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Bush Administration Sends Medicare Legislation to Congress

By Drew Armstrong, CQ Staff

February 15, 2008 -- The administration pulled the Medicare "trigger" Friday, sending Congress legislation to reduce Medicare spending through medical liability caps, information technology improvements, and increased drug benefit premiums for higher income Medicare beneficiaries.

Health and Human Services Secretary Michael O. Leavitt outlined the legislation in a conference call with reporters. The centerpiece—and the only proposal whose savings have been estimated—would require Medicare enrollees with higher incomes to pay higher monthly premiums for prescription drug coverage, known as Part D, than other beneficiaries.

Individuals with incomes of more than $82,000, or $164,000 for couples, would pay higher Part D premiums. According to Leavitt, that provision would save $900 million in 2009, when it would go into effect, and $3.2 billion over five years.

The administration was required to send legislation to Congress by what is commonly known as the Medicare funding "trigger." That is a warning system put in place as part of the 2003 Medicare overhaul law. The law says that if for two years in a row Medicare is projected to draw 45 percent of its funding from general tax revenues in any of the next seven years, the president must propose legislation to solve the problem. The 45 percent threshold will be crossed in 2013, according to a warning issued by Medicare trustees in April.

Other parts of the proposal have yet to be calculated for savings. One title would cap non-economic damages in medical malpractice lawsuits at $250,000 and limit the share of damage awards that plaintiffs' attorneys could collect.

Another title would have the HHS secretary encourage adoption of health information technology such as electronic prescribing and medical records. That same title would authorize the secretary to both publicize the prices charged by providers and disseminate information on the quality of care, in order to spur competition that might yield higher value for the Medicare dollar.

"As those become more specific we'll be able to provide scoring and effects on those," said Kerry Weems, acting administrator of the Center for Medicare and Medicaid Services.

Leavitt delivered the legislation in a letter to House Speaker Nancy Pelosi, D-Calif.

Democrats Dismissive

Privately, aides to both parties' leaders had previously declared the bill more or less dead on arrival, but Leavitt disagreed.

"We broadly consulted with members of both the Senate and the House, and we anticipate that [the proposal] will be met, at least by Republicans, with broad acceptance and interest," he said.

Two of the three titles in the legislation—on medical malpractice caps and on means-testing of Part D premiums—come from past Republican proposals. The recycled provisions generated scorn from Democrats.

Edward M. Kennedy, D-Mass, chairman of the Senate Health, Education, Labor and Pensions Committee, said the administration had "trumped up a phony crisis in Medicare to justify proposing deep cuts in quality health care for seniors while giving massive subsidies to HMOs and other insurance companies."

Rep. John D. Dingell, D-Mich., chairman of the House Committee on Energy and Commerce, termed the Medicare trigger "little more than a scare tactic to promote cuts to the most successful program of our time."

Senate Finance Committee Chairman Max Baucus, D-Mont., didn't slam the door on the entire proposal, however. Although Baucus called the malpractice provisions a non-starter and said he would not include Part D means-testing in his own Medicare revisions package this year, he said that "there is room to work together. Value-based purchasing and health information technology are both smart targets for reforms in Medicare right now."

The law requires the majority and minority leaders in both houses—or a designee—to introduce the bills. In the House, they must discharge them from committee by June 30; another provision allows any House member to call a point of order to force a vote on passage.

In the Senate, Judd Gregg, R-N.H., will introduce the legislation. Gregg said he would do so after the Presidents Day recess. "This proposal absolutely must be considered, and as quickly as possible," Gregg said in a statement.

The other principals will have three legislative days to introduce the bill, after Congress returns from recess Feb. 25.

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