Hospitals weren't the only healthcare interests seeking a fiscal sleight of hand to conceal increased federal spending as Congress passed legislation last month to reverse payment cuts imposed under the Balanced Budget Act of 1997.
Medicare+Choice plans also quietly sought, and won, intent-of-Congress language that urges HCFA to reverse a proposal to cut overall Medicare managed-care expenditures next year when it adjusts payments on the basis of enrollees' health status.
They argue that the "risk-adjuster" should be imposed on a budget-neutral basis, neither increasing nor decreasing total government expenditures.
Despite the likelihood that spending would increase if HCFA follows those instructions, the Congressional Budget Office is not officially anticipating a spending increase as a result. That's because the language was inserted in a conference-committee report that accompanied the Medicare revisions.
The report explains congressional intent behind every provision in the legislation. Because it is not legislative language, however, the CBO was not mandated to estimate a spending impact if HCFA were to follow Congress' instructions.
The lack of a spending increase estimate was crucial to lawmakers who didn't want to appear to be spending too much of the federal budget surplus. The CBO estimates that surplus at $123 billion in federal fiscal 1999-nearly all of it resulting from surpluses in the Social Security trust fund, which in theory is earmarked only to pay future Social Security benefits.
"If you look at the subtext of the legislation, there was a wink and nod exchanged with the administration," says one Senate Republican aide, who did not want to be identified.
Although the major groups representing managed-care plans supported the measure, industry representatives identify Stephen Cooper, a lobbyist for the Blue Cross and Blue Shield Association, and Jonathan Topodas, a lobbyist for Aetna, as the chief architects of the change. Neither lobbyist would comment for this story.
Blues spokesman Bill Pierce says the language was an important step in reversing HCFA's action. "We think it's an acknowledgment that there are problems" with Medicare+Choice payments, he says.
The Medicare+Choice plans' success in getting Congress to conceal the potential cost of the measure was in contrast to hospitals' chief stealth lobbying issue, reversal of a $3.9 billion cut in Medicare fees for hospital outpatient departments over the next five years.
Members of Congress say they hadn't intended to impose that cut on outpatient departments when they passed the Balanced Budget Act. They say HCFA also had made that cut based on its interpretation of the law, so that any move to reverse it shouldn't be counted in the final cost of the legislation.
The CBO ignored that argument, however, and included a $3.9 billion spending increase in its final tally of the $18.1 billion cost of the provider givebacks.
Likewise, Medicare+Choice plans argued that HCFA doesn't have the authority to seek additional savings when it adjusts plans' capitation payments based on enrollees' risks of higher healthcare costs. They argue that the agency would be taking an additional $9 billion from them over five years, which the balanced-budget law did not call for.
In passing the conference report language, Congress agreed that it did not intend for HCFA to cut the extra $9 billion.
The language may not matter to HCFA, however. A CBO analyst says the budget office didn't estimate a spending increase partly because it doesn't believe HCFA will change its policy as a result of the conference report language.
Likewise, it may not matter to Medicare+Choice plans whether HCFA follows the congressional instructions. The plans say they believe the conference report language would give them the legal argument they need to sue HCFA over the lowered payments.
If the health plans were to win such a lawsuit and get higher payments, it would not affect the CBO's current estimates of spending, according to budget office officials. That scenario would give the Medicare+Choice plans the higher capitation payments they want without embarrassing Congress with higher Medicare spending estimates.
An aide for Rep. Fortney "Pete" Stark (D-Calif.), senior Democrat on the House Ways and Means health subcommittee, adds that it would be nearly impossible for HCFA to impose the risk adjuster on a budget-neutral basis. The agency has estimated that far more plans are being overpaid than underpaid because there is no accounting for health status, the aide says.