Against the odds, Senate Finance Committee Chairman Sen. Chuck Grassley (R-Iowa) forged a legislative package at the last minute last week moving cuts to Medicaid and Medicare one step closer to realization.
On Oct. 24, the Senate Finance Committee is slated to vote on the budget reconciliation bill containing the cuts before forwarding it to the Senate Budget Committee, which is expected to vote on it, probably later this week. If the bill gets past those hurdles, the full Senate could vote on the bill as early as the week of Oct. 31.
Overall, the bill would cut a net $4.3 billion from Medicaid and $5.8 billion from Medicare during a five-year period starting in fiscal 2006, which began on Oct. 1, for a total savings of about $10 billion.
There are a number of changes in Grassley's bill. Doctors would not be allowed to refer patients to new specialty facilities in which they have ownership interest. The so-called "75% rule" would be frozen at 50% for two years starting retroactively from this past July 1 through June 30, 2007. The threshold is currently 60%. A stabilization fund to encourage private health plans to participate in the new drug benefit would be eliminated.
In addition, a $6.1 billion package to extend Medicaid coverage for Hurricane Katrina evacuees was drastically cut to a $1.8 billion package. The full amount may be added to another bill, said Mark Hayes, health policy director for the Finance Committee.
In fiscal 2006, Medicaid spending would increase by a net $1.7 billion, Hayes said. Combined with Medicare, spending would increase by $4.3 billion in the first year.
Reaction from the healthcare community was mixed. Richard Pollack, executive vice president of the American Hospital Association called the package a responsible approach to cutting, but expressed concern about a provision that would require the HHS to develop and implement pay-for-performance initiatives.