Here's what we know for sure about healthcare in 1999:
*The Clinton administration will send a budget to Congress later this month that includes new health initiatives and provider reimbursement cuts.
*Congressional Democrats say their top priority will be managed-care regulation.
*The National Bipartisan Commission on the Future of Medicare is scheduled to release its report in March.
*Provider groups will complain that they aren't being adequately reimbursed by Medicare and Medicaid.
Here is what we don't know about 1999:
Early in 1999 there is more political uncertainty than ever because we are in waters not charted since President Andrew Johnson was impeached in 1868.
"It's impossible to predict what will happen this year; I don't think anyone has ever seen anything like this," says one congressional aide, who requested anonymity. "Anyone who tries to predict is just guessing."
Another lobbyist, when asked for an outlook, answers, "How the hell do I know?"
"Ask me in about 11 months," still another lobbyist quips.
That is probably as succinct a summary of the situation as is possible.
Of course the most significant wild card is also the most obvious: the impeachment of President Clinton and the Senate trial.
Questions, questions. How long will the trial last? Will Republicans, anxious to show that they are not singing just one note, look to pass significant legislation to prove they are still working on the nation's business? And what of the Clinton administration? Will it be in any position to force its priorities onto the agenda? Can the administration broker deals with the same congressional Republicans who have attacked Clinton during the impeachment fight? Or will Clinton push all the harder to mold his legacy?
And what about the Medicare reform commission (See story, p. 27)? Although it's too early to tell what the commission might recommend, a proposal called "premium support" appears to have significant backing. Under that plan, the federal government would contribute an amount equal to the cost of a standard Medicare package of benefits for each beneficiary. If seniors wanted more benefits, they could pay extra premiums out of pocket. There is also interest in adding a pharmaceutical benefit to Medicare.
At a recent commission meeting, Administrative Chairman Rep. William Thomas (R-Calif.) raised the possibility that lawmakers might link Medicare reform with the politically popular Social Security reform. Such a pairing might increase the chances that Congress would consider a package, but it's still likely that significant reform is a more long-term proposition.
Clinton already has linked the two, although in a way Republicans may not like. In his State of the Union address last week, he called on Congress to use the federal budget surplus to ensure the solvency of both Social Security and Medicare.
He asked for 15% of the surplus dollars over the next 15 years-or an estimated $500 billion to $700 billion-to be used for Medicare.
There's yet another variable. Newly elected House Speaker J. Dennis Hastert (R-Ill.) is a little-known legislator who, for the past several years, has headed the House GOP healthcare task force. He is likely to bring his own ideas to the debate, but, as yet, he hasn't articulated his thoughts on the issue.
So that's the backdrop for 1999. But it's just that, a backdrop. For providers and insurers there will still be hundreds of fights, large and small, over reimbursement issues, regulations and legislation.
The following are some of the most significant issues facing various industry sectors and their wish lists for 1999:
Hospital lobbyists say 1999 is likely to be a tough year.
First, they are still trying to convince Congress, the White House and the public that they are not profiting from Medicare as much as it seems. The Medicare Payment Advisory Commission says hospital Medicare inpatient margins reached an all-time high in 1997-more than 16%. The commission predicts margins will remain strong in the final 1998 figures and in 1999. The Congressional Budget Office predicts Medicare will spend $75.5 billion on inpatient care in fiscal 1999.
But hospitals say that's only part of the picture. They argue that Medicare outpatient payments, which MedPAC says cover only about 80 cents of every dollar of cost, combined with cuts in home health and other services, put hospitals in difficult financial straits.
But so far, those arguments are falling on deaf ears.
The Clinton administration is likely to include at least $10 billion in additional Medicare hospital inpatient spending reductions in its budget. And hospitals are worried that if congressional Republicans try to pass a tax cut in 1999, it will come at the expense of hospitals.
"We have to knock down this perception," says Michael Bromberg, counsel at the Washington lobbying firm Steelman Health Strategies. "This has to be our top priority. This can't be allowed to sit out there unchallenged, or it will become fact."
The potential for more cuts in 1999 has caused hospital groups to change their focus. They had hoped to spend this year trying to overturn some of the cuts enacted as part of the 1997 budget law. Now they will be fighting on two fronts.
"Hospitals want to undo some pain from the Balanced Budget Act (of 1997), while many in Congress want to inflict more pain," says James Scott, president of the Premier Institute in Washington, the lobbying arm of the Premier hospital alliance. "The (budget law) inflicted more pain than most people realized. We're just beginning to feel the pain. This year is going to be about dollars, dollars, dollars."
Some issues for hospitals are not directly related to reimbursements, however. The most significant is the ongoing discussions between the hospital community and federal law enforcement officials over fraud prosecutions.
Richard Pollack, executive vice president of federal affairs at the American Hospital Association, says hospital representatives are discussing an "early warning system" with federal enforcers that would give hospitals a chance to talk to officials about a perceived problem before it becomes a widespread investigation. The two sides also are discussing more efficient ways to resolve billing disputes.
The wish list:
*To finish fighting 1997's battles before fighting 1999's.
*A better working relationship with federal investigators.
There's little doubt that much of 1999 will look a lot like 1998 for HMOs. The battle over managed-care regulation is likely to come up early, as Democrats have declared it a top priority.
In many ways, managed-care regulation ended up being a political debate last year rather than a policy debate. Democrats and Republicans each staked out their positions, and although there were some crossovers, the issue largely broke down along party lines.
In 1999, it's likely to remain a political issue.
"Patient protection is on the agenda," says Karen Ignagni, president of the American Association of Health Plans. "But I don't think it is a slam-dunk. We have made progress making people realize that whatever is done in the area of patient protections has costs."
Along with some members of Congress, Clinton already has thrown down the gauntlet for the 1999 patient-protection battle. His State of the Union address included a call for a "strong, enforceable" bill of rights, although he did not specify what he wanted.
How the issue will proceed in Congress is still in question. One school of thought is that Republicans, anxious to get the subject off the table and to make it clear they are focusing on issues other than impeachment, will seek a quick solution. That solution will be based on the GOP plan that passed the House last year. That measure was developed by a GOP task force led by Hastert.
Others think the Senate, which failed to act on a managed-care regulation bill last year, will be preoccupied with impeachment and will again avoid acting.
Either way, a serious division remains over several issues, most notably the Democrats' insistence that any bill include a measure to make it easier for beneficiaries to sue a health plan that denies or delays care. Republicans say that is a nonstarter. Democrats say if the right to sue isn't expanded, the package is veto bait.
The managed-care industry also has a number of serious payment issues to deal with. Congress, HCFA and the industry are anxious to make sure that last year's exodus of health plans from the Medicare market isn't repeated in 1999. Plans say changes need to be made, including allowing plans to submit their annual financial filings later than the current May 1 deadline.
They also want to see a delay in the planned "risk adjustments," which are scheduled to begin taking effect Jan. 1, 2000. The mechanism is designed to pay plans more to enroll riskier patients and less to enroll healthy ones. The first adjustment will be based on hospital inpatient data. Estimates are it will reduce plan payments by an average of about 10%. Plans say the adjustment should be delayed because the hospital inpatient data are imprecise and don't tell the whole story. HCFA counters that the agency cannot delay implementation without congressional action, something the plans are seeking.
The wish list:
*A delay in the risk-adjustment plan.
*No managed-care regulation or passage of a toothless plan.
Medical specialty groups probably will be working with and against one another simultaneously. On the one hand, primary-care physicians and specialists alike probably will ask Congress to change Medicare's physician spending growth target for 1999, a figure that if unchanged is likely to result in reduced fees in 2000.
On the other hand, physician groups will be pitted against one another in court over millions of dollars that will be shifted from specialists and surgeons to primary-care doctors under a change in Medicare's practice-expense compensation formula.
The growth target, established every year as part of HCFA's regulation outlining Medicare physician fees, is based largely on growth in the nation's gross domestic product. But it's also affected by such factors as Medicare fee-for-service enrollment.
The growth target aims to discourage overutilization. When physician spending growth is below the growth target, Medicare rewards doctors with a bigger fee update the following year. When it exceeds the growth target, Medicare punishes doctors by reducing their update.
Because of projected increases in Medicare managed-care enrollment, HCFA believes fee-for-service enrollment will drop 4.3% in fiscal 1999. Meanwhile, it expects the GDP to rise only 1.3% resulting in a -0.3% spending-growth target in 1999. It would represent the first negative spending growth target physicians have faced since the physician fee schedule took effect in 1992.
Physician groups have characterized that growth target as unrealistically low and pledged to work together to lobby Congress to change it.
That unity could be blasted apart by a lawsuit against HCFA*that 11 specialty groups have filed in federal court in Chicago. The groups claim that HCFA, in drafting rules to enforce a change in the practice-expense compensation to a "resource-based" formula starting in fiscal 1999, gave primary-care physicians an unlawful $495 million boost through a three-year transition.
Primary-care groups have filed a friend-of-the-court brief opposing the specialists' lawsuit.
The wish list:
*Higher Medicare growth targets.
Nursing homes, meanwhile, will be fighting two separate battles. They'll be under the microscope this year from federal enforcement agencies that want to prosecute severe quality lapses as violations of the federal False Claims Act. Nursing home groups have said involvement by the Justice Department and HHS' inspector general's office will conflict with HCFA's quality-enforcement mechanisms.
On the other front, some groups hope to reopen Medicare's prospective payment system for skilled-nursing care. The issue will be Medicare payment for such nontherapeutic ancillary costs as drugs, laboratory tests and respiratory therapy, which represent 20% to 25% of the $14.2 billion in skilled-nursing payments in federal fiscal 1999.
That issue set off an intra-industry lobbying battle last year. Nursing home chains that have specialized in treating high-acuity patients said the PPS doesn't adequately compensate those costs and tried to persuade Congress to return to cost-based reimbursement for those expenses.
But because the proposal was budget-neutral, it would have shifted money away from nursing homes that have lower-acuity patients. Congress rejected the return to cost-based reimbursement.
The American Association of Homes and Services for the Aging, which represents not-for-profit nursing homes, says this year it plans to push for greater compensation for the highest-cost patients.
To avoid further intra-industry fighting, the group wants more money for skilled-nursing reimbursement so that facilities with low-acuity patients don't see their fees drop if payments for high-acuity patients increase.
The wish list:
*Higher payments under the new PPS.
*Easing of federal enforcement activities.
In one of the only changes last year to the 1997 budget law, Congress altered how Medicare pays home health providers. But it was far from what the providers wanted. The change put some money back in the Medicare reimbursement system but at the expense of payments in future years. This year, the industry wants more. However, it is unlikely to win relief unless relief is in the context of a broader managed-care package or an omnibus budget bill.
The wish list:
*Higher Medicare reimbursements.
An overriding issue
An issue crossing all industry sectors that Congress is likely to address relates to privacy standards for medical records.
A 1996 health insurance reform law requires Congress to pass privacy legislation by August 1999. If not, the insurance reform law gives HHS the authority to enact privacy standards through regulation, a power Congress may not want to cede to the department.
Although privacy standards have been percolating slowly through Congress, Clinton's address last week gave it a jump-start. In essence, by saying that HHS will develop those standards if Congress does not, Clinton challenged lawmakers to act quickly.
The closest Congress has come to approving privacy standards came in the House-passed patient-protection bill last year, which required providers and health plans to develop safeguards to protect the privacy of medical records; allowed patients to inspect, amend and copy their own medical records; and pre-empted state privacy laws related to the use of private medical information in healthcare organizations.
Several members of Congress have drafted records-confidentiality legislation, but the bills often conflict. Differences have arisen over whether to pre-empt state privacy laws, in what circumstances providers and plans must seek patient authorization for release of private medical information, and for what purposes private medical information can be used.