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Copyright 1999 The National Journal, Inc.  
The National Journal

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SECTION: LOBBYING; Pg. 2506; Vol. 31, No. 36

LENGTH: 1268 words

HEADLINE: Getting a Second Opinion on Medicare

BYLINE: Marilyn Werber Serafini


     A coalition of hospital trade associations anticipates
spending approximately $ 7 million during the next several months
in an effort to persuade Congress to restore billions of dollars
in Medicare cuts. The hospital groups, as well as nursing homes
and rehabilitation centers, are gearing up for Capitol Hill
combat over two-year-old reductions in Medicare reimbursements
that they contend have forced many health care providers to
dismiss employees, close key facilities, and discontinue some
health care programs.

     At the center of the debate are provisions in the 1997
Balanced Budget Act that lowered federal spending on health care
by cutting Medicare reimbursements to hospitals and other medical
facilities. Hospitals rely heavily on the reimbursements to cover
the costs of providing services to Medicare beneficiaries. Nearly
40 percent of hospitals' revenue comes from Medicare.
Hospital officials maintain that the two-year-old law has had
unintended, budget-wrecking consequences. From 1998-2002, the
Balanced Budget Act cuts were supposed to reduce federal Medicare
spending by $ 116 billion, but the reductions are now expected to
total nearly $ 190 billion. Hospitals were projected to receive $51 billion less in reimbursements; however, an American Hospital
Association study estimates that the five-year hit to hospitals
nationwide will be $ 71 billion. The study also predicts that
Medicare costs will put seven out of 10 hospitals in the red.

     For the first time in Medicare's 34-year history, federal
spending on Medicare will fall from one year to the next. A
Congressional Budget Office study released in July estimates that
Medicare spending will decline from $ 211 billion in 1998 to $ 210
billion in 1999.

     ''This is the worst year for hospitals in 20 years,''
said Thomas A. Scully, the Federation of American Health Systems
president. ''CEOs are having a brutal time. They're laying off
people, and they're in a financial squeeze.''

     To press Congress for changes in the reimbursement rules,
the hospital groups have formed the Coalition to Protect Access
to Medicare and Medicaid. Members of the coalition include the
AHA, Scully's federation, the Catholic Health Association of the
United States, and the Association of American Medical Colleges,
whose members are worried about the impact that Medicare cuts
have had on teaching hospitals.

     Coalition members meet every Friday to coordinate
lobbying and grass-roots strategies. The trade associations have
distributed wallet-sized cards to hospital employees in Iowa and
New Hampshire to help them when questioning presidential
candidates. Moreover, the hospital trade groups are encouraging
hospital employees to send members of Congress postcards that
urge them to change the provisions of the budget act this year.
The coalition's goal is to blanket Capitol Hill with one million
letters and postcards by early September. Meanwhile, the
coalition has started flying hospital executives and employees to
Washington for meetings on Capitol Hill.

     The coalition is also bankrolling a radio and print
advertising campaign, mostly with money from the AHA and the
federation. And the AHA is calling on outside lobbying and media
consultants as reinforcements. ''Everyone we (regularly) used is
being turned loose on this,'' said AHA spokeswoman Carol
Schadelbauer. Policy Impact Communications Inc., the public
relations arm of  the Barbour Griffith & Rogers lobbying firm,
helped design and produce many of the ads that have already run.
Policy Impact's Ed Gillespie, a former top aide to House Majority
Leader Dick Armey, R-Texas, is directing the PR effort.

     Radio and print ads have run inside the Beltway and in
roughly 20 congressional districts. The ads warn that the
Balanced Budget Act is causing ''real pain for real people.'' For
example, a spot that aired in Seattle discusses the impact that
the reductions in Medicare reimbursements had on the Virginia
Mason Medical Center, a major city hospital. The medical center's
Bailey-Boushay House, the ad stated, ''serves patients with AIDS.
But the Balanced Budget Act's reductions for skilled nursing
facilities like Bailey-Boushay could force it to close.'' The
budget law contributed to the health system's decision to close
satellite clinics in Seattle and two rural communities, the ad

     The coalition is considering a ''significant escalation''
of its advertising efforts, Scully said. The AHA and the
federation have spent approximately $ 3 million on advertising,
grass roots, and lobbying activities.

     Scully and other hospital industry lobbyists want
Congress to overturn--or at least to delay--the budget act's
changes in the Medicare reimbursements. But hospital lobbyists
must also play some defense. President Clinton has proposed that
some changes in Medicare reimbursements be made permanent. ''The
No. 1 priority for us is trying to prevent further reductions,''
said AHA Executive Vice President Richard J. Pollack.

     The White House proposal would also help hospitals by
boosting Medicare reimbursements by $ 7.5 billion between 2000 and
2004. But Clinton's initiative would finance a new prescription
drug benefit for the elderly by extending some Medicare cuts to
2007. That provision, Scully said, will cost hospitals
approximately $ 36 billion from 2002-2007. ''They want to give us
back a crumb now, but kill us in the future,'' he complained.

     Meanwhile, key members of Congress are preparing
legislation that would help hospitals. Rep. Bill Thomas, R-
Calif., chairman of the Ways and Means Health Subcommittee, and
Senate Finance Committee Chairman William V. Roth Jr., R-Del.,
each plan to introduce a bill sometime in September. Their
proposals are expected to aid hospitals by increasing Medicare
reimbursement by as much as $ 10 billion, according to
congressional aides. Some hospital lobbyists say that more help
is needed.

     Lawmakers and lobbyists want to attach the Thomas and
Roth proposals to other legislation, such as the budget bill.
Because many members of Congress are eager to help health care
facilities in their states or districts, the Medicare
reimbursement changes could be added to legislation that needs a
sweetener to get passed. The Medicare fix also could be attached
to the continuing resolution, which gives Congress more time to
pass the remaining 12 appropriations bills.

     Another option involves the Republican health care
legislation. House Speaker J. Dennis Hastert, R-Ill., could add
the Medicare reimbursement changes to the patients' bill of
legislation that is being drafted by Reps. Tom Coburn, R-
Okla., and John Shadegg, R-Ariz. The bill is expected to reach
the House floor shortly after lawmakers return from their August
recess. Hastert will need every vote he can get to pass the GOP
plan, and some strategists maintain that attaching the hospital
relief provisions would boost support for the Coburn-Shadegg

     Meanwhile, the hospital groups are preparing for an
important--and expensive--fall offensive. The AHA and the
federation face a conundrum. The groups want to spend more money
on the hospitals' ad campaign, but the cuts in Medicare
reimbursements mean their members have less money to throw into
the fight.

LOAD-DATE: September 09, 1999

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