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Senate Finance Panel Struggles to Find Offsets for Medicare Package

By John Reichard, CQ HealthBeat Editor

October 17, 2007 -- Senate Finance Committee members met Wednesday to discuss a Medicare package that could include payment cuts to Medicare Advantage plans and prevent a scheduled 10 percent payment cut to Medicare physicians, among other provisions.

The package under consideration could include cuts as large as $30 billion to pay for the physician payment fix and other provisions, but at least one senator said it's unclear whether offsets can be found to finance a package that large. Also up in the air is whether the physician payment fix would be one or two years because of the offset issue.

Senators emerging from the meeting on Medicare, tax, and trade issues emphasized that the discussion was general but said Committee Chairman Max Baucus, D-Mont., would like to mark up the Medicare provisions this month.

However, the committee appears to have a ways to go before any markup can occur.

"They'd like to do that, but I think maybe they're dreaming," said Sen. Trent Lott, R-Miss. There were "no final decisions, we're just exchanging ideas at this point."

Although Medicare Advantage cuts are on the table, there appears to be considerable resistance on the committee to cutting deeply. Oregon Republican Gordon H. Smith characterized the discussion of Medicare Advantage cuts as "stalled."

"There may be some trimming but the general proposition is Medicare Advantage has taken hold, and it is the basis by which rural people get Medicare," Smith said.

Washington Democratic Maria Cantwell said the panel is considering cuts to private fee-for-service plans in Medicare Advantage. "I think people are trying to see if that's where we want to go," she said, and added "the [private] fee-for-service area is a good place to look at."

However, Utah Republican Orrin G. Hatch said that he doesn't think the panel has to cut those plans, but added that he does expect some Medicare Advantage cuts.

Lobbyists estimate the cost of blocking projected payment cuts to doctors for two years at about $20 billion, and believe that Baucus is looking at various other Medicare provisions, such as adding payments for rural hospitals and rural home health agencies, extending exemption provisions to existing caps on payments for rehabilitation therapy, and possibly provisions to make it easier to qualify for subsidies to low-income Americans for Medicare prescription drug coverage.

But Smith said it may be difficult to find the offsets to pay for those provisions, including a two-year doctor payment fix. Michigan Democrat Debbie Stabenow agreed: "It's one or two [years,], depending on how much we can raise to offset."

However, without sizeable cuts to Medicare Advantage, it's unclear where the money would come from for a two-year physician payment fix. Asked whether there was discussion of cuts to other providers, such as home health agencies and skilled nursing facilities, Smith said "the only thing I've heard mentioned is oxygen," referring to payments for oxygen equipment for those with respiratory difficulties.

Baucus also may have another "pay-for" challenge—paying for a resolution he plans to introduce that would overturn a July 30 "National Coverage Determination" by the Centers for Medicare and Medicaid Services limiting payments for higher dosage levels of erythropoiesis-stimulating agents (ESAs) used to treat anemia in cancer chemotherapy patients.

Lobbyists say the five-year cost of overturning that decision would be about $2 billion, according to an unpublished Congressional Budget Office estimate. Consumer groups have urged Congress to resist pressure by oncologists, hematologists, and the manufacturers of ESAs to overturn the July 30 decision, and the Food and Drug Administration has issued a letter saying the order is generally consistent with the scientific literature.

But a Baucus aide said the Montana Democrat sees the dosage issue as one that can be safely handled by physicians. "Doctors need to be able to treat their patients," the Baucus aide said.

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