WASHINGTON OUTLOOK;`96 MAY DEAL CHALLENGING HAND
Skip to main content
Sister Publication Links
  • Modern Healthcare Metrics
MDHC_Logotype_white
Subscribe
  • Subscribe
  • Register
  • Login
  • News
    • This Week's News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Merrill Goozner
      Another half-measure for preventing HIV/AIDS transmission
      Dr. Richard Snyder
      Outdated privacy laws hinder coordinated care, especially in the fight against addiction
      Nurses recycle surgical wraps for the homeless
      Nurses sew surgical wraps into sleeping bags for the homeless
      Joan Budden
      Q&A: Priority Health CEO eager to share best practices with Total Health Care
    • November was healthcare's second strongest hiring month of 2019
      Primary-care provider ChenMed to enter five new markets
      Lacking specialist access drives health disparities
      Genetic Counseling
      Addressing barriers to expanding genetic counseling
    • Joan Budden
      Q&A: Priority Health CEO eager to share best practices with Total Health Care
      Silver-loading, CSR elimination lowered premiums for some rural enrollees
      Centene to sell Illinois plan to CVS Health
      Blue Cross of Idaho unveils souped-up short-term health plans
    • Capitol Building with pills
      Week Ahead: House to vote on drug bill; SCOTUS hears risk-corridor case
      MedPAC thinks hospice payments are too high
      MedPAC says ambulatory surgical centers don't need a pay raise
      States focus on healthcare costs to address coverage problems
    • Analysts to CommonSpirit Health: Show us the savings
      Smallest hospitals saw biggest earnings gains last month
      Sutter Health postpones financial filing
      doctor helping patient stock image Sandoz
      Sponsored Content Provided By Sandoz
      As hospital executives look to reduce costs, biosimilars offer a compelling option
    • astronaut
      Astronauts developed bloodstream issues in space
      Sponsored Content Provided By ABM Healthcare
      Protecting and Maintaining Medical Devices
      human hand robotic hand stock image
      Sponsored Content Provided By Deloitte
      The Health System of the Future: How Digital Health Technology is Transforming Care
      EHR
      EHR vendors most in-use throughout Medicare incentive program
    • MRIs of dense breasts find more cancer but also false alarms
      Flu season takes off quickly in Deep South states
      Uber driver says South Carolina hospital dumped patient on him
      1 in 3 adults age 45 and older reported being lonely in a 2018 AARP survey
      Data Points: Loneliness and its impact on health
    • Jim Allison playing the harmonica
      Documentary tells tale of Nobel winning researcher
      Seema Verma
      Seema Verma's bold initiatives land her in No. 1 'Most Influential' spot
      New CEO takes the helm at Lurie Children's Hospital of Chicago
      Mayo Clinic taps Dr. John Halamka to lead its Google partnership
    • Midwest
    • Northeast
    • South
    • West
  • Special Features
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • Chest x-ray from a patient with a vaping-related lung injury
      Vaping-related cases lead to care guidelines from Intermountain
      Arkansas Children’s was a founding partner in Solutions for Patient Safety.
      Children's hospitals collaborate rather than compete on patient safety
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
    • Linda Kenney
      Patient advocate recalls two medical errors that nearly killed her
      Arkansas Children’s was a founding partner in Solutions for Patient Safety.
      Children's hospitals collaborate rather than compete on patient safety
      Kim Hollon
      Hospitals fall short of patient-safety goals 20 years after 'To Err is Human'
      Dr. Mark Chassin
      One-size-fits-all approach to patient safety improvement won’t get us to the ultimate goal—zero harm
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Paging Dr. Robot: Artificial intelligence moves into care
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • ProMedica doubles down on social needs data analysis
      Amazon taps first pharmacy for Alexa Rx management
      Trump administration unveils new price transparency rules
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
    • VA dives into artificial intelligence R&D
      Home health to pare down therapy services, up telehealth offerings
      Amazon launches medical transcription service
      Hospitals' uncompensated care continues to rise
    • Chest x-ray from a patient with a vaping-related lung injury
      Vaping-related cases lead to care guidelines from Intermountain
      Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
    • Value-based pay still struggles to improve costs, quality
      Hospitals sue HHS over negotiated price disclosure rule
      Bundled payments get a boost in two states with employee programs
      CMS wants primary-care docs to take on financial risk
  • Data/Lists
    • Rankings/Lists
    • Data Points
    • Modern Healthcare Metrics
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Steve Strongwater
      How Atrius Health stayed independent by not shying away from risk
      Why moving the VA to a new EHR was a pivotal decision
      Why AdventHealth's rebrand was more than a name change
    • Terry Shaw
      A diverse and inclusive culture should empower others
      Paving the path to diversity and inclusion
      The next step in healthcare evolution
      Breaking Bias: A road map to boost women and minorities into healthcare leadership
    • Dr. Richard Snyder
      Outdated privacy laws hinder coordinated care, especially in the fight against addiction
      David Dill and Keith Myers
      Healthcare partnerships are a proven path to better care, healthier communities
      Health systems need to devote more resources to caring for the caregivers
      Chip Kahn and Alan Morgan
      Rural healthcare needs innovation, policy changes to survive
    • Letters: Let’s keep humanity in discussions about patient safety
      Hospital with money
      Letters: Let providers set their prices,
 and then publish them all
      Letters: Ambulatory surgery centers aren't getting a break on regulation
      Letters: Rising Medicaid spending isn't a windfall for providers
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Nominate
    • Award Programs
    • Previous Award Programs
    • Other Award Programs
    • Nominations Open - Top 25 Minority Leaders
      Nominations Open - Health Care Hall of Fame
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • Kronos webinar logo lockup
      Sponsored Content Provided By Kronos
      Webinar: The Future of Work in Healthcare
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Critical Connections: Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Minority Leaders Gala (2020)
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. News
January 08, 1996 12:00 AM

WASHINGTON OUTLOOK;`96 MAY DEAL CHALLENGING HAND

Eric Weissenstein
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Like any good sequel, 1996 will try to top the 1995 original. There'll be even bigger budget battles, more provider uncertainty, and a presidential election thrown in for good measure.

    Dragging on early this year will be the federal government's great unfinished business-the seven-year balanced-budget plan that is still being negotiated by congressional Republicans and the White House. Like last year, that will mean more uncertainty as providers scramble to deal with slower payment growth and position themselves to compete in a Medicare marketplace already roiled by managed care.

    Budget impasse. One incipient 1995 story line that will be completely played out in the 1996 sequel is the presidential election. With two of the three primary budget negotiators, Senate Majority Leader Bob Dole (R-Kan.) and President Clinton, in the race, the budget and the election are intertwined as never before.

    Opinions vary on whether the election makes it more or less likely that a budget agreement will be reached in 1996.

    "I think both sides are going to stick to their positions until somebody's poll numbers go through the floor," said James Scott, president of the American Healthcare Systems/Premier Institute. "If that doesn't happen, they will both be happy to take it to the American people and see if someone can articulate their position well enough to make a real difference."

    But others say both parties' nominees will want to go into the election with the budget issue behind them.

    "Neither side can afford to be seen as not able to pass a budget," said Jack Bresch, director of government relations for the Catholic Health Association.

    Medicare reform debate.All 1995's other blockbuster issues are guaranteed to be reprised in 1996. For providers, that means the issue of provider-sponsored networks will be back.

    Under all three of the major budget plans that have been introduced, provider networks would be allowed to contract directly with Medicare to enroll beneficiaries in managed-care plans. Networks would be made up of a combination of physicians, hospitals, nursing homes and other providers. How those provider groups would be formed and regulated became one of the most contentious issues in the Medicare reform debate last year.

    "We are moving on the assumption that there will be provisions for (provider-sponsored networks) of some form included in the final budget," said Richard Pollack, executive vice president of the American Hospital Association. "Hospitals have to be preparing themselves for that eventuality and to move quickly when it happens."

    If a budget bill is passed early in the year, it will likely take effect in early 1997. That means Medicare beneficiaries will be making decisions on whether to join a managed-care plan during an open-enrollment period that will start late in 1996.

    "If a budget is passed, say in late January, that means providers may have only six or eight months to get ready to accept Medicare beneficiaries," said Brent Miller, director of government relations for the American Group Practice Association. "That just isn't a lot of time, and I don't know how realistic it is."

    Medicare/Medicaid spending. Another hot 1995 topic that may be even hotter in 1996 is how much the growth in Medicare and Medicaid spending should be slowed. Absent any changes by lawmakers, the Congressional Budget Office estimates that Medicare spending will grow at an average rate of more than 9% a year, from $196 billion in 1996 to $332 billion in 2002. The Clinton administration plan would reduce those projected payments by about $98 billion over seven years while the GOP plan would trim them by $202 billion. The plan introduced by the conservative Democrats in the House, known as the "Blue Dogs," would save $153 billion over the same period.

    "No matter what happens in 1996, providers will continue to be the bank on which Democrats and Republicans alike look to balance the budget," said Frederick Graefe, a lobbyist with the Washington law firm of Baker & Hostetler.

    The conversion factor.Like hospitals, physicians are going to have to prepare for change regardless of whether Congress and the White House reach a budget agreement.

    Under both the congressional GOP balanced-budget proposal and the Clinton administration plan, the base Medicare fee-for-service payment rate would be $35.42, with a two-year transition from a separate surgical rate under the administration plan. The Blue Dog plan includes a slightly higher rate of $36.40.

    That single payment rate, called the "conversion factor," would represent a real cut for some physicians. For example, the updated 1996 surgical payment rate is $40.95 while the primary-care payment rate is $35.55. However, the new rate would be an increase for other nonsurgical services, which are paid at a rate of $34.75.

    The conversion factor is used to establish Medicare fees by multiplying it by a numerical, work-based value assigned to each service provided to a Medicare beneficiary.

    Both the White House and GOP proposals also tie the method of controlling Medicare physician expenditures and calculating future fee increases to medical inflation, growth in real gross domestic product and the ability of physicians to keep spending growth below certain limits.

    But following the ticks of the conversion factor may become less crucial to physicians as more beneficiaries enroll in managed-care organizations and private plans.

    Managed-care revolution. Such a trend mirrors that among private-sector employers, who have tried to restrain their health insurance costs by enrolling employees in HMOs and other types of managed-care organizations.

    In the past, doctors often have viewed managed care as the enemy. But by the time Congress and the Clinton administration finish their work, that may all change.

    "(Doctors are) going to have to get involved in these plans, but that's happening in the private sector anyway," said Charles Huntington, Washington office director for the American Academy of Family Physicians. "It just means more of their patients are involved."

    Like hospitals, physicians will need to use 1996 to prepare to enter the Medicare beneficiary sweepstakes, said Marie Michnich, associate executive vice president of the American College

    of Cardiology. "If (doctors are) not at the table, they're not going to be involved in making those decisions," Michnich said.

    Congressional Republicans, and many outside observers, argue that the GOP and White House budget plans are more similar than they are different, making compromise on Medicare reform possible.

    "The bottom line is that agreeing on the Medicare numbers shouldn't be that difficult," said Lawrence Goldberg, a partner with Deloitte & Touche in Washington. "But for hospitals, that is in some ways irrelevant. The cuts are going to be there no matter what. The real question is how can hospitals best control costs and manage the revenue stream. They have to understand how to accept more capitation and risk."

    The future of Medicaid. Accord on Medicaid reform may be another matter.

    GOP lawmakers and governors are seeking a no-strings-attached block grant that would end the federal entitlement and turn control of the Medicaid program over to the states. In exchange, the states would agree to limit how much the block grants would increase each year.

    The Clinton administration, however, is seeking to retain the federal entitlement and to pay states on a per-capita basis. Those capitated payments also would grow at a capped rate. Supporters argue that such a plan would better shield states from changes in the Medicaid beneficiary population.

    "It is really hard to see where the agreement can come from on Medicaid," said Mary Grealy, executive vice president of the Federation of American Health Systems. "(Medicaid) could be the issue that keeps them from reaching an agreement."

    For nursing home owners, who rely on Medicaid for roughly half their income, the outcome of the Medicaid reform debate is crucial.

    Even if the Clinton administration prevails, it's likely that the governors' clamor for greater flexibility will lead to 50 different Medicaid programs, making it harder to prepare for changes, said Michael Rodgers, senior vice president of the American Association of Homes and Services for the Aging.

    "We're at a little bit of a loss what to tell (our members) to do," Rodgers lamented.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    Modern Healthcare
    Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Special Features
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Data Points
      • Modern Healthcare Metrics
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Nominate
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Critical Connections: Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Minority Leaders Gala (2020)
      • Webinars
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing