Hospitals' fight to avoid a Medicare payment rate freeze continues, despite a last-minute decision by federal budget negotiators not to spell out how they would trim $115 billion from projected Medicare spending over the course of the five-year balanced-budget plan now before Congress.
A one-year freeze on Medicare hospital payment rates was among the assumptions made by some Clinton administration officials and GOP congressional leaders for achieving the needed savings during the lengthy negotiations that produced the budget agreement.
"(Negotiators) didn't lock in anything, and we need to work hard to ensure that our concerns about a freeze are incorporated in whatever (congressional committees) produce," said Richard Pollack, executive vice president for federal relations for the American Hospital
The AHA is concerned that if a freeze is enacted given current budget considerations, it could be extended beyond a year if Congress needs additional savings to meet its goal of balancing the budget by 2002.
"There is no question that they can reach their mark without a freeze," Pollack said. "Our position is a freeze is fundamentally unfair. And once (a freeze) is in place, you never know what could happen."
However, some Republicans said they thought the issue of a freeze has taken on political overtones for hospitals that go beyond the scope of health policy.
Pollack acknowledged that the freeze does have connotations that make it a particularly sensitive political issue. It could destabilize hospitals' debt ratings and stock prices, for example.
"But there are also policy reasons . . . and there is the perception that we are being singled out for hits that no other programs are taking," Pollack added.
The idea of a freeze on hospital Medicare payment rates for federal fiscal 1998 was first suggested in early January by the Prospective Payment Assessment Commission, which advises Congress on Medi-care Part A matters. ProPAC's recommendation was made in light of hospital Medicare profit margins reaching their highest level in more than a decade.
After first saying it would not propose a freeze, the Clinton administration anted up a hospital Medicare payment freeze in the latest round of budget poker.
Later, in a meeting with a number of hospital groups, Clinton administration officials said the freeze was one of their assumptions in the balanced-budget plan, and that if hospitals wanted to avoid a freeze they should talk to Congress.
Republican budget negotiators jumped at the White House offer of a freeze and said they were also working under assumptions that included a one-year freeze on hospital Medicare payment rates.
But at the eleventh hour, GOP congressional leaders seeking to preserve the traditional role of congressional committees in determining the details of budget policy, balked at the agreement. To avoid a fight, the budget negotiators agreed to propose only a broad budget outline without Medicare spending reduction details.
That gave hospital groups a reprieve and more time to fight the freeze on Capitol Hill.
According to a number of lawmakers and staff of both parties interviewed last week, in the absence of evidence to the contrary, a freeze is still among the plans being considered.
Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee, said he believes a freeze is justified based on ProPAC's analysis.
Another health subcommittee member, Rep. Jim McCrery (R-La.), said if the committee was to meet its goal of $115 billion in Medicare savings over five years, "these are the types of things we are going to have to look at."
Rep. Christopher Shays (R-Conn.), a member of the House Budget Committee, said there was "strong support" for a one-year freeze among Republicans, but he left the door open to other proposals.
"I'm not going to say that (the budget plan) won't be changed again," Shays added.
Democrats also seemed open to the idea of a one-year freeze.
Rep. Benjamin Cardin (D-Md.), the second-ranking Democrat on the health subcommittee, said the freeze proposal was not "terribly controversial. I thought it was pretty well negotiated with the industry."
Another Democratic staffer said many other provider groups have come to lawmakers calling for more cuts in hospital reimbursements, using the robust hospital Medicare margins as justification. "This is cannibalism time of the worst sort," the aide said.
According to Thomas Scully, president of the Federation of American Health Systems, if hospitals want to avoid a freeze, they must persuade Congress to place more savings in hospital Medicare payments in the last four years of the budget plan.