medicare & Medicaid Services related to school-based services and rehabilitation services. Medicare managed care plans likely were the biggest winners in the package, not for what it contains, but for what it does not. The Finance Committee at one juncture was contemplating cutting managed care payments by as much as $20 billion over five years, and the House in its bill included more than $50 billion in reductions to plans. As late as Dec. 17, Finance still was considering cutting indirect medical education program payments to health plans, but the provision was dropped, and in the end, Congress will take only $1.5 billion from the managed care stabilization fund to help fund the package. Offsets in Bill Other offsets in the bill include a freeze in the payment update for long-term care hospitals for the last quarter of 2008, and a freeze in Medicare payment to inpatient rehabilitation facility payments from April 1, 2008, through fiscal 2009. Several other providers, such as home health agencies, skilled nursing facilities, and home oxygen suppliers, also avoided having their Medicare reimbursement reduced. An industry official told BNA Dec. 18 that the lack of savings from managed care plans in the final bill is a result "of the realities of the political process," in which the Finance Committee could not reach a bipartisan agreement on a Medicare package, the White House opposed cutting managed care, and lawmakers from states getting large amounts of IME funding, such as New York, Pennsylvania, and California, objecting to cutting those payments. "You put all that together, and that's how we got from there to here," said the official. But the official said Congress is likely again in June 2008 to try to cut managed care to fund another doctor payment fix, although with President Bush in the White House and Democrats still lacking votes to override vetoes, managed care funding probably will be spared from cuts through next year. Hospitals Seen Big Winners A health care analyst added hospitals also were big winners in the package. "Every Medicare bill has winners and losers," R. Alexander Vachon III, of the consulting firm Hamilton PPB, told BNA Dec. 18. "The American Hospital Association is a big winner. The hospital industry lobbied hard for rehabilitation hospitals and LTCHs; although both contribute savings, the bill is also a rescue package for each." "AHA didn't get the specialty hospitals killer it wanted--but that's for 2008," he added. "America's Health Insurance Plans is another big winner. AHIP lobbied against a cut to MA IME--which even the White House supported. Big losers are the nation's doctors. Congress provided only a six-month stay on a 10 percent pay cut. It's hard to understand why doctors aren't more effective on Capitol Hill." In a Dec. 18 statement, the American Medical Association said it was disappointed the Senate approved only a six-month payment fix, and called on lawmakers to address the underlying problems with the physician payment formula. "We are disappointed that the Senate could only agree on a six-month action because it creates great uncertainty for Medicare patients and physicians," the AMA said. "We strongly urge Congress to break the tradition of short-term interventions that are not fully funded and fail to chart a course for replacing a flawed payment formula that is a barrier to improving quality and access to care for seniors." Agreement 'Woefully Inadequate.' AARP, which has been lobbying Congress to cut managed care funding, in a Dec. 18 statement called the Medicare agreement "woefully inadequate." "Given the inability to find consensus on a broader Medicare improvement package, the short term package coming before the Senate this week is the path of least resistance and is woefully inadequate," the seniors' lobby said. "Enactment of this legislation does little to protect millions of Medicare beneficiaries from higher monthly premiums and only temporarily averts the problems beneficiaries would face finding a physician if payment cuts take place." "The American people deserve better," the group said. "It is a shame that our elected officials will go home for the holidays without helping low-income beneficiaries get the care they need by strengthening programs directly targeted at the most vulnerable older Americans." Lawmakers told reporters Dec. 18 that, while the final Medicare package may not reflect what they initially started out to do, it was the best possible outcome, given the failure of Finance to reach agreement on a bill, and White House objections to cutting managed care funding. "The White House stopped all this," Finance Committee Chairman Max Baucus (D-Mont.) told reporters. "The White House stopped the tax package, the energy bill, the Medicare package from passing, and the White House stopped a significant reimbursement package for the docs." "But as you get closer to the [2008 congressional and presidential elections], I don't think the White House will have quite the same power," Baucus said. "This bill includes essential policies for the government to make sure doctors can continue to treat Medicare beneficiaries and to preserve health care services in rural areas of the country," Finance Committee ranking minority member Chuck Grassley (R-Iowa) said in a Dec. 18 statement. "It's a six-month extension that serves as a stop-gap until Congress can take care of the important Medicare business that got backed up this fall." Baucus said the Medicare package to be crafted by mid-2008 likely would be a larger bill addressing many of the provisions left out of the current agreement, such as help for low-income beneficiaries enrolled in the Medicare prescription drug program and a moratorium on Medicare reimbursement to specialty hospitals. Stark Comments The Senate legislation is likely to be a bitter pill for House Democrats to swallow, since they passed a massive Medicare bill earlier this year. House Ways and Means Health Subcommittee Chairman Fortney Pete Stark (D-Calif.) told reporters Dec. 18 he would prefer doing nothing on Medicare this year and take up the issue next year. Stark said increasing doctors' pay could be done retroactively, but in any case, Congress should not fear the physician lobby. "Your mother taught you that when a bully challenges you, if you give in, you're going to be running from them on the playground the rest of your life," he said. The agreement also reflects the political reality that Democrats are not likely to get a bill passed and signed by Bush to reauthorize the SCHIP program. Two such bills already have been vetoed by the president, and Democrats hoped to extend SCHIP funding to Sept. 30, 2008, to force Republicans to vote on the program immediately before the 2008 elections. Democrats said Dec. 18 that the longer extension only means funding for states that will run out of money beginning in March 2008 will be secured, and that additional attempts to pass legislation are likely. "We're not going to give up on it," Sen. John D. Rockefeller (D-W.Va.) told BNA. House Republicans urged the House to pass the SCHIP extension, and urged Democrats to work with them to pass a SCHIP reauthorization bill. "What we need most is a responsible dialogue between the two parties on how America can have healthy children, and extending SCHIP makes one possible," House Energy and Commerce Committee ranking minority member Joe Barton (R-Texas) said in a Dec. 18 statement. "Republicans have been willing to work with Democrats on this since the day after the 2006 election. Now maybe we can. If the House extends SCHIP, the next logical move is to convene a committee hearing and begin an honest, bipartisan exploration of how to improve children's health insurance." A summary of the legislation is available. The full text of the bill is available. A Congressional Budget Office cost analysis of the bill is posted. By Steve Teske
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