Having secured Senate and House approval last week of the most dramatic Medicare expansion in the program's history, healthcare lobbyists are plotting their strategy for clearing the final hurdle: a congressional conference committee that will resolve differences between the two proposals.
For providers, some of those differences are substantial.
Under the House bill, hospitals would receive a Medicare payment update in 2004 and 2005 that does not keep pace with inflation. The Senate bill would maintain a full inflationary update in those years, as prescribed by current law.
Meanwhile, the Senate bill would prohibit physicians from owning a stake in certain specialty hospitals, but the House bill would mandate only a study on the matter.
"We're mapping out our conference strategy now," said Rick Pollack, executive vice president of the American Hospital Association, adding that hospital payment updates, indirect medical education allotments and the specialty hospital issue top the AHA's priority list.
The specialty hospital provision "is very much on the table to be considered in the conference committee," said a health policy aide in the Senate Finance Committee. "It's hard to see how that one could be pulled out."
Both chambers' bills provide considerable help to rural providers, including provisions that would equalize the base rate paid to rural and urban hospitals under Medicare. But if the House bill were enacted, its policy of updating overall hospital payments at a rate below inflation would wipe out some 50% of the $16.5 billion hospitals would receive under the rural provisions, according to the AHA.
In Montana, for instance, the House bill would boost payments to hospitals by $33.7 million over 10 years, but the Senate plan would increase those payments by $102 million, Pollack said. The House bill, he said, "drowns out the help that (some senators) want to go to rural hospitals."
Another hospital lobbyist agreed the issue would be a major one to reconcile but anticipated that the expected conference chair, Rep. Bill Thomas (R-Calif.), is unlikely to erase the update provision.
Under the House proposal, physicians would see their payments increase 1.5% in both 2004 and 2005. That provision is not included in the Senate version, but several lobbyists expected it to make it through the House-Senate conference.
"My feeling is that this will be fixed," said Brent Miller, director of federal government relations at the Marshfield (Wis.) Clinic. "This is the kind of thing they'll find a way to do because there's enough evidence to show that there are problems in physician reimbursement."
Currently, physicians are slated to see their payments cut 4.2% next year.
In a fighting mode, Democrats last week introduced a string of amendments, most of them unsuccessful, that would have expanded the scope of the Medicare drug benefit, prevented employers from dropping drug coverage for their retirees and provided a more definitive fallback option for seniors who don't like or can't get into a managed-care plan.
In gathering votes for the two bills, Republican leaders in the House and Senate were forced to defend the proposals to some fellow Republicans, who argued that they represented insufficient reform and a benefit that will be too costly and cumbersome to maintain.
Rep. Jim DeMint (R-S.C.) voted against the House bill out of concern that it "fails to enact serious reform and threatens to bankrupt the entire Medicare system," said DeMint spokesman John Hart.
The proposed Medicare program, Hart said, can't work "unless we slash benefits or jettison the new (drug) benefit before it's implemented or do a massive tax increase, and none of those are favorable options."
Some members of the House, including DeMint, were not given enough time to consider the hugely complex Medicare bill before voting on it, Hart and other aides said. Unlike the Senate, which debated its bill for the better part of two weeks before approving it 76-21, the House allowed only one day for floor debate and prohibited members from introducing amendments.
"It's hard to understand why we're taking up this bill in the dark of night," House Minority Leader Nancy Pelosi (D-Calif.) said in an emotional speech on the House floor before the chamber passed its bill on a razor-thin vote of 216-215.
The House-Senate conference committee is expected to begin meeting after Congress' July Fourth recess. In the meantime, aides will begin thorough comparisons of the two proposals in preparation for a final bill that could emerge from conference in August and make its way to the Oval Office before summer's end.
For the managed-care industry, which would play a pivotal role in administering the new Medicare drug benefit, the conference committee represents an opportunity to "make sure we're providing appropriate feedback, comment, discussion and observation about how provisions might work in the real world," said Karen Ignagni, president of the American Association of Health Plans.
In its lobbying over the next several weeks, the AAHP will focus on fortifying Medicare+Choice plans until the new Medicare program would take effect in 2006, formulating the rules for competitive bidding among the private plans that would participate and "creating a workable regulatory structure" for the new program, Ignagni said.
As conference negotiations begin to take shape, some lawmakers are less than optimistic that things will work out for the best. "This thing is set up to fail, to finally drive a dagger in the heart of Medicare," said Sen. Tom Harkin (D-Iowa), who voted against the Senate bill.