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Norwalk Weighs in on SCHIP, Potential Medicare Advantage Cuts

By Mary Agnes Carey, CQ HealthBeat Associate Editor

August 9, 2007 – The reauthorization of the State Children's Health Insurance Program (SCHIP) may be less than the five years envisioned by House and Senate legislation, and the reduction in Medicare payments to managed care plans lower than those proposed in the House package, former acting Centers for Medicare and Medicaid Services (CMS) administrator Leslie V. Norwalk said this week.

In a speech Monday in New York City to Citigroup investors and in an interview Thursday, Norwalk said there were many scenarios that could unfold on SCHIP. President Bush has threatened to veto both the House (HR 3162) and Senate (S1893) bills, which he views as too expensive. Norwalk said Thursday she finds it hard to believe that Democrats and Bush will be able to reach agreement on a five-year extension of the program, and that a shorter extension—perhaps of two years—would cost less money and might be more acceptable to the president.

"Whether it's two years or one year or five years, a lot of that will just depend on amounts. I don't know how they're going to get to five years ... Something shorter, that is less money—the president will have a harder time vetoing it," Norwalk said. "It wouldn't surprise me if they did something less than full authorization for five years."

On Medicare Advantage, Norwalk said payment reductions may be more modest and targeted than the 9 percent to 10 percent cuts included in the House package. "It depends on how they do it. In talking about it when I was there, I suggested that they look at the scalpel approach relative to the axe approach ... They need to be a little more educated in what they do." The larger the cuts, the more likely the White House is to reject them, Norwalk said. The Medicare Advantage cuts in the House bill would raise $157 billion over 10 years.

Norwalk also told the Citigroup audience that CMS is unlikely to further limit coverage of Epogen for dialysis patients, although a Sept. 11 Food and Drug Administration advisory committee meeting may influence CMS policy if the panel calls for a more restrictive label. More CMS data on the issue also will influence how the agency pays for dialysis services and Epogen, Norwalk said. Congress also may give CMS the authority to create a bundled payment system that would pay a single rate for both services and products used for dialysis patients.

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