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SCHIP, Medicare Advantage Payments Among Pallone's Priorities

By Mary Agnes Carey, CQ HealthBeat Associate Editor

March 13, 2007 -- Expansion of the State Children's Health Insurance Program (SCHIP)—including coverage of more parents of SCHIP-eligible children—is one of the top legislative priorities this year for House Energy and Commerce Health Subcommittee Chairman Frank Pallone.

During a breakfast interview with health care reporters, Pallone, D-N.J., said his panel is hoping to markup SCHIP reauthorization legislation after the April recess, with cuts in federal payments to Medicare Advantage plans a likely target to finance an SCHIP expansion and other legislative priorities.

Insurers face concerted efforts by congressional Democrats this year to cut Medicare Advantage payment rates and have mounted a campaign to oppose any reductions, saying their plans provide more benefits and save beneficiaries money.

Pallone rejected arguments from the industry that beneficiaries would be forced to pay higher premiums and receive fewer services if Medicare Advantage payments were reduced. "They're going to make that argument but I don't think it's a legitimate reason," Pallone said. He and other Democrats have pointed to findings from the Medicare Advisory Payment Commission (MedPAC) that Medicare Advantage plans are paid 112 percent of fee-for-service rates, a finding insurers dispute.

"I think the MedPAC report clearly showed there was no reason for it," Pallone said the higher payment rate. "It's not justified. It's something we have to look at."

Other priorities for Pallone's panel include the impending 10 percent in Medicare payments to physicians. While Pallone said he preferred to address the issue over a two-year period, a one-year fix may be the end result. "It may come to that again," he said.

Pallone also said he expected mental health parity legislation to come before his panel but the committee has not yet set a date for action.

Legislation to reauthorize the Prescription Drug User Fee Act (PDUFA) will be before the subcommittee within the next few weeks, Pallone said, adding that a key focus of the debate will be to determine how to best target resources so the Food and Drug Administration can improve post-market surveillance of drugs and perform greater oversight of direct-to-consumer advertising. Another related bill would give the FDA the authority to approve generic biologics, which Pallone called "a big issue."

Increasing the use of health care information technology among hospitals, physicians and other health care providers is another priority, but Pallone said he was wary of proposals that would allow hospitals to share technology with doctors to achieve that goal.

"I don't want collusion, corruption and fraud," he said, echoing concerns from some analysts that such arrangements would cause doctors to steer patients to specific hospitals.

Increasing federal funding for health IT is critical, Pallone said. "There's got to be some new source of funding," he said. "You just can't take it from another provider." But he said private investment was needed as well.

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