As the House and Senate prepare to iron out their differences in Medicare reform legislation, providers are poised to make their cases in the familiar battle of limited resources vs. unlimited demands.
In addition to hashing out controversial drug benefit issues at the center of historic bills that passed the House and Senate last month, lawmakers from each chamber will meet as early as this week to begin deciding a range of issues important to providers, including overall reimbursement levels, rural hospital assistance, restrictions on specialty hospitals and payments to physicians.
"This is not likely to be a short conference," said Patrick Morrisey, deputy chief of staff to the House Energy and Commerce Committee, which helped draft the Medicare bill that passed the House last month 216-215. "This is a very complicated bill and we want to make sure we get it right."
Last week, the Senate appointed conferees, with a total of five Republicans and four Democrats making up the group. The House named Republican conferees and said Reps. Bill Thomas (R-Calif.) and Billy Tauzin (R-La.) would co-chair the committee. House Democrats had yet to name their conferees at deadline.
For hospitals in general, the Senate bill may be a better deal because it doesn't propose a cut in the payment update they will receive next year.
The House bill, meanwhile, might be better for physicians, who would see their payments increase 1.5% next year and in 2005 but would get no similar help from the Senate bill.
Rural providers stand to benefit from both measures-the House would spend $27 billion over 10 years boosting payments to critical-access hospitals and other small-town providers. The Senate would spend $25 billion over 10 years on similar program changes.
The $400 billion legislation that cleared the House and Senate late last month would spend the bulk of its allotment adding a prescription drug benefit to Medicare. To help finance the rural provider provisions included in both packages, lawmakers have proposed reforming the systems used to pay for drugs and supplies in the outpatient setting.
Currently, physicians are reimbursed for 95% of the average wholesale price of the drugs they administer on an outpatient basis. Under the Senate proposal, physicians would see their reimbursement for those drugs drop to 85% of the average wholesale price, which the Senate estimates will save $18 billion over 10 years.
This provision has cancer-care providers upset. The effect of the House and Senate bills "would be to remove funding from the cancer-care system," said Jenny Heumann, a spokeswoman for the American Society of Clinical Oncology, which represents 20,000 oncologists in the U.S. and abroad. Heumann did not have an estimate of how much money oncologists would lose under the reformed system.
Using the savings from average wholesale price reform to assist rural providers "could hurt cancer patients in rural areas even more," as oncologists find it increasingly difficult to provide expensive clinical treatments, Heumann said.
Both chambers' proposals would equalize Medicare's base payment amount to rural and urban hospitals, a step that would benefit some urban providers, too, according to Kirk Norris, president and chief executive officer of the Iowa Hospital Association.
"In Iowa, every one of our hospitals on the (prospective payment) system would benefit" from the rural provisions, Norris said. Iowa hospitals, he said, lose $100 million per year as a result of low Medicare payments, and the congressional reform bills would increase revenue by at least $27 million over 10 years.
For hospitals, another top priority heading into the conference committee is a provision in the House bill that would increase hospital payments by an amount that is 0.4 percentage points below inflation next year. That provision is not in the Senate bill, which would give hospitals a full inflationary update, and hospital lobbyists who argue that payments should at a minimum keep pace with inflation are eager to see it disappear.
"The Senate was more sensitive to concerns raised by the hospital industry that there shouldn't be any more cuts in the short term," said a Democratic aide who asked not to be identified. However, he added, "that's going to be an issue of contention" in the conference.
While provider issues are "second-tier" to the prescription drug debate, the aide said, one provision likely to stir conflict is the Senate's specialty-hospital amendment, which would restrict the number of beds and physician investors in controversial specialty hospitals.
Associations that represent some members with interests in specialty hospitals and other members who have seen their revenue squeezed by specialty hospitals are "walking a tightrope" but generally support the Senate's effort to regulate their operations, one hospital lobbyist said.
The Medicaid disproportionate-share payments that are used to help hospitals that treat a large number of indigent patients also have made lobbyists' list of priorities. The Senate bill would raise federal allotments to states with low disproportionate-share payments and cancel reductions that took effect last September. No similar provision is in the House bill.
Prescription drug-related issues the conference committee will address include, but are not limited to, means-testing for the benefit, how heavily the federal government should subsidize private managed-care plans competing with Medicare, and whether to provide a fall-back plan for seniors who have trouble finding a private carrier.
Last week, a group of prominent Senate Democrats, including Edward Kennedy (Mass.), Hillary Rodham Clinton (N.Y.), and Tom Daschle (S.D.), sent a letter to President Bush saying they will not support Medicare legislation that coerces seniors into managed-care plans by withholding an equal drug benefit under traditional Medicare.
Kennedy's support is widely considered critical because without it the Senate may not muster enough Democratic votes to pass the conference committee's version of the bill.
The final bill, Kennedy and fellow Democrats said, also must eliminate the House-passed health savings-account provision, which would spend $174 billion providing additional insurance options to people with insufficient or no coverage. Critics of that proposal said it would give employers an excuse to drop or scale back coverage.