Despite two weeks of haggling, the federal balanced-budget deal has held, which leaves providers where they started the fortnight: facing the strong possibility of a one-year freeze on Medicare hospital reimbursements and $115 billion in total Medicare spending reductions over the next five years.
The agreement also paves the way for creation of provider-sponsored organizations. However, they may be structured in a way that's opposed by most hospital groups.
The budget outline sailed through the House Budget Committee at week's end on a 31-7 vote. The Senate Budget Committee is scheduled to take up the measure this week. However, the skeletal plan leaves thousands of details to be filled in by congressional committees over the next several months.
According to several Republican members of Congress and staff, the House Ways and Means health subcommittee and Senate Finance Committee are likely to use as their starting point elements of the Republican balanced-budget plan that passed Congress in 1995 but was vetoed by President Clinton.
Under that plan, PSOs would have been required to apply for state certification to begin enrolling Medicare beneficiaries and could only seek federal certification if they could show that the state insurance commissioner was unfairly blocking the process. Instead, provider groups want a PSO plan that will override the state certification process with a federal program.
"We don't like it because it still leaves us going to state capitals for licensing," said Thomas Scully, president of the Federation of American Health Systems.