Disagreements among Republican members of the Senate Finance Committee are delaying a fiscal 2006 budget reconciliation package that must address scheduled Medicaid cuts and major Medicare changes, and ultimately the turmoil could mean the committee will be unable to produce a bill. While several Senate committees are crafting reconciliation bills, only the finance committee is responsible for the Medicaid and Medicare portions. If the committee cannot reach an agreement, the debate may end up on the full Senate floor. The Senate Budget Committee is expected to vote on all reconciliation bills by Oct. 26. Some conservatives on the finance committee are balking at the $6.1 billion price tag of a provision to give Hurricane Katrina evacuees Medicaid benefits, a key piece of the legislation being crafted by committee Chairman Sen. Chuck Grassley (R-Iowa). And earlier, two Republican and two Democratic senators raised the possibility in a letter to Grassley that they would not support any reconciliation bill with Medicaid cuts.
According to several sources, Grassley's proposal would effectively establish a permanent ban on physician self-referral to specialty hospitals; hold the required admissions under the "75% rule" for rehabilitation hospitals at 60% for two years; replace a scheduled 4.4% cut in Medicare reimbursement to physicians in 2006 with a 1% raise; and lower the scheduled reimbursement increase for hospital-based outpatient services to inflation minus 0.4 percentage points. The Medicaid savings -- targeted at $10 billion over five years -- would be achieved, in part, by basing reimbursement for prescription drugs on average manufacturer price instead of average wholesale price and requiring greater rebates from drug companies. The package also would eliminate a Medicare stabilization fund meant to encourage health plans to participate in the new drug benefit, saving an estimated $6.8 billion over five years. -- by Tony Fong