Senate Approves Medicare Bill That Would Delay Physician Fee Cut, Extend SCHIP Through March 2009
The legislation would increase Medicare physician fees by 0.5% for six months and would extend several programs that provide higher Medicare reimbursement rates to rural health care providers and hospital laboratories. However, the legislation does not address future physician fee cuts, which means the 10% cut will go back into effect after the six months without additional legislative action.
The measure also would extend SCHIP funding through March 31, 2009. A summary distributed by the Senate Finance Committee showed that the legislation would provide enough funding for states to maintain their current enrollment levels (Armstrong, CQ Today, 12/18). In addition, the bill would extend for six months rural and low-income subsidies, as well as payments for rehabilitative therapy under Medicare (Johnson, CongressDaily, 12/18). Other Provisions
The bill also would:
Bar Medicare Advantage special needs plans from expanding service areas through Dec. 31, 2009, and prevent new SNPs from entering the program until that time;
Place a "limited" moratorium on new long-term acute-care hospitals and establish new facility and medical review requirements to ensure patients receive appropriate levels of care at the facilities;
Extend a system in which physicians report quality-of-care data;
Extend through June 30, 2008, a Medicaid program that helps low-income seniors and individuals pay their Medicare premiums;
Extend the current abstinence-only education program until June 30, 2008; and
Extend through June 30, 2008, a transitional medical assistance program that helps low-income individuals move from welfare to work by maintaining health insurance for children (Carey/Reichard, CQ HealthBeat, 12/18). Costs
The Congressional Budget Office on Tuesday estimated that the measure would cost $5.3 billion over five years. The costs would be offset by $1.5 billion in cuts from a "stabilization fund" created under the Medicare prescription drug benefit to attract preferred provider organization plans to underserved areas; $1.4 billion in reduced payments to hospitals for inpatient rehabilitation services; and $1 billion in reduced payments for drugs administered by physicians rather than taken at home by beneficiaries. In addition, a data reporting requirement for Medicare Secondary Payer should reduce fraud and abuse, creating savings for Medicare. Under the program, Medicare takes over payment liability from private insurers after they have paid to treat certain conditions over a specific period of time (CQ Today, 12/18).
The bill would maintain current payment system for teaching hospitals. Republicans had proposed funding the measure by eliminating some payments for medical education, but House Ways and Means Committee Chair Charles Rangel (D-N.Y.) opposed the idea because he said the cuts would disproportionately hurt urban areas (CongressDaily, 12/18).
CBO estimated that the physician fee patch would cost $1.5 billion over five years and $6.4 billion over 10 years. Extending SCHIP would cost $800 million over 10 years. According to CBO, the legislation would save the government $100 million over five years and would be cost neutral over 10 years (CQ Today, 12/18). Future of SCHIP
Extending SCHIP until 2009 would be a "victory for Republicans," according to CQ Today. Democrats had aimed to extend the program for a shorter period of time to make it a main issue during the 2008 presidential campaign. However, the "longer extension also offers a chance to secure Republican cooperation in expanding the program to cover more uninsured children," CQ Today reports (CQ Today, 12/18).
Finance Committee Chair Max Baucus (D-Mont.) said that the extension does not limit when SCHIP can be discussed again, saying, "We can still bring it up and try to do (children's health) legislation before" funding expires (Reuters, 12/18). In addition, the legislation does not address a CMS rule that prohibits states from expanding SCHIP income eligibility limits to higher income levels if they have not covered 95% of low-income children, so "any problems that develop as a result of it will give lawmakers an excuse to revisit SCHIP in the summer," CongressDaily reports (Johnson, CongressDaily, 12/19).
However, The Hill reports that supporters of SCHIP "might have to wait for the next president and the 111th Congress to get a result." According to The Hill, that "could be risky, since in 2009 SCHIP could well be subsumed by much larger debate over the future of the U.S. health care system if the focus of presidential candidates on health care issues holds steady" (Young, The Hill, 12/19). Comments
The American Medical Association said that the six-month fix creates uncertainty for Medicare beneficiaries and the physicians who serve them. AMA said Congress should do away with the funding formula that created the cuts altogether. In addition, AARP and other groups "described the Medicare legislation that passed the Senate as woefully inadequate," hoping that "Congress would substantially lower payments" to MA plan providers "to pay for other programs that they wanted," the AP/Houston Chronicle reports.
Finance Committee ranking member Chuck Grassley (R-Iowa) said, "This is a disappointment for many of us," adding, "The purpose of moving forward with a six-month package now is to provide the opportunity for the Finance Committee to address these priorities next year" (Freking, AP/Houston Chronicle, 12/18). Senate Budget Committee ranking member Judd Gregg (R-N.H.) said of the Medicare physician fees, "There's a geometric progression which makes it worse each year," adding, "So what we ought to do is correct it permanently, take the hit and deal with it" (CongressDaily, 12/18).
House Energy and Commerce Committee ranking member Joe Barton (R-Texas) said, "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" (The Hill, 12/19).
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