House Republicans Hope Recent Provider Endorsement of Medicare Package Will Help Garner Support

House Republican leaders are hopeful that recent endorsements of the GOP's Medicare reform package by provider groups "will help convince members" to support the legislation, CongressDaily/AM reports. Members of the House Ways and Means Committee announced last week that they had reached a deal with hospitals to boost their Medicare payments by $9 billion over 10 years rather than a previously discussed $17 billion, 10-year cut. After lobbying hard against the proposed cuts, hospital groups wrote letters praising the agreement. Greater New York Hospital Association President Kenneth Raske called the change "a good first step toward protecting America's health care system from damaging Medicare reimbursement rate cuts that could threaten the viability of institutions the nation is relying upon now more than ever" (Fulton, CongressDaily/AM, 6/5). In addition, following a lobbying campaign by the American Medical Association, Republican leaders have proposed increasing Medicare payments to doctors by $20 billion over five years. Such payments were cut by 5.4% this year and would drop by a combined 14% over the next three years under current law, the New York Times reports.

The Times reports that the additional money for provider groups "reduc[es] the amount of money available" for the drug benefit component of the GOP package. The Times reports that "advocates for the elderly have reserved judgment" on the plan, "saying some older people will not sign up for the drug plan unless the benefits are more generous." David Certner, director of federal affairs at AARP, said the increased reimbursements would mean "less money for drug benefits in a pot that was already insufficient" (Pear, New York Times, 6/5). But the GOP drug benefit "grew more generous over the Memorial Day recess," CongressDaily/AM reports. Under the current draft, seniors would pay 20% of their annual drug costs up to $1,000 and 50% from $1,000 to $2,000, with a $250 deductible. They would pay 100% of costs from $2,000 to $4,500, after which a catastrophic benefit would begin (CongressDaily/AM, 6/5). Seniors would pay a monthly premium of approximately $34 (New York Times, 6/5). Earlier drafts of the proposal called for seniors to pay 30% of their costs up to $2,000 and for the catastrophic benefit to begin at $5,000 (Fulton/Rovner, CongressDaily, 6/4). Republicans said that seniors would save 30% on drug costs through the new plan, "although Democrats questioned the figure" (Fulton, CongressDaily/AM, 6/5). House Republicans have set aside $350 billion over 10 years for Medicare reform, including a drug benefit.

In addition to gaining the support of the providers, the House Republican plan also has received endorsement from the managed care industry. Hoping to stem the exodus of MCOs from Medicare+Choice, House Republicans have proposed increasing payments to health plans by about $3.5 billion over the next decade (New York Times, 6/5). "This is a prescription for stability," American Association of Health Plans President and CEO Karen Ignagni told reporters yesterday, although she cautioned that plans may still exit the program next year if a Medicare bill is not finalized by then. Addressing senior advocates' view that provider and payer "givebacks" should not take away money for a drug benefit, Ignagni said the extra money for health plans would go toward helping seniors. "We're lobbying for pay equity for beneficiaries," she said.

On the Senate side, Sen. Zell Miller (D-Ga.) urged Congress yesterday "not to give in to conventional wisdom and assume that a drug bill will not pass this year," CongressDaily reports. "That is exactly the blame game that smells up this place sometimes," Miller said during a floor speech, adding, "Time is running out, and I hate to tell you that some people want it to run out." Miller, along with Sen. Bob Graham (D-Fla.), is sponsoring a drug benefit bill that has "yet to be endorsed by the Democratic leadership but is seen by Democrats as a good starting point." Under the plan, seniors would pay a $25 monthly premium and 50% of annual drug costs up to $4,000, at which point a catastrophic benefit would kick in (CongressDaily, 6/4).

Meanwhile, Sen. Charles Grassley (R-Iowa) said yesterday that he, along with Sens. John Breaux (D-La.) and Jim Jeffords (I-Vt.), plans to introduce a $350 billion drug benefit proposal that "could serve as a companion piece" to the House GOP bill. Grassley, however, is not optimistic that Congress will approve a bill this year. "I think, for sure, there's going to be a bill that gets through the House of Representatives. But I'm just afraid that the agenda of the Senate's so full that we may not get it done this year," he said (Koffler, CongressDaily/AM, 6/5). In addition, Democrats and Republicans are divided over whether structural reforms of Medicare should be included in any legislation. The House Republican plan, for instance, would allow beneficiaries to purchase drug coverage from competing private health plans. But Senate Finance Committee Chair Max Baucus (D-Mont.) said, "The interest in prescription drug benefits is increasing, but the interest in structural reform of Medicare is falling off. It doesn't save money. There's no consensus. And in states like Montana, there's no Medicare managed care anyway" (New York Times, 6/5).