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House Leaders Assure Blue Dogs on Medicare Payment Fix

By David Clarke, CQ Staff

October 15, 2009 –House leaders assured a group of fiscally conservative Democrats that final legislation to prevent cuts in Medicare payments to physicians would not be brought to the floor unless it is paid for or the deficit-fighting "pay-as-you-go" rule becomes law first.

Leaders of the 52-member Blue Dog Coalition, whose primary concern is combating deficit spending, received the assurance from Speaker Nancy Pelosi, D-Calif., and Majority Leader Steny H. Hoyer, D-Md., at a Thursday morning meeting, said Rep. Jim Matheson, D-Utah.

"I think it's really important we stick to our guns," Matheson said.

If House leaders do hold firm on the vow, first made in April, it would set off a potentially tense showdown with Senate Democrats, who plan to bring legislation (S 1776) to the floor next week to change the formula that determines how much Medicare reimburses physicians, without offsetting the cost.

Senate Majority Leader Harry Reid, D-Nev., filed a cloture motion on the bill Thursday. The cloture vote is scheduled for 5:30 p.m. Monday.

Under the current budget formula, known as the "sustainable growth rate," Medicare payments to doctors are scheduled to be cut each year. But under pressure from physician groups, Congress never allows this to happen.

Congressional leaders and the Obama administration want to permanently change the formula and end the annual practice of preventing the cuts. That will be expensive.

The House health care overhaul bill (HR 3200) contains such a fix, and it is estimated to cost about $245 billion over 10 years. Senate Democrats want to remove this policy change from the health care overhaul legislation. Republicans argue that Democrats are only trying to make the overhaul bill look less expensive.

The administration, meanwhile, says the cost of the Medicare payment legislation should not be offset because it is an extension of a policy Congress implements each year, not a new policy.

To tamp down resistance from the Blue Dogs, House leaders had to promise that they would not put a payment change conference agreement on the floor unless it is fully offset, a statutory pay-as-you-go bill has already been signed into law or the conference agreement contains language that would put pay-as-you-go into law. The promise also covers legislation dealing with extending middle class tax cuts that expire at the end of 2010 and the long-term cost of changing the estate and alternative minimum taxes.

The House and Senate pay-as-you-go rules require the cost of new tax cuts or mandatory spending to be offset by revenue increases or spending cuts elsewhere. But those rules have been waived several times, and Blue Dogs argue that putting them into law would strengthen the requirement.

The House passed a pay-as-you-go bill (HR 2920) in July, but Senate leaders have yet to show enthusiasm for the measure.

The Senate leaders' decision has also irked Senate Budget Committee Chairman Kent Conrad, D-N.D., who as argued that, at most, a two-year physician payment bill should be enacted.

Conrad has been trying to build the case for establishing a task force or special process so that Congress could come up with policy proposals next year for overhauling the tax code and addressing the long-term fiscal problems facing the government.

Several tax policies are set to expire at the end of 2010, and Conrad said that having the doctor payment issue addressed only that long would build momentum for Congress to address broader fiscal issues next year. Under this scenario, Conrad argues the payment change could be fully offset.

The Senate leaders' decision is a blow to his plan.

Conrad said he would vote against the physician payment bill next week and didn't hold out hope he could convince Senate leaders to change their strategy.

"I'm trying to work out something else, but right now it's on a course to come to the floor," he said.

Conrad has also opposed moving the statutory pay-as-you-go bill now, arguing it would exempt too many expensive policies and should instead be part of a broader budget agreement next year. His stance has annoyed House Democrats, who argue that the Senate is the body that waives the rules most often and that House Democrats and the administration want to at least set a benchmark for what policies don't have to be offset.

Hoyer has said he would gladly push the House to offset the policies that would be exempted under the pay-as-you-go bill if Conrad could get the Senate to do the same.

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