Legislative Watch

Subscribe | Advertise | About Us | Contact Us | Home

July 2003

By George G. Olsen, JD

For most of the summer and into the fall, the health care agenda for Congress and the Bush Administration will be dominated by the effort to enact a comprehensive Medicare prescription drug benefit. President Bush and the Republican leadership in the House and the Senate have publicly committed to this endeavor and they appreciate that its success, or failure, could have ramifications in the Presidential and Congressional elections in 2004. Because this issue will so control the health care landscape over the coming months and because the availability of drug therapies is often critical to rehabilitation patients, this column describes the current state of play with respect to proposals to create the most sweeping new Medicare benefit since the program’s inception nearly 40 years ago.

The foundation for legislative work on the drug benefit was laid earlier this year when the House and Senate passed budget resolutions allocating $400 billion over the next 10 years to Medicare reform and modernization. The Medicare drug benefit as well as the Medicare reforms that the House, Senate, and the Administration are developing must fit within this funding limitation.

THE HOUSE OF REPRESENTATIVES

House Speaker Dennis Hastert initially planned to have a Medicare drug benefit and reform bill reported out of the committees of jurisdiction (Ways and Means, Energy and Commerce) and passed by the House by the Memorial Day recess. To this end, the chairmen of the two committees have worked to develop a “leadership proposal” that could be considered by the committees at approximately the same time. This proposal is likely to be similar (but by no means identical) to the Medicare Modernization and Prescription Drug Act that the House passed last year. Pursuant to the House leadership’s schedule, the two committees will mark up the bills in the first 2 weeks in June and the Rules Committee would reconcile any differences between the committee bills shortly thereafter. The bill would be brought to the House floor for a final vote before the Fourth of July recess.

The foregoing timetable raises the question of whether Energy and Commerce Committee Chairman Billy Tauzin (R-La) will incorporate the ideas of five important Republican committee members who are promoting alternative Medicare reform/drug benefit legislation. This group, led by Reps Richard Burr (R-NC) and Charlie Norwood (R-Ga), and including Reps Barton (R-Tex), Shadegg (R-Ariz), and Buyer (Ind), unveiled its proposal to House leadership on May 8 and 9, 2003. Their proposal does not rely on a risk-based insurance approach for delivering the Medicare drug benefit as did the legislation passed by the House last year. Instead, it would establish “drug accounts” for each Medicare beneficiary. Medicare would make deposits to each account in amounts determined by the beneficiary’s income level. Additional deposits could be made by employers and individuals (tax free) as well as by states. The accounts would be accessed through drug cards. An income-related stop-loss feature would also be included for drug expenses. By way of broader Medicare reform, the proposal would establish an “Enhanced Medicare” program modeled after the Federal Employees Health Benefit Program. The group has asked the Congressional Budget Office (CBO) to “score” the proposal to determine whether it fits within the $400 billion limitation established by the budget resolution. The CBO has not yet responded.

It is unclear at this point how receptive the House leadership is to these ideas, but they reportedly told the group to “continue working” on its proposal. If they do not incorporate some of the ideas into the “leadership bill,” Chairman Tauzin may not have the necessary votes to move a Medicare package similar to that of the Ways and Means Committee through his committee.

Unlike last year’s bill, the new House Republican bill will likely not include many provider payment increases for hospitals, nursing homes, physicians, and others. Instead, the bill will largely follow the recommendations of the Medicare Payment Advisory Commission (MedPAC), which suggested that some health care providers receive reduced funding levels. With less money allocated to providers, this year’s GOP drug benefit could be more generous than last year’s. Moreover, no decisions have been made on which version of the Medicare contractor and regulatory reform legislation will be included in the bill. The two House committees have differing versions and they have yet to be consolidated, but regulatory reform is likely to be part of the overall legislation.

GOP leadership is also actively considering adding the medical malpractice damage award cap bill (as passed by the House last month) to the Medicare proposal. While controversial, its inclusion would serve a number of purposes including forcing the Senate to address the matter. Moreover, CBO would likely attribute savings to the inclusion of a medical malpractice reform piece, which would provide additional dollars for the drug benefit. Given the fiscal constraints facing lawmakers, any provisions that generate additional revenue are extremely attractive.

THE SENATE

The Senate is on a slower track than the House, although its leadership wants to have a bill passed before the Fourth of July Recess. This is an aggressive timetable and it is not clear how Republicans will secure enough Democratic votes to reach the 60 required to avoid a Democratic-led filibuster. Significant issues are likely to cause gridlock, including the cost, benefit design, extent of Medicare reform, level of federal regulation, price/cost controls on drugs, and related drug issues such as direct-to-consumer advertising and reimportation.

The Senate Finance Committee is drafting a bill that reportedly contains many elements of last year’s Tripartisan bill (which was introduced by Senators Grassley (R-Iowa), Hatch (R-Utah), Snowe (R-Me), Breaux (D-La) and Jeffords (D-Vt). Last July, the Senate considered Hatch/Waxman reform, reimportation, and some Medicaid provisions during the prescription drug benefit debate, but rejected four drug benefit proposals, before finally passing a measure that was not conferenceable with the House-passed bill (HR 4954, 107th Congress).

THE ADMINISTRATION

On March 4, the White House released a document entitled “21st Century Medicare: More Choices—Better Benefits.” While not a detailed legislative proposal—indeed, it is styled “A Framework to Modernize and Improve Medicare”—the white paper provides information on the President’s approach to reforming Medicare and furnishing a drug benefit to senior citizens.

The Bush Administration’s Medicare proposal is predicated on the principles for Medicare reform that the President first articulated in July 2001:

All seniors should have the option of a subsidized prescription drug benefit.
Medicare should provide better coverage for preventive care and serious illness.
Beneficiaries should have the option of keeping the traditional plan with no changes.
Medicare should provide better health insurance options.
Medicare legislation should strengthen the program’s long-term financial security.
The management of the government Medicare plan should be strengthened so that it can provide better care for seniors.
Medicare’s regulations and administrative procedures should be updated and streamlined, while the instances of fraud and abuse should be reduced.
Medicare should encourage high-quality health care for seniors.

In pursuit of these principles, the President’s “Framework” presents three program options for Medicare beneficiaries: Traditional Medicare, Enhanced Medicare, and Medicare Advantage. These options are designed to give seniors more choices and better benefits. According to the White House the President believes Medicare beneficiaries should be given more choices in how they receive their health care—and these choices should be strictly voluntary. Those seniors who are happy with their current coverage will be able to keep it and receive help with the high costs of prescription drugs. Traditional Medicare will continue to be there for those who want help for prescription drugs. But seniors who want more choices and better benefits—including a prescription drug benefit and limits on high out-of-pocket costs—will be able to select options for these additional benefits as well. Seniors will have the right to select the health plan that fits their needs best.

The White House strongly defends proposed fee-for-service drug coverage, arguing it needs to be assessed in combination with seniors’ supplemental coverage. The Administration is facing Senate pressure to bring its fee-for-service drug benefit up to par with the benefits proposed under privately run Medicare plans. The Administration faces pressure from Senate Finance Committee leaders to make the drug benefit available in fee-for-service as good as the coverage seniors would get if they switch to a private preferred provider organization (PPO). The cost of subsidizing the shift of seniors toward PPOs has caused the Senate Finance Committee to look at delaying the move toward the private plans.

However, the Administration maintains that seniors are best suited to make the decision as to whether the package of Medicare and supplemental benefits they currently have or the comprehensive benefit available from the PPO option that the Administration wants to set up would be better. According to the Administration, 90% of Medicare beneficiaries have some form of supplemental coverage, either from former employers, from their purchase of supplemental Medigap insurance, or, if they are low-income, from Medicaid. But the Administration acknowledges fewer employers are offering retiree health benefits and the cost of Medigap plans is rising faster than seniors can afford.

The Administration proposal would give $600 for the drug expenses of low-income seniors, but it has not specified at what level catastrophic coverage would kick in. There appears to be flexibility regarding the Administration’s 2006 target for setting up PPOs to offer comprehensive Medicare benefits on a regional basis.

The Congressional debate over the Medicare drug benefit will certainly be contentious, lengthy, and politically charged. As a result, it will be very difficult for other health care issues such as physician payments, rehabilitation caps, and skilled nursing facility and home health agency reimbursement initiatives to command attention.

George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies and Providers.

LOOKING FOR EXPERT ADVICE?

Experts here are available to answer all your questions!

Please contact us for more information about this feature, or to become an expert.

MEDIA CENTER

Interactive Media

Resources

	Classifieds
	Calendar
	Consumer Resources
	Media Kit
	Advertiser Index EAB Reprints Submit an Article

Featured Jobs

Nurse, RN, NP, Legal Nurse, Chart Reviewer
King of Prussia, Pennsylvania

Infectious Disease Physician
Harlingen, Texas

In-House BIOMEDICAL EQUIPMENT TECHNICIAN
Oceanside, New York

More Jobs...

Find a Job

www.thejobcure.com

ADDITIONAL ONLINE RESOURCES

Allied Healthcare		Medical Education
24X7mag Chiropractic Products Magazine Clinical Lab Products (CLP) Orthodontic Products The Hearing Industry Resource HME Today Rehab Management	Physical Therapy Products Plastic Surgery Products Imaging Economics Medical Imaging RT Magazine Sleep Review	SynerMed Communications IMED Communications
		Practice Growth
		Practice Builders

Become a featured employer

Featured Employer

Alliance Imaging, Inc.

High Quality Clinical Care

The nation's leading provider of diagnostic medical imaging services with 25 years of industry experience is seeking qualified professionals to join their team.

Learn More
View Job Openings

July 2003