Healthy Skepticism Library item: 1470

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Publication type: news

Teske S.
Potential House-Senate Compromise On Medicare Bill Outlined in Document
The Bureau of National Affairs 2003 Nov 3

Full text:

House and Senate Medicare conferees could produce a compromise agreement on prescription drug legislation (H.R. 1) that would include Republican priorities of cost containment, means-testing, a scaled-back premium support system, and a blended benchmark payment system for health plans, according to documents obtained by BNA Oct. 31.

The legislation also would include Democratic priorities such as low-income assistance to beneficiaries, allowing Medicare to cover drug spending for dual eligibles (those eligible for Medicaid as well), a federal fallback modified to apply in fewer parts of the country, and no health savings accounts, the document said. In essence, many of the provisions favored by each side in the talks would be included in the final bill, but they would be modified to garner support from the other side.

It is unclear whether the compromise is still being discussed by conferees, because it is undated and several proposals have been advanced in the negotiations and conferees have said little publicly about the substance of the talks.

Senate Finance Committee ranking minority member Max Baucus (D-Mont.) told reporters Oct. 31 that conference chairman William M. Thomas (R-Calif.) likely will produce a document for discussion Nov. 3 that contains areas in which tentative agreements have been reached and with other bracketed items which still need to be resolved.

Four-Hour Meeting

Conferees met again for four hours Oct. 31, reaching no decisions, lawmakers said upon leaving the meeting. They are scheduled to meet again Nov. 3 at 2 p.m., and some conferees said decisions would soon have to be made if legislation is to be approved before Thanksgiving, at which time some believe Congress will adjourn for the year.

“The rubber is going to meet the road on Monday,” Baucus told reporters.

Conferees discussed durable medical equipment, drug reimportation, and health savings accounts, Baucus said. Many other issues remain unresolved, including premium support, specialty hospitals, and how to keep employers from cutting retiree benefits once a bill is implemented, Baucus said.

Emerging from the conference Oct. 31, Health and Human Services Secretary Tommy G. Thompson told reporters that the week of Oct. 27 has “not been as productive as last week, but we’ve made progress. I’m cautiously optimistic” the conference will produce a bill, he said.

“We’re getting close [to an agreement]—people are getting to believe we’re going to finish this job,” added House Energy and Commerce Committee Chairman W.J. (Billy) Tauzin (R-La.). “That belief is beginning to build in that room,” he said, referring to the conference.

According to the potential compromise outlined in the document, a cost-containment provision—designed to keep the overall price of the bill within $400 billion over 10 years—would be included in the legislation, but without caps or a fast-track legislative process.

Democrats Say Cap Undermines Medicare

Democrats oppose a cost-containment provision, saying it would undermine Medicare as an entitlement program. But House conservatives, who say they are worried about the cost of the drug benefit spiraling out of control, are insisting a spending cap be included in the final bill

Means-testing of the Part B premium also would be implemented, but the federal government would provide minimal subsidies for all income levels, the document said.

Premium support also would be included in the final bill, but it would be “modified to apply to fewer parts of the country and with premium protections for beneficiaries,” the document said. Premium support—in which private health care plans would directly compete against traditional fee-for-service Medicare—has emerged as a major sticking point in the conference.

Democrats and some moderate Republicans have rejected the premium support proposal, which is in the House bill, claiming it would dismantle the current system. House Republicans have argued premium support would save the program money due to the introduction of more competition into the program and would allow more medical innovation to be enjoyed by beneficiaries. Conferees have publicly reported little movement on the issue.

The final bill also could include a benchmark payment provision favored by Sen. Jon Kyl (R-Ariz.), but “pre-premium support, blended with fee-for-service, and with limits on overpayments to plans,” the document added.

Democrats would get low-income assistance for drug coverage, but modified to be less generous. Dual-eligibles’ drug spending would be covered by Medicare, but “with a more aggressive clawback to limit state windfall,” the document said. A clawback is a mechanism in which the savings states would realize from not providing drug benefits to the poor would be credited to Medicare. A lesser version of a clawback already exists in the House bill.

Soft Cap Plan

Senate conferees have advanced a cost-containment option for consideration by the conference, according to another document dated Oct. 31. Under the proposal, known as a soft cap, presidential and congressional action to address excess spending on prescription drugs would be triggered after Medicare’s trustees report for two consecutive years that general revenue funding exceeded 45 percent of total Medicare outlays, the document said.

The trustees would begin reporting on prescription drug spending and trends beginning in 2004, along with information already reported on spending in Parts A and B of the program.

“After two consecutive years of Trustees’ projections that Medicare has excess general revenue funding, the president shall include in the President’s first annual budget of the next session of Congress a proposal in response, which may include matters within the jurisdiction of the Committee on Finance in the Senate and the appropriate committees in the House,” the document said.

“Further, the President shall propose legislation not later than 15 calendar days after submission of this first annual budget for the next session of Congress” after the second Trustees report, according to the proposal. The majority and minority leaders in the Senate and House would be required to introduce legislation within three days after the president’s proposal is offered, it added.

A legislative proposal must be reported out by the committees of jurisdiction by June 30, the document said.

House conservatives favor a “hard cap” on spending, in which reductions automatically would be triggered to control program spending. Thompson told reporters Oct. 31 the White House wants “as much [cost control] as we can get” in the final bill.

Thomas Proposal

According to the American Hospital Association, Thomas has floated a proposal in which “the self-referral law would apply to new specialty hospitals for eighteen months from the date of enactment while [the Medicare Payment Advisory Commission] produces a study (to be completed within one year) examining whether the ‘whole hospital’ exemption has led to specialty hospitals accepting lower risk patients and the financial impact of specialty hospitals on community hospitals.”

The proposal “would significantly narrow” the Senate provision authored by Sens. John B. Breaux (D-La.) and Don Nickles (R-Okla.), AHA said in talking points about the proposal.

The amendment would remove a provision in the physician self-referral law that effectively allows doctors to retain ownership in, and refer patients to, single-specialty hospitals. Most specialty hospitals are owned by physicians.

The House in its prescription drug bill called for MedPAC to conduct a comparison study of specialty and general acute care hospitals to determine if there are excess self-referrals to niche hospitals, the differences in quality of care, the impact of speciality facilities on general hospitals, and the differences in services provided.

Conferees Oct. 30 reached agreement on a $12 billion stabilization fund to provide additional funding to attract preferred provider organization health plans to areas they might not otherwise enter, a Senate GOP aide told reporters. The fund would be self-financing with savings generated from competition, the aide said.