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The Champ Act's Tale of the Tape

By John Reichard, CQ HealthBeat Editor

July 30, 2007 – The latest scoring documents from the Congressional Budget Office put the cost of House provisions expanding the State Children's Health Insurance Program at $47.8 billion over five years, and $159.9 billion over 10 years. The other main element of the House measure (HR 3162)—blocking big Medicare payment cuts to doctors—would cost a surprisingly low $20.1 billion over five years to erase payment cuts in 2008 and 2009, and replace them each year with 0.5 percent payment increases. But the 10-year cost of fixing doctor payments in those two years is five times higher—$101 billion.

It was unclear late Monday afternoon, however, how closely the scoring documents reflected the actual provisions that would be voted on by the House. Sponsors of HR 3162 faced a shortfall of tens of billions of dollars in paying for the legislation over a ten-year period, and it was unclear whether they would make deeper cuts or simply try to pay for the bill over a five-year period.

The analyses of versions of HR 3162—which sponsors call the Children's Health and Protection Act (the Champ Act)—considered last week by the House Ways and Means and Energy and Commerce committees include figures for the years 2008–2012 and 2008–2017. Although the Ways and Means Committee approved its version of the bill, Energy and Commerce Committee Republicans blocked a vote by their panel. Democratic leaders will meld the two proposals into a single bill for floor consideration, which is expected this week.

Although previous indications were that the two-year cost of the doctor payment fix would be considerably more than $20 billion, the 10-year cost suggests that steep cuts would be made several years from now to keep lower the near-term cost, a tactic employed by Republicans last year in moving legislation blocking a scheduled 2007 payment cut to doctors. According to one lobbyist, HR 3162 would have "massive cliffs" in payments to doctors in 2010 and 2011, with payment cuts of 14 percent each year moderated somewhat by an inflation adjustment.

But other measures trimming costs in the Part B side of Medicare that covers physician care also may help explain the lower-than-expected cost of the doctor fix, including cuts in payments for diagnostic imaging and certain Part B drugs. The imaging cuts would save taxpayers $400 million over five years and $1.2 billion over 10 years in the Ways and Means proposal, and $100 million over five years and $400 million over 10 years in the Energy and Commerce plan. Payments for Part B drugs would be cut $1.6 billion over five years and $7.4 billion over 10 years in the Ways and Means proposal, and $700 million and $1.9 billion respectively under the Energy and Commerce approach.

In addition to tobacco tax hikes that include a 45-cents-a-pack increase in the federal tax on cigarettes, much of the cost of the legislation would be funded by cuts to Medicare. Payments in the private health plan side of Medicare, known as Medicare Advantage, would decline by $50.4 billion over five years and $157.1 billion over 10 years by making their payments equal to providers in traditional Medicare. Medicare cuts of all kinds would total $194.8 billion over 10 years, a sum that exceeds cuts to Medicare in the 1997 Balanced Budget Act, another lobbyist noted.

But in addition to covering some five million additional uninsured children over five years and fending off steep doctor payment cuts in 2008 and 2009—the 2008 cut alone would total 10 percent—the legislation reduces a variety of costs for seniors. The bill aims to ease their access to mental health care by reducing out-of-pocket co-insurance costs for mental health treatment. The Ways and Means version of the bill allots $3.3 billion over five years and $8.2 billion over 10 years for that purpose, while the Energy and Commerce version allots somewhat less: $2.2 billion and $4.7 billion respectively.

The Ways and Means proposal also would spend $2.2 billion over five years and $4.7 billion over 10 years to waive the deductible for colorectal screening, while the Energy and Commerce proposal would not change the current deductible. Both versions would spend about $15 billion over five years and around $55 billion over 10 years to pay for "beneficiary improvements," including lower out-of-pocket costs for various Medicare-covered services and less strict eligibility criteria for the comprehensive drug benefit for low-income seniors. Benzodiazepines, heavily used in nursing homes to sedate residents, would gain coverage under the Medicare prescription drug benefit under both committees' proposals, at an added cost to taxpayers of $500 million over five years and $1.2 billion over 10 years.

Both committees' versions would drive up Medicare spending by $500 million over five years and $1.1 billion over 10 years to fund "comparative effectiveness research" to analyze the relative costs of various types of treatments for the same medical condition. But that spending eventually could save tens, if not hundreds of billions of dollars, by lowering the overall growth rate in Medicare spending, some analysts believe.

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