Bush Meets with Republican Senate Leaders To Begin Planning for Medicare Reform

President Bush yesterday met with Republican Senate leaders to "lay the groundwork" for a Medicare prescription drug benefit and other reforms to the program, CongressDaily reports. As the administration and Republicans in Congress begin drafting proposals, they must decide whether to offer drug benefits to only low-income seniors or to all seniors. CongressDaily reports that the administration is considering the Medicare+Choice program as a potential method to provide a drug benefit. Administration members also are discussing government-subsidized drug discount cards and catastrophic drug coverage for low-income seniors. While a White House spokesperson said the administration would not yet comment on specific proposals, CMS Administrator Tom Scully said that the administration's plan for a prescription drug benefit would "surface 'in about six months.'" However, a House Republican aide said that Republicans would have difficulty passing any prescription drug benefit without also approving cost-control measures for Medicare. Democrats are expected to oppose focusing only on low-income seniors and instead are likely to support a more comprehensive drug benefit, CongressDaily reports (Fulton/Koffler, CongressDaily, 12/10). The House this summer passed a GOP-sponsored Medicare reform bill that included a prescription drug benefit, but the Senate failed four times to pass similar legislation (California Healthline, 11/22).

Meanwhile, Scully yesterday renewed his call for Congress to address the Medicare provider payment formula, which has resulted in cuts over the last two years in physician reimbursements, CongressDaily reports (CongressDaily, 12/10). Physician groups and other health advocates have been urging Congress to reverse a 4.4% reduction in physician reimbursements scheduled to take effect in January, on top of a 5.4% payment reduction imposed earlier this year. The House last month approved as part of an unemployment benefits bill a provision that would give CMS the authority to address the provider payment formula, a power the agency has said it does not currently have. A similar Senate bill did not contain the Medicare provision. The House also had approved a Medicare provider "giveback" as part of the Medicare reform bill it approved this summer, but the Senate did not pass such legislation (California Healthline, 11/20). At an American Medical Association conference in New Orleans yesterday, doctors protested the cuts, which AMA officials said would result in an "access meltdown" for Medicare beneficiaries. Because of the cuts, some doctors have said they will limit the number of Medicare beneficiaries they treat, and other doctors are declining to treat new patients who are nearing the Medicare enrollment age of 65. Physicians also are concerned that private insurers might reduce their rates in response to reduced Medicare rates (King, New Orleans Times-Picayune, 12/11).

In response to increasing prescription drug costs, Congress should add a prescription drug benefit to Medicare, help states with rising Medicaid pharmaceutical costs and investigate "new approaches" to the FDA drug approval process, Rand economists Dana Goldman and Geoffrey Joyce write in a Los Angeles Times opinion piece. Congress should examine the incentive-based drug plans used by pharmacy benefits managers when determining how to give Medicare beneficiaries a drug benefit, Goldman and Joyce write. Many PBMs have tiered copayment systems, which can result in a "dramatic drop" in beneficiaries' drug spending. However, given that those savings are likely to be "marginal" over long periods, Congress also should experiment with requiring the FDA to approve new drugs only if they are "worth the extra price" and will foster competition within a class of drugs, Goldman and Joyce suggest. They add that the federal government should permit states' Medicaid programs to experiment with cost-controlling measures. For example, Medicaid programs could charge high copayments for "less-essential" drugs and require no copayment for medications to treat chronic diseases. For people without any drug coverage, a catastrophic drug plan "would be valuable," Goldman and Joyce write. They say, "Why not start with such a plan and see how much it costs?" Goldman and Joyce conclude: "It's time for Congress to move with the times and provide more flexibility" (Goldman/Joyce, Los Angeles Times, 12/11).