Provider groups gave high marks to the third Clinton administration budget of the year, which was released last week, just one day after the president vetoed the Republican spending plan.
The new program would lower projected Medicare spending by $124 billion and Medicaid by $54 billion over the seven years from 1996 to 2002. However, those estimates are based on Clinton administration spending projections, which are more favorable than those used by the Congressional Budget Office, which estimated the savings in the GOP plan.
According to the CBO, Medicare will increase by about 10% a year in the absence of any legislative changes, rising from $178 billion this year to $345 billion by 2002. The GOP plan would reduce the rate of increase to about 6% a year, while the administration plan would allow a 7% annual rise.
Providers said the less-severe reductions in spending growth were a positive step and also supported retaining Medi-caid as a federal entitlement (See related story, p. 3).
American Hospital Association President Richard Davidson said the White House budget "moved closer to the principles we believe must be contained in any budget agreement." Last month, the AHA opposed the GOP plan.
Like the Republican plan, the White House blueprint would allow provider-sponsored networks to contract directly with Medicare to enroll beneficiaries. What is unclear is how the provider networks would be regulated. Democratic congressional aides who were briefed by HCFA said PSNs would be required to be licensed by states, which would administer quality and beneficiary-protection standards created by the federal government. HCFA also would create new solvency requirements that would account for the fact that PSNs are geared to provide care, whereas insurers must keep cash reserves to pay providers for care.
The plan doesn't include any of the antitrust exemptions for physician groups originally in the GOP plan but dropped at the last minute because of procedural rules. Republicans have vowed to reintroduce the antitrust provisions, which would make it easier for physician groups to create rate schedules, in other legislation and to push for the provisions when they negotiate with the White House.
Other major provisions of the White House budget would:
Reduce the variation in payments to managed-care plans and PSNs by implementing payment floors and ceilings. The plan also would remove disproportionate-share and graduate medical education payments from managed-care reimbursements. It would pay 75% of that amount directly to hospitals and managed-care plans that have contracts with academic medical centers, a measure strongly opposed by managed-care groups.
Shift more than $60 billion over seven years in home health expenditures from Medicare Part A to Part B. Under the administration plan, only the first 100 home health visits would be paid for under Medicare Part A, with the rest coming from Part B.
Direct HCFA to create a prospective payment system for skilled-nursing facilities by 1999.
Implement the Physician Payment Review Commission's recommendation that physician payments, which are now segregated into three groups, be consolidated into one payment rate.
Set the beneficiary premiums at 25% of program costs, compared with 31.5% under the GOP plan.
The White House and GOP plans are more similar than different. Both would allow seniors a menu of delivery options, including a variety of managed-care plans, although the White House plan doesn't include medical savings accounts.
But even with the new Clinton plan, chances of the two sides quickly reaching an agreement seemed remote. Rep. Sam Gibbons (D-Fla.), the ranking minority member of the Ways and Means Committee, said it would be "well into next year before we get this all negotiated out."