House votes 355-59 to approve legislation that would delay Medicare physician fee cut

Jun 26 2008

The House on Tuesday voted 355-59 to approve legislation (HR 6331) that would delay for 18 months a 10.6% reduction to Medicare physician fees scheduled to take effect on July 1, among other provisions, the Washington Post reports (Kane, Washington Post, 6/25).

The measure is "based closely" on a bill (S 3101) introduced by Senate Finance Committee Chair Max Baucus (D-Mont.) that earlier this month failed to receive enough votes for cloture in the Senate, CQ Today reports (Armstrong [1], CQ Today, 6/24). Offsetting the physician fee cut is estimated to cost between $6.4 billion and $6.8 billion. Democrats have proposed using reductions to Medicare Advantage plans to offset the physician fee fix, but the White House and Republicans oppose any MA cuts (Young [1], The Hill, 6/24). All the votes against the measure came from Republicans, although 129 Republicans voted for it.

The House measure would provide a 1.1% increase in pay to physicians for 2009. The bill also would delay a competitive bidding program for durable medical equipment under Medicare and repeal another bidding program for medical laboratories. Lawmakers believe both bidding programs could disrupt services to beneficiaries (Pear, New York Times, 6/25). In addition, the measure would require Medicare to pay pharmacies within 14 days of billing for prescription drugs dispensed to beneficiaries and would reduce copayments for mental health services from 50% to 20% (AP/Baltimore Sun, 6/25).

Offsets to cover the cost of the legislation include reductions to private plans under MA (New York Times, 6/25). The offset would reduce payments to private insurers participating in MA by $14 billion over five years (AP/Baltimore Sun, 6/25). A spokesperson for Senate Majority Leader Harry Reid (D-Nev.) said the earliest Reid can file for a cloture vote on the measure is Thursday (Edney, CongressDaily, 6/25).

Senate Finance Compromise

Baucus and Finance Committee ranking member Chuck Grassley (R-Iowa) on Tuesday presented compromise legislation to curb the physician fee cut to senators during party caucus lunches, CQ Today reports. Baucus declined to disclose details on the measure (Armstrong [2], CQ Today, 6/24). Industry sources say the measure would delay the physician fee cut for 18 months and provide a 0.5% increase for 2008. The rate would be frozen for 2009, compared with Baucus' failed measure that would increase payments by 1.1% in 2009. The sources also said that Baucus pared back on low-income assistance for beneficiaries compared with his earlier measure.

The measure will not reduce payments to private plans under MA but instead will make cuts to indirect medical education under the program. Other provisions in the measure include a $600 million reduction to oxygen provider payments and a 9.5% reduction in funding to DME suppliers to pay for a delay to the bidding program. Baucus on Tuesday said the Finance Committee is awaiting Congressional Budget Office scores of the measure (Edney, CongressDaily, 6/24).

According to CQ Today, because of resistance from the Bush administration and Senate Republicans to other legislative proposals, the compromise between Baucus and Grassley "is expected to be the one that eventually gets the president's signature." However, the "House vote may have rearranged the math on a Baucus-Grassley deal for Senate leaders," CQ Today reports. Baucus said, "The House vote changes the dynamics. The House bill was essentially the one I tried to get a vote on over here. If the House bill passed by such a large margin, there's an argument that it could pass over here, too" (Armstrong [1], CQ Today, 6/24).

White House Issues Veto Threat

The White House on Tuesday in a statement issued a veto threat against the House bill, outlining several objections, mainly reductions to MA payments, The Hill reports. "The administration has repeatedly communicated that legislative proposals that result in loss of beneficiary access to additional benefits or choices in the (Medicare Advantage) program are unacceptable," the statement said (Young [2], The Hill, 6/24).

According to the Times, President Bush has said the proposed reductions to MA plans would "reduce access, benefits and choices" for U.S. seniors (New York Times, 6/25). House Speaker Nancy Pelosi (D-Calif.) said, "(Tuesday's) bipartisan and veto-proof vote sends a strong signal that improving care for seniors and ensuring fair payment for providers will not be held hostage to the White House's insistence on bloated, unnecessary subsidies for private health insurance plans that participate in Medicare" (Young [3], The Hill, 6/24).

WSJ Examines Special-Needs Plans

The Wall Street Journal on Wednesday examined how "one sticking point" in the Senate negotiations over the Medicare package "has been the special-needs plans." According to the Journal, Congress limited SNP expansion in 2008 amid debate over who and which illnesses qualify for a certain plan intended for chronically ill people. The Bush administration is seeking for the plans to be renewed "without restricting them only to the sickest patients," according to the Journal. Senate lawmakers from both parties want to extend the plans through 2010. However, Baucus desires to limit them only to beneficiaries with "complex, chronic conditions."

Meanwhile, Grassley is seeking to limit the plans' expansion for another year while trying to find a compromise. According to the Journal, the debate could affect how care is administered to "the most vulnerable senior citizens -- a big concern for insurers, health care providers and federal budgeters alike as the baby boomer generation ages" (Zhang, Wall Street Journal, 6/25).