Medicare Compliance & Reimbursement

With the White House's 2003 Medicare prescription-drug proposal now in the mix, members of Congress are looking for ways to revise legislation they've developed over the last few years to incorporate more administration priorities.

Five hearings by four House, Senate, and joint committees over the past week and a half afforded a glimpse of how the effort is going. Progress appears slow, with most panels hearing from witnesses with a wide range of views and some members, including Republicans, casting about for new ideas, such as funding seniors' drug-buying solely with tax credits.

The most focused hearing was held April 3 by the Senate Finance Committee. Witnesses told the panel how several large private and public purchasers manage competition among health plans and what their experiences imply for Medicare. Some Finance members on both sides of the aisle last year championed drug bills that featured health plans, drug-only insurers, or pharmacy benefit managers competing for beneficiaries or at least for federal contracts. Chair Chuck Grassley (R-IA) clearly hopes to gain White House approval for any bill he puts forward in 2003 by emphasizing competition in some form.

In general, Finance Democrats were negative about the prospect of competing health plans. Many rural Democrats are skeptical that private plans would show up in their areas. Several witnesses assured members that plans will serve rural areas, but some also said that plan offerings such as chronic-care management must be changed to accommodate rural conditions.

In the past, Grassley too has been skeptical about insurers' willingness to offer products to Iowa beneficiaries. But he vowed April 3 to "not find reasons why it won't work but find ways that it will."

Finance panel member Sen. John Breaux (D-LA), a leading centrist whose vote will be crucial if Republicans hope to boast of any Democratic support for a competition-based Medicare overhaul, expressed support for a Medicare revision relying heavily on private health plans.

At an April 9 hearing of the House Ways and Means Committee, Republican leaders signaled that they may add provisions on disease management and other means of care integration to bring their prescription-drug package more in line with the administration's proposal, though Ways and Means seems unlikely to change the basic structure of its leading drug plan.

The panel's bill - already passed twice by the House in 2000 and 2002 - relies on private insurers to provide drug-only coverage; in the president's plan, private insurers would offer not just drugs but comprehensive health-care coverage, which many argue is the optimal mechanism for improving care and holding down costs.

"Analysis by the Centers for Medicare & Medicaid Services actuary ... shows that Medicare spending last year spiked" across a wide range of services, said Chair Bill Thomas (R-CA) in a statement. "Integrating a prescription drug benefit to Medicare will clearly improve seniors' health and is long overdue.

"Hopefully it can also help reduce Medicare's costs over time because we can substitute drugs as a more effective and less expensive alternative to other treatment options. Integrating prescription drugs around disease management is important for seniors when they take multiple prescription drugs, which is happening more and more," Thomas said.

In an April 9 letter to the Congressional Budget Office, Ways and Means health subpanel Chair Nancy Johnson (R-CT) asked CBO to take into account potential future savings from care-integration initiatives when it projects the cost of Medicare legislation.

"The attached peer-reviewed studies demonstrate that chronic illness management can help to reduce overall healthcare costs and improve individuals' quality of life," Johnson wrote. "I believe CBO should take into account the cost savings chronic-care management can deliver when considering legislative proposals to address multiple chronic conditions."

Meanwhile, other proposals continue to bubble up around Capitol Hill. On April 2, for example, a group of centrist House Democrats led by Rep. Cal Dooley (D-CA) proposed enacting a premium-free catastrophic drug benefit for all seniors, with the $4,000 catastrophic deductible waived for lower-income people. The plan is similar to a proposal made last year by the Progressive Policy Institute.