House and Senate negotiators began working out differences in their balanced-budget bills late last week with House lawmakers sticking to their objective of freezing Medicare payment rates to hospitals for one year.
Each chamber separately passed its own budget bill last month, and the process now is in the "conference committee" stage.
One key difference of opinion is the freeze on hospital payment rates.
While the House budget bill includes a one-year freeze for fiscal 1998, the Senate version does not.
Instead, the Senate version would set the increase at the rate of hospital inflation less 2.5 percentage points. The government currently estimates the rate of hospital inflation at 2.7% to 2.9%, so the increase would be minimal. The Senate also wants to delay the increase to three months past the start of fiscal 1998, or to Jan. 1, 1998.
House negotiators also were holding firm in their opposition to a Senate budget provision that would divert about $400 million next year in Medicare payments to primary-care physicians from specialists. The redistribution would come as a result of changing the way Medicare pays for practice expenses.
The change to "resource-based" practice-expense compensation is scheduled to take effect Jan. 1 and is expected to eventually shift about $4 billion annually in Medicare payments from specialists to primary-care doctors.
The House and Senate agree the change should be delayed for one year, but the Senate budget plan calls for a 10% down payment on the change in 1998.
On the plus side for providers, the House voted to oppose raising Medicare eligibility to 67 years of age from 65. That aligns the House with the Clinton administration. The Senate budget plan includes the age increase, but with two sides in agreement on the issue, it likely won't be a stumbling block to a final budget.