As the HHS' Medicaid Commission last week put forth its report on how to cut $11 billion from the Medicaid program over five years beginning in fiscal 2006, questions about the panel's credibility continued to linger, casting skepticism on how much weight its recommendation would have in Washington.
But when Congress unveils its Medicaid legislation later this month, some said the results might look very similar to the commission's report.
"The recommendations are a fairly clear compilation of savings that Congress needs to achieve," said Tom Nickels, senior vice president of federal relations at the American Hospital Association. "I think what we'll see when they come out with their legislation, it'll be similar to what (the commission) recommended."
Included in the commission's six recommendations are a call to increase copayments to beneficiaries for prescription drugs, a proposal to change policies governing how beneficiaries transfer their assets and a recommendation to change how Medicaid pays for prescription drugs. The commission, though, did not address the use of accounting mechanisms called intergovernmental transfers that the White House said are abused by states to draw more federal dollars for the program.
Taken as a whole, the commission's proposal closely mirrors earlier recommendations made by the National Governors Association, and some said that the association's proposal, first released in June and updated last week, was a clear influence on the commission's plan.
Joseph "Chip" Marshall, one of the commissioners and chairman and chief executive officer of Temple University Health System, a five-hospital system based in Philadelphia, said in addition to finding immediate cuts to the Medicaid program, the panel aimed at laying the foundation for longer-term reforms. The panel was mandated with reducing the budget by $10 billion but found $11 billion in savings. The commission's next report is due in December 2006.
"We knew we needed to get $10 billion. We looked at places where we could do that but we also looked at areas where we could send some philosophical messages," he said.
Reaction to the commission's recommendations was mixed. Nickels said that given the time constraints on the commission-eight weeks separated the naming of the commissioner and the issuance of the report-and the unsavory task of cutting into the Medicaid program, the commission deserves credit for the job it did.
Reactions from members of Congress were more restrained. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said his committee will consider the proposal as it develops its Medicaid legislation. "The commission's recommendations are constructive," he said in a prepared statement.
John Goodman, president of the conservative think tank the National Center for Policy Analysis, called the commission's approach too timid, adding that the commission is only tinkering with the program when a complete overhaul is needed. "Medicaid spends more than Medicare. None of these people (on the commission) seem to be aware of the crisis."
The most controversial element in the commission's proposal, as it was with the NGA's recommendations, is the call to increase copayments on prescription drugs. According to the commission, the proposal would save Medicaid $2 billion over five years. But some healthcare advocates said the move, if adopted, could have profound health consequences without achieving meaningful savings.
"I think there's a view out there that it encourages personal responsibility. I think that's a wrong-headed health policy," said Georges Benja- min, executive director of the American Public Health Association.
Created by the budget resolution reached by Congress in April, the commission is charged with finding both short-term savings to Medicaid and more far-reaching solutions to keep it financially sustainable for the 53 million people it covers.
Combined state and federal spending on the program is now estimated at $329 billion compared with $325 billion for Medicare, which is paid for solely by the federal government. By the year 2015, the number of Medicaid beneficiaries is projected by the CMS to increase to 65 million, with spending to reach $685 billion.
Two days before the commission's report, the NGA issued a follow-up to a June report providing greater details about its Medicaid reform recommendations. Like the commission, the NGA supports giving states greater power to implement and enforce cost-sharing strategies that would increase out-of-pocket expenses to Medicaid beneficiaries. The association favors increasing premiums for all services, saying, "Using premiums rather than copays would prevent beneficiaries from being denied care that they need for failure to pay when they can least afford it." The association also said states should be allowed to negotiate prescription-drug prices based on the average manufacturer price rather than the average wholesale price.
While the commission is the de facto advisory panel to the HHS and Congress on how to revamp Medicaid, the panel's creation has been tainted by controversy from the start. By the time the 13 voting and 15 nonvoting commissioners were named in July, serious doubt was cast on its credibility. Even before the commissioners were named, Democrats said that because HHS Secretary Mike Leavitt had sole power to name the panel members, it would be nothing more than a puppet of the Bush administration. As a result, Democrats refused to participate on the commission.
"The truth of the matter is that the Medicaid Commission is a funny group," said Leighton Ku, a fellow at the Center on Budget and Policy Priorities, a left-leaning Washington-based think tank. "It was basically handpicked to be a conservative group."
Among Republicans, concerns also were voiced that members of Congress could become only nonvoting members on the commission. Party leaders eventually declined to nominate any of its members to the panel.
The most serious blow to the commission, perhaps, came when the NGA also declined to nominate members to sit on the panel, saying it preferred to work on its own proposal. Marshall, a commission member, said that when he first began work on the panel he questioned its credibility, but after a month of thoughtful debate and consideration of the recommendations, such questions should no longer exist. "We can only do our job as well and as transparently as we can," he said.
One area not addressed by the commission's recommendations is intergovernmental transfers, or IGTs. In its budget proposal for fiscal 2006, the White House sought to slash $60 billion from Medicaid during a 10-year period by clamping down on IGTs, which the administration said have been used inappropriately by states to draw more federal funding. Some saw the commission's omission on IGTs as a concession to states that have complained about the administration's crackdown on using such mechanisms. Marshall said the panel believed it would be more appropriate to address it in the commission's report next year.
Between now and December 2006, the panel will also look at other cost-sharing strategies, fraud and abuse issues and more prescription drug issues, he said.
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