Provider payment relief is likely to become part of a Medicare modernization and prescription-drug bill introduced last week by a tripartisan group of senators, but the prospects for passing such a bill dimmed at the end of a quarrelsome week in the Senate.
The Senate's latest prescription-drug bill contains no reimbursement aid for hospitals, but in a news conference last week co-sponsor Sen. John Breaux (D-La.) said, "You can bet a dollar to a doughnut there will be provider givebacks" once the Senate Finance Committee takes up the legislation.
Several lobbyists anticipated amendments to the prescription-drug bill that would give hospitals $40 billion to $50 billion over 10 years, but Senate staffers would not confirm specific proposals. In addition to Breaux, Sens. Charles Grassley (R-Iowa), Orrin Hatch (R-Utah), Jim Jeffords (I-Vt.) and Olympia Snowe (R-Maine) sponsored the bill.
The American Hospital Association's aggressive lobbying campaign included a letter sent last week to senators asking them to keep pace with inflation by updating hospital payments to fully reflect the rising prices paid for goods and services. In the letter, the AHA also asked senators to boost indirect medical education funding and to align the payments received by rural facilities with those paid to large urban hospitals, something the House included in the drug bill it passed last month.
The House bill, which provides a total of $30 billion in provider payment relief, includes a $2 billion increase in Medicaid disproportionate-share hospital payments, the extra funds hospitals receive to treat large numbers of indigent patients. The AHA would like to see the Senate go further by eliminating reductions in disproportionate-share payments set to take effect at yearend.
It was unclear if the Senate Finance Committee, which has jurisdiction over Medicare, would schedule a hearing to debate the new drug bill, and at deadline no such hearing had been announced. Meanwhile, senators spent last week sparring over several prescription-drug bills, arguing about how best to provide an affordable benefit, how generous that benefit should be and who should administer it. With congressional elections less than four months away, political posturing on an issue affecting millions of seniors reached a fever pitch.
"All eyes are on the November election," said Herb Kuhn, vice president of advocacy at the Premier hospital alliance. "Every member of the Senate seems to have their hands on the steering wheel but both feet on the brakes."
As proposed, the Senate bill would create a Medicare prescription-drug benefit requiring a $250 annual deductible and a 50% copayment until beneficiaries' spending reaches $3,450 annually. Once beneficiaries have spent $3,700 out-of-pocket, including the deductible, they would pay no more than 10% of their drug expenses.
That leaves what critics have called a "doughnut hole" in drug coverage similar to the hole in the plan passed by the House last month. But sponsors of the tripartisan proposal said filling that gap could become part of a compromise to move the legislation forward.
"It's a question of money," Snowe said last week, estimating that filling the gap would cost "a couple hundred billion dollars."
Another controversial component of the legislation involves private companies-such as pharmacy benefit managers-that would administer the drug benefit supported by federal subsidies.
"This bill, like its House counterpart, provides billions of dollars in subsidies to HMOs and big drug companies and allows them to make most of the important decisions about coverage, costs and what drugs to include, not Medicare beneficiaries," the Alliance for Retired Americans said in a written statement.
Taking a similar stance, Democrats last week took aim at the drug companies as part of an effort to stifle legislative proposals they view as more friendly to the manufacturers than to Medicare beneficiaries.
At a press conference announcing the tripartisan bill last week, however, Grassley said, "Our bill is not a Christmas gift to drugmakers."
The bill would have a projected cost to the federal government of $370 billion over 10 years, according to the Congressional Budget Office.