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House Dems Expect Fight 'Every Step of The Way' on Medicare/SCHIP Package

By Mary Agnes Carey and John Reichard

June 29, 2007 -- When Congress returns from the July 4 recess, House Democratic leaders of the Ways and Means and Energy and Commerce committees are promising to renew and expand the State Children's Health Insurance Program (SCHIP), prevent a scheduled 10 percent cut in Medicare physician payments, and improve Medicare reimbursements for rural physicians, hospitals and other providers.

The comprehensive package "we hope will be the signature Democratic health achievement of the 110th Congress," the committee chairmen said in a nine-page memo distributed to Democratic members. "It is vital that we present a united front on this legislation. The Administration will battle us every step of the way, and we cannot count on any votes from the other side of the aisle."

Charles B. Rangel of New York, chairman of the Ways and Means Committee, and John D. Dingell of Michigan, chairman of the Energy and Commerce Committee, along with Rangel's Health Subcommittee Chairman Pete Stark of California and Frank Pallone Jr. of New Jersey, who is Health subcommittee chairman for Dingell's panel, asked Democrats to work with them to find payment offsets. "We are committed to working within our means," they wrote. "That means tough choices will be necessary."

Health care sources say Democrats aim to spend $50 billion over five years for SCHIP and some $30 billion for the two-year doctor payment fix. Adding in the cost of the rural health care provisions, the provisions for low-income Medicare beneficiaries, and several other provisions would bring the price tag for the entire package to around $100 billion. To help cover that cost, Democrats may pursue a tobacco tax increase to raise $35 billion. Assuming they could raise another $35 billion with cuts to Medicare Advantage plans, Democrats would still face the need to cut payments to other providers, including hospitals, and perhaps to trim spending for erythropoietin, a drug used to treat anemia in dialysis patients.

Democrats are eyeing an ambitious timetable for markups next month in the Senate Finance Committee and the House Committees on Ways and Means and Energy and Commerce, as well as floor action in both chambers.

Concerning Medicare physician payments, the House Democrats said their legislation would "implement an interim (payment) policy the next two to three years to prevent the impending cuts and assure stability in reimbursements." The measure would also lay out steps for a long-term change to the Medicare physician payment system "to better promote quality of care while also maximizing efficiency," the memo states. "We are working with the physician community to develop this policy and expect to have their enthusiastic support."

For Medicare providers in rural areas, the measure would extend rural payment provisions in the Medicare drug law (PL 108-173) that have expired, or soon will. They include provisions to equalize payments between rural and urban physicians and provide bonuses to encourage and reward doctors who practice in areas where there are shortages of physicians. Additional elements of the package would help rural home health agencies and ambulance services and help certain rural hospitals cover their lab costs.

The package also would seek to equalize payments between Medicare Advantage (MA) plans and Medicare's fee-for-service program.

"Rural beneficiaries and providers face real problems with Medicare Advantage plans," often being paid at rates far lower than traditional Medicare, the memo states. "Rural providers fear that the lower reimbursement from MA private plans will undermine the rural health safety net." The legislation would also enhance and simplify eligibility and enrollment for two Medicare programs that provide financial assistance with cost-sharing for regular Medicare services and for the Medicare drug benefit.

Increasing the amount of assets that beneficiaries are allowed to have as well as streamlining the asset test process that beneficiaries must complete to qualify for the low-income drug benefit are key changes, the memo states.

On SCHIP, the Democrats said they have three goals: protect coverage for six million children now covered by the program, which expires Sept. 30; give states the tools and incentives to find and enroll children who are eligible but not yet enrolled in SCHIP or Medicaid; and ensure that states have "the resources and flexibility to cover additional groups of vulnerable children," such as those who are too old for SCHIP coverage and Medicaid but are still in school or no longer quality for coverage under their parents' insurance. These individuals would be allowed to keep their coverage until they are no longer income-eligible because of finding a job. Children of legal immigrants and pregnant women also would be covered, and SCHIP application and enrollment processes would be streamlined to ease enrollment.

"With strong public support, we will present a bill the Administration and vulnerable Republicans cannot afford to block," the Democrats wrote. "To paraphrase from our past, failure is not an option."

If Democrats can pull it off, the strategy would enlist the powerful American Medical Association as an ally, as well as bring in Blue Dog Democrats representing rural areas. But Democrats would have little margin for error given the likelihood that their legislative package would attract little or no Republican support. And they could face powerful opposition from the hospital industry and from well-heeled companies such Amgen, the maker of erythropoietin.

In addition, Democrats in the Pacific Northwest may be cool to cuts to Medicare Advantage plans, given the large size of those plans in that part of the country and their relatively low reimbursement rates. Similarly, Democrats representing tobacco states could be opposed to a tax increase. And Democrats could face pressure from groups representing African Americans, who are disproportionately represented in the dialysis population and may resist cuts in payments for erythropoietin. The National Association for the Advancement of Colored People has already expressed opposition to cuts to Medicare Advantage plans, which pitch themselves as offering lower-income Americans access to lower-cost benefits.

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