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GOVERNMENT & MEDICINE

Medicare drug plan, update fix almost ready, House GOP says

But relief for physicians will only come if Senate Democrats take action.

By Markian Hawryluk, AMNews staff. May 6, 2002. Additional information

Washington -- Republican leaders in Congress have promised to bring a comprehensive Medicare reform package including a prescription drug benefit and a physician update fix to the House floor by Memorial Day.

That may be the easy part.

Lawmakers are hoping that the public clamor for a Medicare prescription drug benefit will force the Senate into taking action on the package so it avoids the fate of other health bills left on the Senate's doorstep. The Senate failed to act on the House-passed prescription drug benefit in 2000 and the regulatory relief measure passed last year.

House Energy and Commerce Chair Billy Tauzin (R, La.) hopes this year will be different. His committee is working in tandem with the House Ways and Means Committee to reach agreement on a single Medicare bill. The panels could vote on the measure early in May.

Republicans from both committees have expressed a desire to fix the physician payment formula, which has resulted in a 5.4% cut this year, and could lead to a 20% cut in physician reimbursements through 2005.

"We are making progress," Health and Human Services Secretary Tommy Thompson said about the negotiations over the physician update. "There's no consensus yet but it's moving in the right direction."

While the will to change the update is there, lawmakers say the way is still unclear. House leaders and the Bush administration have insisted that any new funding for Medicare practitioners be offset by savings in other areas of the program.

"The questions of budget neutrality continue obviously to plague us," Tauzin told reporters at an April briefing. "Nevertheless that's the instruction, and our committee has to live within those instructions from the leadership and from the president."

Once the cost of options under consideration are evaluated by the Congressional Budget Office, the committees would have a better idea of what was affordable, Tauzin said. In the meantime, they have been searching for "creative" ways to fund new spending, he added.

Finding the money

The committees have asked CBO and the Centers for Medicare & Medicaid Services to reconsider the assumptions used to determine the cost of fixing the physician update formula. They also sought guidance on whether administrative changes could be made to limit the cost of a fix under congressional budgetary rules.

The Medicare Payment Advisory Commission has suggested updating physician payment according to a forecast of the costs of goods and services used by physicians. But that proposal was estimated by CBO to cost $128 billion over five years and discounted by many lawmakers as too expensive in the current budgetary climate. The Bush administration has forwarded to the committees a list of options for addressing the payment update, but none would involve scrapping the current formula.

"I'm one of those people who believes it can't be done by just tweaking it," said Rep. Michael Bilirakis (R, Fla.), chair of the Energy and Commerce health subcommittee. "I mean, GDP, I'm not sure what the hell that has to do with physician reimbursement."

Both Tauzin and Bilirakis agree that while the proposals on the table are "all too expensive," the formula needs to be fixed.

"We're deeply concerned about the cuts in physician reimbursement," Tauzin said. "This is not about making physicians happy. This is about making sure we don't lose Medicare services in some communities where there's a single provider now. That will happen if we don't deal with this sharp fall in reimbursement."

To offset the new spending, the committees have identified several potential cost savers, including fixing the price that Medicare pays for Part B drugs. Those consist mainly of chemotherapy agents and other medications that are normally administered by physicians. Lawmakers want to eliminate overpayments in this area but are concerned that oncologists and certain other physicians rely on those payments to make up for a shortfall in Medicare practice expense payments. Tauzin said he is unwilling to change the average wholesale price without increasing payments to the affected physicians.

The administration has suggested limiting the update due to hospitals next year as another potential savings source. Hospitals have argued it is pointless to cut payments to one practitioner group to fund increases for another. Home health agencies and skilled nursing facilities are also seeking relief from pending cuts.

The House budget plan set aside $350 billion for Medicare, but those funds have been earmarked for a modernization of the program and the addition of prescription drug coverage. The committee leaders are also gambling that public support for a prescription drug benefit -- a common campaign promise in the last elections -- will provide momentum to the broader package. Republicans pledge they will not approve a prescription drug benefit without modernization provisions. Among those being considered are an expansion of private insurance options under Medicare, a greater reliance on disease management and preventive health benefits, as well as new medigap plans that would eliminate first dollar coverage.

"People tell me that you can't get it done in an election year. I think just the opposite," Thompson said. "The election year is going to be such an impetus to do something in this area that we've got a good opportunity to accomplish some good legislation for seniors."

Thompson told the Ways and Means Committee that the prescription drug benefit is likely to be a financial "drag" on Medicare necessitating further changes to ensure its long-term viability. He predicted Congress would have "little appetite" to make reforms after the prescription drug benefit was established.

Thompson told reporters he was "cautiously optimistic" the House could pass a comprehensive Medicare package with a prescription drug bill and that the Senate would follow suit. The House leadership's insistence on the strict timeline is aimed at giving the Senate every opportunity to do so before adjourning.

"I'm not happy with the deadline of just before the Memorial Day break for something as significant as prescription drugs for Medicare recipients," Bilirakis said. "I guess it's necessary because if we get it over to the Senate as early as we can, then they can't come back to us and say they got it too late."

Last year, the House passed a Medicare regulatory reform measure unanimously but the Senate has not yet addressed the measure. Bilirakis said there is interest in including those provisions in the Medicare bill next month as well. If the House and Senate cannot reach an agreement, Tauzin says there is still a chance to pass many of the provisions before the end of the session.

"If the worst should happen and the Senate does not agree to take up Medicare reforms and whatever improvements we choose to carry along with them, then we'll have an opportunity in September to try to make these changes somewhere else."

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 ADDITIONAL INFORMATION: 

Laying out a Medicare marker

House Republicans plan to introduce a comprehensive Medicare bill in May that will potentially include the following measures:

  • Physician payment update fix and other health care professionals' payment measures.
  • Medicare prescription drug coverage.
  • Replacement of the average wholesale price method of paying for Part B drugs.
  • Limits on direct-to-consumer advertising.
  • Disease management provisions.
  • Expanded preventive health benefits.
  • New medigap plans that eliminate first dollar coverage.
  • Changes for Medicare+Choice plans.

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Copyright 2002 American Medical Association. All rights reserved.

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