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Committee Chairmen See Sunshine in Their Crystal Balls, for Now

By John Reichard, CQ HealthBeat Editor

February 13, 2008 -- Many lobbyists and analysts see Congress moving only a slim Medicare package this year that does little more than protect doctors against payment cuts with offsetting reductions elsewhere in Medicare to pay for that protection. Maybe Senate Finance Committee Chairman Max Baucus and House Ways and Means Health Subcommittee Chairman Pete Stark think so too, but they weren't talking that way on Thursday.

Among the goals they outlined for the year: adding mental health parity provisions to Medicare, expanding preventive benefits, launching more comparative effectiveness research, and widening access to the comprehensive prescription drug benefits available to the lowest-income Medicare beneficiaries.

In a speech to the senior lobby AARP, Baucus said that, "with your help," he intends to move a Medicare package this spring to increase access to preventive benefits and primary care, improve quality, and "extend crucial rural health provisions." The package will also include provisions to improve quality of care and to make the prescription drug benefit offered to seniors under Part D of the Medicare program "work better," the Montana Democrat said. He also reiterated his intention to cut payments to private health plans in Medicare to help pay for the physician patch.

"In connection with this Medicare bill, let me address a couple of items that I know are of particular concern to you: rising Part B premiums and the president's proposal to implement means-testing of Part D premiums," Baucus said. Typically deducted from Social Security checks to pay for doctor care and other forms of care given outside the hospital, Part B premiums are rising "higher and higher," he said. To help more seniors pay for those premiums, as well as qualify for low-income subsidies that eliminate or lower premium costs in Part D, he said he wants to ease the asset tests for those programs.

Baucus said "the law imposes egregiously low limits on the assets that seniors can own and still qualify for the Part D low-income subsidy and for the 'Medicare Savings Programs,'" which lower part B premiums for seniors of modest means. "We must raise the asset levels allowed for all of these programs," Baucus said. "And we must index them to keep pace with health care inflation. Seniors should not have to go into poverty to benefit from these Medicare programs.

"Where justified by sound policy, we must find savings within the Medicare outpatient benefit and Medicare Advantage to offset the cost of blocking the scheduled cut in physician payments," Baucus added. Medicare Advantage is the private health plan side of Medicare.

Baucus also suggested that he would be pursuing other cuts. The Medicare Payment Advisory Commission (MedPAC) has recommended spending reductions compared to current law for skilled nursing and home health providers, and Baucus said he would be looking to the commission for guidance. "We also must acknowledge that sometimes Medicare payments do not reflect true costs," he said. "With the help of MedPAC and other experts, we must identify areas of overspending. We must see that our Medicare dollars are being used wisely."

Baucus didn't close the door on a proposal by the Bush administration to make higher-income Americans pay higher premiums for their drug coverage, but said the trade-off would have to be an improvement in drug coverage.

"The president's budget includes a proposal to means-test premiums for the Medicare Part D drug benefit," he noted. "The president's proposal would raise more than $3 billion over five years. Most Republicans support this proposal, including many on the Finance Committee. Some Democrats support the idea too."

"The rationale is that higher-income beneficiaries should pay higher premiums for Medicare prescription drug benefits, just as they do now for Medicare Part B services. In a tough pay-go environment, it's hard not to look at proposals like this to help to pay for other spending priorities. But means-testing would be a significant change to Part D. We should not make changes like this unless we are taking a broader look at the drug benefit," Baucus said.

"We also need to think carefully about whether it makes sense to expand means-testing for Medicare benefits," he said. "People with higher incomes already contribute more to Medicare because the payroll tax is a percentage of income. The Medicare payroll tax does not have a cap like the Social Security payroll tax. Means-testing the premiums reaches into the same pockets again. In my view, we should contemplate means-testing only in the context of broader improvements to the Medicare drug benefit."

Baucus also outlined his plans to advance an overhaul of the health care system generally.

"I am optimistic. I see consensus forming on the horizon," he said.

Baucus outlined five principles for thoroughgoing change, including: universal coverage; "sharing the burden" by establishing purchasing pools bringing together individuals and small businesses to make coverage more affordable; controlling costs through higher quality care and more research comparing the effectiveness of various types of treatments; greater emphasis on preventive care; and "shared responsibility" for funding such a system by having business, individuals, government and other "stakeholders" pay to fund it.

Baucus said specifically he will introduce a bill to "create a new entity responsible for the essential work of generating better information on the effectiveness of health care treatments. We will invest more money in this research."

Meanwhile, at a brief hearing on Thursday on the Medicare budget, Stark, D-Calif., emphasized potential areas of common ground with Republicans after attacking the White House Wednesday for proposing $183 billion in cuts to Medicare.

Acting Centers for Medicare and Medicaid Services Administrator Kerry Weems said the administration was in agreement with Stark that Medicare could move to bundled payments for kidney dialysis services without first conducting a demonstration program. Eliminating the step of first doing a demo might speed the adoption of payments combining those for drugs with other types of care given to dialysis patients.

Stark suggested after the hearing that the change in dialysis payment might be something that could be accomplished through administrative action by CMS rather than requiring legislation. But he also suggested there might be areas of common ground on legislation. "If we can find some stuff we may be able to do a suspension or two," he said. Areas of potential agreement include mental health parity, both in insurance plans generally and in Medicare, and comparative-effectiveness research, he added. Such action would have to occur in the spring with election campaigns coming up, according to Stark.

Stark said he thinks too that Baucus and Sen. Charles E. Grassley, R-Iowa, agree with him on the need to curb specialty hospitals, which Stark estimated could save $2 billion to $3 billion to pay for other Medicare provisions. "That's a nice little piece for something else we want." But Stark also noted that a member of the Senate could put a hold on such a provision, effectively stalling it.

Asked about the prospects for Medicare Advantage cuts this year, Stark said if will be "a harder year because the lobbyists have had a year now ... to beat up on my members on not cutting Medicare Advantage." Companies have also done more to build up a constituency for Medicare Advantage by enrolling more seniors in the program, Stark added. He stopped short of saying Medicare Advantage cuts are wishful thinking this year but said "it gets more difficult."

"The stuff that's tough are the docs." What has to get done is a new system" replacing the current system that requires a series of temporary payment fixes to block sharp cuts. "It has to be done principally by the physicians. There are going to be big fights between the radiologists and the primary care guys, I mean I'm not going to resolve that."

A new system won't be legislated this year, but it can be done, Stark said. "We could put together some people who could sit down with MedPAC. It's a complex problem. I don't think we can have a reimbursement system without some adjustment for volume."

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