Hospital lobbyists and health policy analysts said a new projection of the Medicare law's cost -- $134 billion more than an earlier estimate -- is potential trouble for providers. If the higher estimate proves true, providers' annual payment increases could suffer as Congress hunts for money. With the fiscal 2004 federal deficit estimated at $520 billion, providers already are gearing up for battle in case a deficit reduction bill threatens provider payments as was the case with the Balanced Budget Act of 1997. The latest estimate, by the White House Office of Management and Budget, put the cost of the Medicare drug benefit and other elements of the new law at $534 billion over 10 years, instead of the $400 billion budgeted by Congress. Earlier this week, the Congressional Budget Office predicted the 10-year cost of the law would come in just under budget, at $395 billion.
Either way, hospitals should be concerned about the future, lobbyists said. The revamped Medicare program could have unanticipated effects on the market and hospitals' finances. "No one is thinking of the spillover effect of the cost of drugs on hospitals," one lobbyist said. "If I was the hospital industry, I'd want to know that answer pretty quick." The divergent estimates set off a feud in Washington over whose numbers were accurate. Observers said the agencies arrived at different figures because they made different assumptions, especially regarding enrollment in Medicare managed-care plans. Congress, however, has a clear choice. It "has to live under the CBO numbers," a House Ways and Means Committee spokeswoman said. -- by Jeff Tieman and Tony Fong