In a dramatic production that lasted almost three weeks and included four distinct acts, the U.S. Senate last month portrayed lawmakers working to add a prescription-drug benefit to Medicare. At the end, however, spectators-mostly seniors who struggle to afford their monthly drug bills-were disappointed to see the curtain come down before the show reached a happy ending.
The final curtain also dropped on the hospital lobby, which had hoped that provider payment relief would land a supporting role in the Senate bill, as it did in a drug bill the House passed earlier this summer.
Despite their highly charged rhetoric and hastily developed compromises, senators last month voted down four separate proposals to provide prescription-drug coverage, a benefit that would no doubt be a part of Medicare if that program were to be created today. Drugs are central to most treatment regimens, legislators acknowledged, making it a political and medical imperative to fund them on behalf of the nation's 40 million Medicare beneficiaries.
Although senators dismayed the pharmaceutical industry when they overwhelmingly passed a bill last month restraining drug patent extensions that sideline generic alternatives, they could not summon the political will to go further.
"I thought the Senate would find some way to pass prescription-drug relief," says Fred Yang, a Democratic pollster for Peter D. Hart Research Associates, a Washington-based public opinion tracking firm. "Politically, given the makeup of the Senate and how many moderate people are up for re-election, I'm just surprised they didn't pass anything."
Yang is an exception. Most policy experts and hospital lobbyists did not expect the Senate to bridge its divide over the two questions that have kept a prescription-drug bill off the president's desk: how generous to make the benefit and who should administer it-private health plans or the federal government.
Under a $350 billion Medicare reform bill the House passed in June, private insurers would manage the benefit with subsidies from the federal government. Republicans believe that approach will drive down costs by increasing competition. Democrats, meanwhile, have steadily opposed private-sector involvement, arguing that health plans will "cherry-pick" patients and drugs while adding an unnecessary middleman.
"I'm not surprised by the outcome," says Larry Goldberg, director of the national healthcare practice at Deloitte & Touche, Washington. "The Democrats and the Republicans were miles apart and neither would give into each others' basic requirements."
That inability to find common ground on prescription drugs affects not only seniors but also hospitals. Rather than introduce stand-alone legislation addressing hospital payment issues, legislators typically attach amendments to other healthcare bills. Those bills give provider provisions a vehicle to ride through Congress, but when that vehicle stalls, so do amendments to it.
None of the four prescription-drug plans that circulated the Senate last month included provider reimbursement relief, which might have been added if any one proposal had survived. The bill the House passed in June includes some $30 billion for providers.
The Bush administration does not want "assistance to doctors and hospitals included in our bill," says Sen. Edward Kennedy (D-Mass.), referring to a $500 billion Democratic drug plan senators rejected last month. "There is no such assistance in our bill-but I hope we add it before we are finished."
Sen. Charles Grassley (R-Iowa), one of several senators who supported a $370 billion tripartisan plan defeated last month, told reporters shortly before the August recess that "we should do provider reimbursement in September because we need to put a lot of thought into it. We need something to be proud of." Grassley hopes to create an independent proposal to address provider payment relief rather than hastily attaching it to a separate bill.
Some observers in Washington don't see it going down that way. "Medicare deserves its own attention and should have its own bill, but that's not the way Congress has done it for the past two decades," Goldberg says.
Seeking last month to persuade fellow legislators of the merits of competing drug plans, senators joined factions and ratcheted up the rhetoric as they prepared to face disappointed seniors in their states. Late last month, Sens. Bob Graham (D-Fla.) and Gordon Smith (R-Ore.) developed the fourth and final proposal, a $400 billion plan intended to break the logjam. "If we are to convert Medicare from a sickness program to a wellness program, it is essential we provide a comprehensive, affordable drug benefit. That is not a benefit that can be provided on the cheap," Graham says.
Supporters of the tripartisan plan-including Grassley and Sens. Olympia Snowe (R-Maine) and James Jeffords (I-Vt.)-claimed that 48% of seniors would not qualify for coverage under the Graham-Smith plan. "This is not policy you can draft on the fly," Snowe says.
Regardless of how generous the drug benefit is, or who administers it, Congress' pledge to revive the issue this fall offers seniors and healthcare providers alike at least some hope.
One American Association of Retired Persons official tells Modern Healthcare that the powerful lobby "expects a feeding frenzy on provider givebacks" when the Senate reconvenes in September. Provider advocates believe that Medicare payment issues will take center stage when drug benefit negotiations resume.
They're also hoping for a better ending this time.