With members of Congress away for their August recess, congressional aides continued to toil away on a compromise Medicare reform bill that does not easily give way to consensus.
Legislative staff for the chief Medicare conference negotiator last week announced a preliminary agreement on the structure of a prescription drug discount card, but the 17-member House-Senate committee has yet to overcome some of the greatest obstacles to a compromise. Those hurdles include the extent of private-sector involvement in a reformed Medicare, if seniors should have a fallback option for drug coverage when managed-care plans aren't available and how to adjust hospital rates in upcoming years.
The uncertainty on such controversial but critical provisions has led some to wonder what the landscape for reform would look like if an agreement doesn't materialize.
It would be a "tremendous missed opportunity" if Congress could not produce a bill for President Bush to sign, said Karen Ignagni, president of the American Association of Health Plans (AAHP) in Washington.
At stake are not only prescription drugs for seniors but also significant new money-and other help-geared to hospitals. Both the House and Senate proposals would permanently equalize the base payment rate to rural and urban hospitals. In fact, the House would spend some $27 billion over 10 years boosting payments to critical-access hospitals and other small-town providers, and the Senate would spend $25 billion over 10 years on similar program changes.
If conference negotiators can't build enough support for a compromise bill, "all that stuff falls by the wayside," one hospital lobbyist said. Still, he added, "we're trying to get the best deal on a conference report. That's where you have to be now."
In August, the Medicare action moves from offices on Capitol Hill to congressional districts around the country, where seniors voice their opinions and may cause lawmakers on both sides of the aisle to return to Washington with new priorities.
Specifically, support for the House plan, which calls for Medicare to compete with private insurers starting in 2010, could diminish if seniors make clear their disapproval of what critics have called the beginning of privatizing Medicare.
"If specific objections override the general support for getting a start on a drug benefit, then I think the mood in Congress could change," said John Rother, director of policy and strategy of the AARP, which has said there is not yet enough evidence to justify encouraging seniors to abandon traditional Medicare in favor of a private managed-care plan.
However, Rother said, "I do think (the conference committee) will report a bill out. There are very negative political consequences for failure."
For hospitals, Congress' failure to deliver a drug benefit would be a mixed bag: On the one hand, they would get a payment increase to match inflation as mandated by current law. Under the House proposal hospitals would receive smaller payment increases of 0.4 percentage points below inflation next year and in 2005.
"There is not much support in the Senate" for reducing hospitals' payment update, a Senate Finance Committee aide said last week.
A Senate amendment that would restrict the number of beds and physician investors in specialty hospitals also would fall off the table if the Medicare bill doesn't advance. So would relief under Medicaid's disproportionate- share payment program.
Last week, House and Senate aides worked on "noncontroversial" provider issues, according to the House Ways and Means Committee and other sources. The list of items staffers intended to tackle last week is an indication of how difficult it is to forge progress on the big issues when Congress is out.
Topics on aides' agenda included coverage of hospice-based nurse practitioners, preventive physicals, cholesterol screenings and adult day care, among others. More thorny issues for hospitals-such as adjusting the wage index that helps determine their payments-were on the list but did not get attention.
If conference negotiators cannot agree to a Medicare reform bill, the provider relief included in both versions of the legislation may be difficult to advance without the drug bill as a foundation.
"It's hard to tell seniors you're not going to fund a drug benefit but you are going to fund more money for doctors and hospitals and home health providers," the Senate aide said. "That's where the politics get pretty messy."
The AAHP supports provisions in the House bill that would act to stabilize Medicare+Choice rates in 2004 and 2005, an important precursor to enabling Medicare to play on a competitive playing field with managed-care plans.
In 2006, both the House and Senate bills would set a benchmark rate against which PPOs would bid. The benchmark would be based on the Medicare+Choice rate, and without a boost before 2006 that rate would be artificially low, according to the AAHP.
The House bill "does a way better job" of stabilizing Medicare+Choice before 2006 than the Senate bill, an AAHP spokesman said. Ignagni added: "Hospitals that would seek to participate in the Medicare environment of the future (are) rooting for (a boost in the Medicare+Choice rate) in '04 and '05."
As members of Congress gear up for the intense negotiations-and possibly new fights-that will take place in September, Bush himself is likely to push negotiators toward an agreement.
"When members of Congress come back, we'll have some heavy lifting to do, but I want to be there to help carry the load," Bush said at a White House ceremony marking Medicare's 38th birthday late last month. "We should not let another Medicare anniversary go by without modernizing the system."