Rural Health Spending Increased in Revised Labor-HHS Budget Bill

Congressional conferees on Monday reached an agreement on a $601.7 billion Labor-HHS spending bill, with about $180 million in health-related costs shifted to win "the GOP votes that led to the bill's failure on the House floor last month," CongressDaily reports (Heil, CongressDaily, 12/13). All House Democrats and 22 Republicans last month voted against the bill, with "[a]t least seven" Republicans saying their opposition was because of cuts in funding for rural health care programs, CQ Today reports.

The revised bill includes $90 million in additional funding for rural health care programs. It also would give $9 million to a rural health research and policy program that was to be eliminated under the original bill and $39 million to a rural health grant outreach program -- the same amount it received in 2005 -- instead of a previously proposed 73% cut.

In addition, area health education centers, which help recruit and retain health professionals in underserved areas, would receive $29 million, instead of the previously proposed $2 million.

The revised bill also addresses House Ways and Means Committee Chair Bill Thomas' (R-Calif.) concern that a provision to ban Medicare coverage for erectile dysfunction drugs would lead to breaches of government contracts. The provision, which would have saved $90 million in 2006, has been removed (Swindell, CQ Today, 12/12).

The bill's $180 million in added spending is offset by $120 million in cuts from flu preparedness programs and $60 million in cuts from the implementation of the new Medicare prescription drug benefit. Appropriators expect that a separate bill will make up for the cuts in flu preparedness funding.

An appropriations spokesperson said that the bill could reach the House floor on Wednesday and that Republicans were "making pretty good progress" on securing votes. In the Senate, the bill "is likely to pass again, as it did in October," CongressDaily reports (Heil, CongressDaily, 12/13).

In other news, House Republican staff on Monday reported progress on negotiations for cuts to Medicaid and Medicare in a fiscal year 2006 deficit reduction package (Dennis, CQ Today, 12/12). The House bill (HR 4241) includes about $13.5 billion in cuts from both programs (Cohn/Heil, CongressDaily, 12/12).

"The House bill would cut about twice as much as the Senate bill (S 1932) from Medicaid, while the Senate paired cuts from Medicare with nearly $11 billion in new spending on reimbursements from doctors," CQ Today reports.

Thomas, Senate Finance Committee Chair Chuck Grassley (R-Iowa) and House Energy and Commerce Committee Chair Joe Barton (R-Texas) are negotiating the cuts.

House negotiators "face a problem" on a possible provision for oil drilling in the Arctic National Wildlife Refuge because "[s]ome conservatives who support oil drilling may vote against a conference report if it is taken out of the measure, while 20 or so caucus moderates are vowing to oppose a bill if it is left in," CQ Today reports (CQ Today, 12/12).

Sen. Ted Stevens (R-Alaska), a proponent of ANWR drilling, "is openly prepared to trade for House Democratic votes by offering to pay for domestic priorities with money from ANWR lease revenue or even broadcast-spectrum receipts within his province as Senate Commerce Committee chair," the Wall Street Journal reports (Rogers, Wall Street Journal, 12/13).

One focus for budget reconciliation negotiators is Medicare physician reimbursement rates, and congressional aides met over the weekend to discuss tying reimbursement rates to quality of care measures (Cohn/Heil, CongressDaily, 12/12).

Barton and Thomas both favor linking physician payment increases to quality of care measurements. The Senate bill would increase physician payments by 1%, while the House proposal would allow a scheduled 4.3% payment reduction to take effect (Cohn, CongressDaily, 12/13).

Negotiators are considering a compromise that "would in part preserve Senate language trimming the Medicare prescription drug 'stabilization fund,'" CongressDaily reports. The White House has threatened to veto any changes to the 2003 Medicare law but "appears to be softening its stance," CongressDaily reports (CongressDaily, 12/12).

Rep. Pete Stark (D-Calif.) on Tuesday is expected to introduce legislation that would give physicians a 1.5% increase in 2006 and 2007 and would have the Medicare Payment Advisory Commission study Medicare payment policy.

Under the proposal, beneficiaries would be protected from any premium increases resulting from the reimbursement increase. The proposal also would repeal the "45% trigger" in the 2003 Medicare law that requires the president to submit legislation to Congress to cut spending if general revenue contributions to the drug benefit are projected to cover more than 45% of total Medicare expenditures for two consecutive years.

"It is unclear what effect, if any, Stark's proposal will have" on budget negotiations, CQ HealthBeat reports (CQ HealthBeat, 12/12).

In related news, CQ HealthBeat on Monday examined the managed health care industry's opposition to a Senate budget provision that would require CMS to make "intensity adjustments" for upcoding by managed care providers. The adjustment would account for physicians who bill for more expensive care than they actually provide.

Industry sources said there "is no policy rationale" for making such an adjustment, CQ HealthBeat reports. The sources said scoring of the Senate provision by the Congressional Budget Office assumes $6.5 billion in savings over five years by ending "budget-neutrality" payments. Such payments are intended to lessen the impact of switching to "risk-adjusted" payments in which reimbursements would be lowered if a managed care plan had healthier-than-average beneficiaries.

The sources said that the elimination of budget-neutrality payments would not generate $6.5 billion and that savings instead would be permanent and come from the intensity adjustment, CQ HealthBeat reports (Reichard, CQ HealthBeat, 12/12).