Medicare Compliance & Reimbursement

Senate leaders want to put their stamp on Medicare and Medicaid spending.

In his chairman’s draft of the fiscal year 2004 budget resolution, which passed the Senate Budget Committee virtually unchanged on a party-line vote March 13, Chair Don Nickles (R-OK) essentially earmarks several significant pots of money in reserve funds. The funds would be released to a given authorizing committee to develop or revise a federal program only if Nickles agrees that the program meets goals he outlines.

Several funds involve health-care initiatives. Notably, Nickles goes along with a bipartisan proposal introduced in the Senate last year to allow states that haven’t spent their 1998, 1999, and/or 2000 allotments under the State Children’s Health Insurance Program to keep the money.

Nickles also would reserve $7.5 billion over ten years — including $43 million in FY 2004 — to fund legislation that the Senate, but not the House, passed last year to expand Medicaid coverage for severely disabled children. The bill, a favorite with Senate Finance Committee Chair Chuck Grassley (R-IA), who is a principal cosponsor along with Sen. Edward Kennedy (D-MA), would give states the option to “expand Medicaid coverage for children with special needs” by allowing families at higher income levels to buy into Medicaid for their children who need the program’s comprehensive set of disability-targeted benefits.

Also in Medicaid, Nickles reserves funding for the president’s plan to increase state control over the program in return for states accepting “their Medicaid and SCHIP money in an allotment that would be indexed at predetermined rates.”

That’s Nickles’ way of describing the president’s Medicaid plan, in which states would get a fixed ten-year allotment that would be advanced in larger amounts in the early years and smaller amounts in the last three years of the decade. The plan is for early, more generous funding to be used to develop better systems that can deliver caremore cheaply down the road.

On Medicare, Nickles follows the president’s budget proposal, offering Finance $400 billion over ten years to create legislation that “strengthens and enhances” the program and “improves the access of beneficiaries under that program to prescription drugs.”

Initially, the House budget proposal also contained a reserve fund for Medicare prescription drugs, but House budgeters — reportedly under pressure from other members — later reworded their bill.

Rather than specifically setting aside $400 billion for prescription drugs, they netted out the $400 billion in additional Medicare spending proposed by the president for pharmaceuticals and around $215 billion in Medicare spending cuts that Chair Jim Nussle (R-IA) proposes as a means of balancing the federal budget within the tenyear budget window.

The new wording presumably would give legislators a slightly freer hand in developing Medicare legislation. Rather than being forced to make the very substantial program cuts originally called for before $400 million could be freed up for modernization and a drug benefit, they could develop a single measure including, for example, only an extremely modest drug benefit combined with less draconian cuts or even no cuts at all.

In Nussle’s plan, except for Social Security, not only Medicare but all federal mandatoryspending programs would face restraints on spending growth. That could include, for example, $15 billion in projected ten-year spending cut from veterans’ programs, a $12 billion cut in food stamps, $39 billion from federal employee benefit programs, and $93 billion from Medicaid, analysts say.

Nickles’ resolution also would set aside $5.7 billion over ten years for the president’s Project Bioshield. The money would “facilitate procurement for inclusion ... in the Strategic National Stockpile of countermeasures necessary to protect the public health from current and emerging threats of chemical, biological, radiological, or nuclear agents,” says the resolution.

A final health-related reserve fund in the Senate resolution would set aside up to $50 million to help uninsured people gain coverage.