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Groups Applying Pressure on Senate Finance Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 28, 2007 -- As the Senate Finance Committee assembles legislation that is expected to reduce Medicare reimbursements to some health care providers to help stop a scheduled 10 percent cut in Medicare physician payments, groups are applying pressure to make sure that their reimbursements remain untouched.

Earlier this month, Finance leaders said the panel would consider a Medicare physician's pay package after the Thanksgiving Day recess, with action possible the first week of December. The cornerstone of the measure will be either a one- or two-year delay in cutting Medicare physician reimbursements, with financing expected from a cut in payments to private Medicare plans run by insurers, called Medicare Advantage. Depending on the size of physician payment package, reimbursements to other Medicare providers may also have to be reduced.

A bipartisan group of senators have asked Finance Chairman Max Baucus, D-Mont., and Charles E. Grassley, R-Iowa, the panel's ranking Republican, to spare Medicare's oxygen benefit from further cuts, noting that in recent years the program has sustained an estimated $1.5 billion payment reduction due to new federal regulations enacted as part of a budget-savings bill (PL 109-171) and the Medicare drug benefit (PL 108-173).

"Additional cuts to the Medicare oxygen benefit could not only increase costs to the Medicare program in the form of increased hospitalizations, but could also present substantial health risks to over half a million Medicare beneficiaries," wrote the senators, who include George V. Voinovich, R-Ohio, and Sen. Tim Johnson, D-S.D.

Sen. Mark Pryor, D-Ark., has asked the Finance leaders as well as Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., to make sure any Senate Medicare package does not cut Medicare funding for skilled nursing facilities. In his letter, Pryor notes that skilled nursing facilities (SNFs) provide rehabilitative, health care, and related services to 3 million Medicare beneficiaries each year. Pryor also notes that since approximately 70 percent of SNF costs are labor related "any reduction in Medicare funding for SNF care will likely have a direct and negative effect on these Americans."

In a statement, American Health Care Association President and CEO Bruce Yarwood said the more lawmakers understand how potential cuts to SNFs would hurt patient care, "the more we believe they will understand how this key funding is integral to both sustaining quality improvements in the nation's nursing homes and improving the quality of life of our oldest citizens."

House legislation (HR 3162) to reauthorize and overhaul the State Children's Health Insurance Program (SCHIP) would have reduced SNF funding by $2.7 billion over the next five years and $6.5 billion over the next decade, and nursing home advocates do not the want the Senate to follow that path.

Separately, AARP CEO Bill Novelli has asked Senate Finance members to protect beneficiaries' access to physicians—but not by increasing Medicare premiums. In his letter, Novelli notes that monthly Medicare Part B premiums for beneficiaries have risen by more than 106 percent from 2001 to 2007, with the Social Security cost-of-living-adjustment rising 21 percent during the same period.

"If Congress enacts a Medicare physician update without offsetting the costs through other legislation, the cost to the beneficiaries will be reflected in the announcement in the fall of 2008 and 2009 and beyond," Novelli wrote. "Older Americans are willing to pay their fair share for Medicare, but we should not ask them to take on an increasing burden for a flawed physician payment system."

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