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Senate GOP Wants Health Care Provisions Dropped from Supplemental

By Drew Armstrong, CQ Staff

May 9, 2008 -- Senate Republicans are pushing to remove Medicare and Medicaid provisions from a supplemental war spending bill, but so far they have been rebuffed by Democrats.

Charles E. Grassley of Iowa, ranking Republican on the Senate Finance Committee, sent a letter to Senate appropriators on Thursday asking for removal of two provisions in the Senate bill. One would block seven Bush administration Medicaid regulations that would shift some costs to the states, and the second would ban new physician-owned "specialty hospitals" from getting payments through Medicare.

Finance Chairman Max Baucus, D-Mont., who normally cooperates with Grassley, disagrees with his ranking Republican this time, noting Republicans have blocked efforts to address the Medicaid rules in separate legislation (HR 5613).

"Senator Baucus has said that in light of the fact that efforts to move legislation stopping these bad Medicaid [regulations] from being implemented have been blocked, the supplemental funding bill is a viable vehicle for moving them forward," said Baucus spokeswoman Carol Guthrie.

A spokesman for Appropriations Chair Committee Chairman Robert C. Byrd, D-W.Va., said the language has the support of Democratic leaders.

"The Medicare/Medicaid provision is expected to be in the House supplemental and was included in the Senate mark at the request of the Democratic leadership in the Senate with the support of the chair of the Senate Finance Committee," said Jesse Jacobs, Byrd's spokesman.

Grassley sent Baucus a copy of his letter to Byrd and the panel's ranking Republican, Thad Cochran of Mississippi. As of midday Friday, he had received no reply from Byrd, his office said.

"It is legislation on Medicare and Medicaid, and that is a basic part of the jurisdiction of the Finance Committee," Grassley wrote.

Cochran is backing Grassley's position. "Senator Cochran was certainly not consulted about this issue. We hope the chairman will carefully consider Sen. Grassley's concerns," said Cochran spokeswoman Margaret McPhillips.

"There are several pieces of the House and Senate drafts that don't belong on a supplemental appropriations bill, particularly if there is to be no opportunity for amendments on the House or Senate floor, and no conference committee," she said.

Grassley has previously supported the crackdown on specialty hospitals and said in his letter that he still does.

The spending bill would prohibit Medicare participation by new specialty hospitals, typically physician-owned facilities that specialize in one line of care, such as surgery, cardiac care, or orthopedics. These hospitals often focus on the most profitable specialties and have been accused of siphoning off paying patients from general hospitals.

There are an estimated 100 to 200 of the hospitals in operation. Those would be grandfathered in, but they would have to disclose their ownership interests to patients.

The provision would create $2.4 billion in savings over 10 years, according to a Senate GOP aide, mostly by slowing the growth in Medicare payments.

"While I am in support of the policy changes proposed by these provisions, they should only be considered by the Finance Committee," Grassley said in his letter.

Grassley has opposed the effort to stop implementation of the Medicaid regulations, working with other Senate Republicans to block or slow efforts to act on the Medicaid bill passed by the House last month by 349–62.

That measure, sponsored by House Energy and Commerce Chairman John D. Dingell, D-Mich., would postpone the regulations until April 2009, when a new president will be in office. The bid to include the provision in the supplemental represents an attempt by Democrats to work around the filibuster threat in the Senate.

The administration regulations are part of a long struggle between states and the federal government over who should pay more for Medicaid, the health care entitlement for the poor. The regulations would eliminate or curtail federal reimbursement for a number of services the administration thinks Medicaid shouldn't pay for, and they would change accounting procedures that the administration alleges states have used to draw more federal Medicaid dollars than they would otherwise be due.

Liriel Higa contributed to this report.

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