While some members of Congress are giving a chilly reception to President Clinton's proposal to trim $9 billion from Medicare provider payments next year, healthcare industry lobbyists said they fear that other lawmakers may be open to extending cuts enacted in 1997.
Clinton's Medicare savings proposal includes a one-year freeze on Medicare hospital inpatient payments in fiscal 2000, worth $3.9 billion.
Lobbyists said it was not clear what reductions in budgeted spending Congress was considering for extension, but the effect on hospitals and other providers could be significant. The reductions imposed by the Balanced Budget Act of 1997 were projected to cost hospitals $14 billion in Medicare inpatient payments alone between 1998 and 2002.
One of the reductions enacted in 1997 was a limit on Medicare hospital inpatient payment increases to at least 1.1 percentage points below the rate of inflation.
Extending that limit could be necessary to pay for new spending initiatives in Clinton's budget or for broad-based tax cuts, which Republican leaders are pushing. Clinton's budget proposal specifically states that the Medicare spending reductions were being used to keep his new initiatives from exceeding annual spending caps imposed by the 1997 balanced-budget law.
"While I think the president's freeze is dead on arrival, there's still a lot of cuts" that could be extended, said Thomas Scully, president and chief executive officer of the Federation of American Health Systems.
Members of Congress spoke out last week against an inpatient payment freeze in fiscal 2000.
"The president's Medicare proposals are simply not justified at this time," Sen. Craig Thomas (R-Wyo.) said at a press conference sponsored by the National Rural Health Association.
The possibility of an extension of the 1997 cuts has been underscored by debate within the National Bipartisan Commission on the Future of Medicare.
The commission is due to approve recommendations to Congress and President Clinton by March 1 and is now debating a proposal to convert Medicare from a system that primarily pays bills to one that assists seniors in buying healthcare coverage.
Because that change to a "premium support" system would not save the more than $625 billion necessary to ensure the solvency of the Medicare Hospital Insurance Trust Fund in 2030, the commission may need to extend the 1997 cuts.
Thomas Nickels, vice president and deputy director of federal relations at the American Hospital Association, said the likelihood of an extension of the 1997 cuts will depend on the commission's decision.
"I think the jury is still out and will be out until the commission reports," he said.