To freeze or not to freeze. That is the question.
The Clinton administration's fiscal 1998 budget, scheduled to be released later this week, won't seek a freeze on hospital Medicare payment rates as recommended recently by a congressional advisory panel, HHS Secretary Donna Shalala said last week.
However, GOP leaders said they would not rule out setting fiscal 1998 hospital payments at 1997 levels.
"We may want to go with a one-year freeze," said William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee.
Last month, the Prospective Payment Assessment Commission voted to urge Congress not to increase Medicare hospital payment rates in 1998. ProPAC also recommended a freeze on Medicare payments to hospitals for their capital costs.
The recommendations were based on ProPAC data showing that hospitals enjoyed high Medicare profits in fiscal 1995 (Jan. 20, p. 2).
But those recommendations won't be incorporated in the White House budget, Shalala said in a speech last week at the American Hospital Association's annual membership meeting in Washington.
Still, White House officials stopped short of saying they would oppose a freeze if it were introduced by Congress.
"A freeze will be discussed over the course of negotiations, but we don't think one is necessary," said an administration official who asked not to be identified.
An area where the White House and GOP leaders appear to be further apart is the administration's package of managed-care reforms.
Under the current system, Medicare pays managed-care plans 95% of the amount it would otherwise spend on an average fee-for-service beneficiary in any given county. The White House plan would reduce that rate to 90% beginning in 2000.
Last week, Senate Majority Leader Trent Lott (R-Miss.) said he would not support a reduction in managed-care payments.
The two sides do seem to be in agreement that wealthy beneficiaries should pay higher Medicare Part B premiums, but neither side seems willing to offer such a proposal.
In an interview last week, President Clinton said he was open to the idea of means testing Medicare Part B premiums. Lott said he believed beneficiaries should pay a higher percentage of Medicare costs.
Thomas said the GOP wouldn't take the first step in raising premiums.
"If the president is not opposed to means testing, I'd like to see it in writing," Thomas said. "It's not going to come from us."