Provider lobbyists and members of both parties are bracing for the big debate this week in the Senate, which is scheduled to take up a controversial but still evolving proposal to overhaul Medicare.
Despite political and economic obstacles that previously stood in the way of adding a prescription drug benefit to Medicare, Senate Finance Committee leaders said last week that they were confident a bill would pass the full Senate before Congress adjourns for its July 4 recess.
Senate Finance Committee Chairman Charles Grassley (R-Iowa) and ranking Democrat Max Baucus of Montana presented their bipartisan framework for reform last week, introducing the outline of a plan that would give beneficiaries the option of drug coverage under traditional Medicare or through a private insurance carrier.
Grassley and Baucus, both from rural states, also said they intend to include in the bill provisions that would boost payment rates for rural providers. Grassley tried to get those provisions into the recent federal tax-cut bill, but House negotiators successfully thwarted the effort.
President Bush voiced support for the rural provisions in a recent letter to Grassley, which healthcare lobbyists said bodes well for the payment assistance staying in whatever bill is ultimately approved.
"This time is going to be different," Baucus said of the chances of passing a Medicare modernization bill, various versions of which have failed numerous times in the Senate. "The stars are in alignment this year (but) it's not a perfect package. Nothing ever is."
In a hearing on Medicare reform late last week, Centers for Medicare and Medicaid Services Administrator Tom Scully told the Finance Committee that the Grassley-Baucus proposal is a step in the right direction. While some elements of the plan still may differ from White House preferences-such as how benefits are structured for those in traditional Medicare vs. those who join private plans-Scully said President Bush hopes to sign legislation by year-end. Scully told reporters recently he is worried about a "provider freight train" that will attempt to pick up as much money as possible when it moves through the Medicare reform station.
Hospitals, Scully said, are likely to "stay on cruise control" with regard to payment rates, rather than see a significant new increase. It was unclear last week how the Grassley-Baucus plan would affect hospital reimbursement. Congressional sources said those details will be ironed out later.
Under the Grassley-Baucus plan, which the Finance Committee will debate this week, Medicare would add a Part D component to administer the outpatient drug benefit. Those beneficiaries who elect to join a private managed-care plan would receive similar benefits but through a PPO-type plan run by a private contractor, according to the senators.
A "Center for Medicare Choices" would be created as a new agency within HHS and separate from the CMS, to oversee all the competitive plan options. The federal budget for 2004 sets aside $400 billion to finance the drug benefit. The Congressional Budget Office is expected to release a cost estimate of the Grassley-Baucus plan sometime this week.
"Four hundred billion dollars is a significant level of funding," Baucus said. "We can do a lot with that money." But Rep. Pete Stark (D-Calif.) said the plan represents "the first step in trying to privatize Medicare," repeating a mostly Democratic criticism that has strained discussions since President Bush first proposed a market-based approach to Medicare reform earlier this year (March 10, p. 6).
Other critics continued to worry about access to care under a newly fashioned Medicare program. The consumer advocacy group Public Citizen last week released a study indicating that the majority of physicians in Maine, Oregon, Utah, Vermont and West Virginia participate in Medicare but not in privately managed plans.
"Given the choice, nine out of 10 seniors choose Medicare over private plans. I will continue to work to persuade Congress to make this same wise choice," said Sen. Debbie Stabenow (D-Mich.), in connection with Public Citizen's study.
At deadline, the White House could not be reached for comment on the proposal. Grassley told reporters last week that his plan includes "much the White House likes but (I'm) not ready to say they'll back this specific plan, and I don't expect them to."
Senate Majority Leader Bill Frist (R-Tenn.) expressed support for the Grassley-Baucus plan but acknowledged that "there is still a long way to go," including approval by the full Finance Committee, the full Senate, the House and finally President Bush.
Sen. Edward Kennedy (D-Mass.) called the preliminary plan a "major breakthrough," adding that there is a long road ahead and that "I hope the (Bush) administration will give these issues as high a priority as their tax breaks for the wealthy."
With negotiations and bill drafting moving at a frenetic pace last week, there was "a lot of valid concern from both sides of the aisle that this is going quickly and senators will be asked to vote on a bill they don't understand," said a Democratic aide to the Finance Committee.
The legislative process is "moving and coalescing better than anyone would have thought it would," said a senior aide to Sen. Olympia Snowe (R-Maine). However, the aide said, liberal Democrats and conservative Republicans have objected to key tenets of the proposal and real progress will depend on moving those groups closer to the centrist views of Baucus, Grassley and Snowe.
Baucus told reporters that a good number of Democrats on and off the Finance Committee support his plan. Grassley declined to speculate on whether the votes are there to approve the proposed reforms.
Also last week, House leaders called on Scully to remove Medicare-covered drugs from the formula used to set annual payment updates for physicians. Making that change, according to the American Medical Association, would boost payment rates to physicians as much as $80 billion over the next 10 years, even though the impact might not be felt next year, when physicians are scheduled to receive a -4.2% payment update.
Healthcare policy experts said Scully is looking for a way to boost payments to physicians without waiting on Congress to act.