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Stark Sees Passing Vetoed SCHIP Measure as First Priority

By John Reichard, CQ HealthBeat Editor

November10, 2008 -- First up on the Ways and Means health agenda next year will be "deferred maintenance"—passing measures opposed or neglected by the Bush administration such as the State Children's Health Insurance Program expansion vetoed by the White House"—and "rebasing" physician spending in Medicare to eliminate the need for costly temporary payment patches. So said Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., in an afternoon press briefing laying out the subcommittees' health care agenda for next year.

Though Stark said his panel stands ready to work with the incoming Obama administration on a major health care overhaul, he stuck to discussing other health care issues in the absence of any clear signal yet on how the new White House will want to proceed. Stark said he's heard from the Obama transition team that they expect to follow "regular order" on a health overhaul"—the textbook approach to legislation involving a bill introduction, followed by hearings, subcommittee and committee markups, floor action, and a conference between the two legislative chambers to resolve differences in their respective pieces of legislation. Stark said he thought the process would begin by considering the Obama proposal with an extensive series of hearings to follow.

"SCHIP is arguably the first because of the timing," Stark said, alluding to the March expiration of the current authorization for the program. "If we have a lame duck maybe we could get it through without a veto this time and get it taken care of." But Stark expressed doubt that a lame-duck session would occur this year. He also said that the terms of an SCHIP expansion might have to be changed given the possibility that with the downturn in the economy many more uninsured children would qualify for the program. In other words, sticking to the income eligibility criteria in the vetoed expansion might bring in many more children than anticipated when the bill was approved by the House and Senate, hiking its cost considerably. Stark said the income limits might have to be adjusted as a result.

"The next order of business that I feel we have to deal with is the physician reimbursement," Stark said. He said it will be "as much a budget issue as a technical issue as to how we design" a revised Medicare doctor payment approach. Under the current formula, it would take some $200 to $300 billion over 10 years to erase a yearly schedule of ever deeper cuts in physician payment levels. "We don't have that," Stark said.

The current formula is based on a target of yearly spending for physician care that Medicare regularly exceeds, building a backlog of debt that entails ever deeper cuts in future years to erase. But Stark and his aides said that problem will only grow worse because Congress won't allow cuts to occur, thereby adding to the pile of debt and deepening the cuts that must be made.

Basically, Stark says that rules of budgeteering must be changed to cancel the backlog of debt"—what Stark called canceling the "credit card debt." In return for canceling that debt Stark called for an approach that would set spending targets for six different categories of physician spending and that would be built on a promise that Medicare's physician spending outlays would be budget-neutral in the future. Stark hinted that there might be a provision in a physician spending measure to boost payments to primary care physicians. He said his staff is at work now on drafting legislation to address the physician payment issues.

Stark and his aides also indicated that an ambitious research program to spur adoption of health information technology and to harness that technology to compare the effectiveness of medical treatments would accompany physician payment changes. "Health IT" and "comparative effectiveness" are viewed by many analysts as techniques that eventually could reduce health spending growth.

Other "deferred maintenance issues" listed by Stark include changes to the Medicare Part D prescription drug program, such as low-income subsidies, marketing issues, and oversight of pricing.

Stark said he would then go after Medicare Advantage "overpayments," seeking to bring them down to payments levels in the traditional Medicare fee-for-service program. He indicated that while he would like to lower the overpayments to pay for an expanded and reauthorized SCHIP program, that tobacco taxes might be used instead.

On health IT, he said Ways and Means is working with the House Energy and Commerce Committee to hammer out a compromise package. He said he favored a program of boosting payments to providers using health IT and then penalizing them after several years if they had not adopted the technology. He suggested that a "date certain" is necessary for health IT because any health care overhaul would depend on having automated medical records.

Stark said he sees improved prospects for a health overhaul compared to the early 1990s because of broader support from the business community, including the U.S. Chamber of Commerce. Backing of the American Medical Association also improves overhaul prospects, he said.

As Obama's aides huddle over what their leading priorities will be, key lawmakers are beginning to weigh in on health care to state their preferences. Stark made a pitch for his own "Americare Health Care Act" (HR 1841), which would allow people with employer-based coverage to stick with their current plans while subsidizing the purchase of coverage for uninsured Americans with modest incomes. Employers would be required to fund premiums or pay a fee, and individuals would have to document at tax time that they had coverage. Senate Finance Committee Chairman Max Baucus, D-Mont., plans to unveil his principles for an health overhaul at a briefing on Wednesday.

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