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Medicare Cloture Narrowly Fails

By Drew Armstrong, CQ Staff

June 26, 2008 -- It now looks certain that doctors will take a deep cut to their Medicare payment rates next week, after the Senate failed to move forward on a take-it-or-leave-it Medicare bill offered up by Democrats.

A cloture vote that would have led to passage of the bill (HR 6331) failed, 58–40, falling short of the 60 votes required. Not voting were Sens. John McCain, R-Ariz., and Edward M. Kennedy, D-Mass.

Feelings were raw following the vote, and predictions dire.

"The doctors are going to survive with a 10 percent pay cut, but they're going to drop out of the system," said Majority Leader Harry Reid, D-Nev.

But it's likely the issue will be revisited shortly after the July Fourth recess. The vote had been 59–39, but Reid changed his vote from "aye" to be on the winning side so that, under procedural rules, the bill could be brought back up later.

"We'll be back, and you'll have another opportunity to vote for this," Reid said.

The bill would have stopped a 10.6 percent cut to Medicare's physician payment rates, scheduled to take effect July 1.

After the bill's failure, Senate Minority Leader Mitch McConnell, R Ky., offered a motion to extend Medicare's current physician payment rates for 30 days. Reid objected.

With the House going into recess for the Fourth of July, Senate Finance Chairman Max Baucus, D-Mont., who had shepherded the Medicare effort there, made clear that the bill was the only shot the Senate would get. With the House gone, there is no way lawmakers can stop the cuts.

"There is no alternative," Baucus said. "This is the only train in the station."

Republicans were upset at having only one option to vote on the legislation—in the form of a bill passed by the House—instead of getting a chance to support a tentative compromise between Baucus and Sen. Charles E. Grassley, R-Iowa, worked out earlier in the week.

"This is a terrible way for Congress to do business," said Sen. John Cornyn, R-Texas. He called the bill "a partisan proposal here that we're being asked to take or leave."

Grassley, often a close partner with Baucus on Medicare legislation, agreed and urged Republicans to vote against the bill.

"For years, the Finance Committee has been the model for how a committee can work on a bipartisan ... basis," Grassley said. "For some reason this year, that doesn't seem to be the case," he continued, but he made a point of not blaming Baucus.

McConnell said that Grassley would lead negotiations to produce a new Senate bill that more Republicans would support.

With the cuts to physician rates now scheduled to go through, Congress will have the option of returning after the recess and passing a retroactive bill that will restore payment rates and make up for the cuts. That will likely create an administrative headache, however, and had long been seen as an undesirable outcome.

The White House reiterated its veto threat against the bill on Thursday, likely making moot the narrow victory that seemed possible for Democrats. The administration opposes a provision that would partially offset the cost of the bill by cutting some bonus payments to private Medicare Advantage plans in areas with teaching hospitals. It also disagreed with a provision to limit a subset of the plans known as "private fee for service," saying the bill would "reduce access, benefits, and choices for many of the approximately 2.25 million beneficiaries who have chosen to enroll in" those plans.

The administration's demands have put Grassley in an uncomfortable position. "The White House has drawn lines in the sand that I think are unreasonable," Grassley said.

The Medicare Advantage plans are paid at a higher rate than traditional Medicare, and Democrats have long argued that the private plans' rates should be cut.

The Bush administration and many Republicans argue that the plans inject private competition into the market and will eventually lower costs.

The House passed the measure two days ago, 355–59, in a vote comfortably more than the two-thirds majority that would be needed to override a presidential veto.

The Senate on June 12 fell six votes short of the 60 votes needed to limit debate on a similar measure (S 3101). But Democrats were emboldened by the huge, bipartisan House vote on the new version and thus thought victory Thursday night might be within their grasp.

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