Budget season has again arrived in Washington. The rosy revenue projections are in full bloom. Powerful committee chairmen are banging their antlers together in a playful test of strength. Wild packs of lobbyists are migrating to Capitol Hill to graze.
All the major interest groups have their own feeding agenda and each will seek to fertilize its own patch of turf.
But what do they really want?
Here's a breakdown of some of the key healthcare players and their top budgetary priorities. It's become standard procedure for lobbying groups to declare victory on everything from World War II to the fight against dry skin, but this should help you wade through the special-interest-group spin.
Hospitals. As testament to the importance of the PSO issue, the 10 hospital groups that make up a still-unnamed coalition to push for provider-sponsored organizations have hired their own lobbying firm. Over the past three years, hospital lobbying groups have elevated PSOs to a make-or-break issue.
But it's not enough just to get any old PSO provision. The hospital groups are seeking federal regulation of Medicare-only PSOs. The groups believe state insurance boards would seek to regulate PSOs like traditional HMOs, thus requiring a state HMO license. This is a real power struggle on Capitol Hill between the providers and the insurers, and so far no one has found a position acceptable to both. Hospital lobbyists are arguing that PSOs are an essential sweetener if hospitals are going to be forced to swallow significant Medicare and Medicaid spending reductions.
Which leads us to another paramount issue for hospital groups: Medicare and Medicaid reimbursement rates and, in particular, a freeze on Medicare payments.
The payment freeze issue has political implications beyond just the cash. It's symbolic. It's like being denied your annual raise. Even though total Medicare payments would still increase by about 2%, a freeze is a slap in the face.
A freeze is also dangerous because, once implemented, it's easy to extend to future years. Remember the airline ticket tax? It was supposed to be short-term, but now that Congress counts on the revenues it keeps extending the tax.
Physicians. Have you heard the one about the internist who buys a new Rolls Royce? He takes the car to a physicians conference. After the meeting a cardiologist asks him for a ride to the airport. During the ride the internist goes on and on about how great the Rolls is.
"Have you ever ridden in a Rolls before?" the internist asks smugly.
"Yes, but never in the front seat," the cardiologist answers.
A controversial provision that could be included in the budget might mean even cardiologists will be driving their own cars.
Under current law, HCFA must change, at the beginning of 1998, the formula it uses to compensate physicians for their Medicare practice expenses. HCFA will begin reimbursing physicians for practice expenses based on their resource use rather than historical charges.
Practice expenses-office staff, utilities, rent and equipment costs-account for about 41% of physicians' Medicare revenues. The change in compensation formula is expected to shift money to primary-care doctors and office-based specialists and away from surgeons and other procedure-oriented specialists who practice in institutional settings. Some specialists could see Medicare reimbursement drop by as much as 40% under the HCFA proposal.
With a proposed rule enforcing the law expected out later this month or in June, groups representing specialists are trying to persuade Congress to stop the current rulemaking process and force HCFA to gather better data on practice costs. Primary-care doctors, on the other hand, argue the current system is unfair and should be changed next year.
PSOs are also a major issue for the American Medical Association. However, as one hospital lobbyist says, the AMA wants PSO to stand for physician-sponsored organization.
The AMA's challenge is to craft a PSO compromise that will allow physician-only groups to contract with Medicare directly. Both major pieces of PSO legislation before Congress effectively require hospital participation.
Insurers. The Clinton budget would reduce the payment rates to Medicare managed-care plans from 95% of what Medicare pays for an average fee-for-service beneficiary to 90%. It also would reduce the disparity between high-cost and low-cost areas. To accomplish this, many high-cost areas would be frozen for two years and would see a small decline in payments in 2000. Insurers have zeroed in on this as one of their significant budget issues.
Like hospitals and doctors, insurers also have the PSO issue high on their priority list. Insurers say they aren't against PSOs but merely want a "level playing field" between traditional HMOs and any new PSOs. Of course, hospitals and doctors say they only want a level playing field, too. That should make compromise easy, right? Don't bet on it.
Long-term-care providers. Home health and skilled-nursing facility payments are among the hardest hit by the Clinton administration budget. That makes Medicare reimbursement the top priority of these groups.
Nursing homes also would like to prevent repeal of the Boren Amendment, although they face an uphill battle. The amendment forces states to reimburse providers under Medicaid for the reasonable costs of an official facility. Spurred by the nation's governors, who hate the Boren Amendment, both the Clinton administration and Republican leaders have pledged to eliminate it.