Medicare Compliance & Reimbursement

Final bill looking increasingly unlikely. 

Congressional Medicare negotiators are not giving up, but the odds seem relatively long against a conference report emerging, and even longer against any report passing in both the House and Senate.

For the first time last week, conferees who have been relentlessly optimistic in their public comments sounded pessimistic notes. The negotiators might "agree to disagree," conference chair Bill Thomas (R-CA) told reporters Nov. 4.

The conference remains deadlocked on huge issues like premium support - the House plan that would put traditional Medicare into direct competition with private plans - and health savings accounts, another House provision which would expand and make permanent the existing Medical Savings Account demonstration program. Whether and to what extent Americans should be allowed to buy less expensive Food and Drug Administration-approved drugs from abroad is another huge unresolved issue.

House Republican Whip Roy Blunt (MO) said Nov. 6 said the conferees should aim for only a simple-majority in the Senate, not a filibuster-proof 60 votes, because a bill that could get 60 votes in the Senate could not get a majority in the House, according to the New York Times.

Blunt said he did not believe Senate Democrats would filibuster a Medicare drug benefit, but Democrats in the upper chamber have been showing every sign of being ready to prove Blunt wrong, even accounting for normal rhetorical excess. Moreover, several moderate Senate Republicans would be doubtful votes for legislation tilted too much towards the House.

Another contentious issue is the Republican push for a Medicare cost-containment mechanism, something that conservatives are likely to insist on with particular fervor if premium support is watered down or absent in any final agreement.

According to the liberal-leaning Center on Budget and Policy Priorities, Sen. Don Nickles (R-OK) is pushing a mechanism, reportedly with administration backing, that would kick in whenever the Medicare trustees projected that general revenues would exceed 45 percent of overall Medicare costs in any two consecutive years over the next seven years. When the mechanism was triggered, the president would be required to propose a way to get back under the 45 percent threshold, and a Senate rule would automatically take effect barring any improvements in Medicare benefits or reimbursements that were not fully offset by Medicare cuts.

CBPP projects in a Nov. 5 paper that the 45-percent threshold would be breached sometime in the 2015-2020 period - pulling the Nickles trigger sometime around 2010. The group said the threshold would be breached every year thereafter without radical changes in Medicare, because spending for physician services, outpatient treatment, and prescription drugs - the parts of Medicare that are or would be paid for by general revenues - are rising faster than hospital costs, which are paid for through a dedicated payroll tax.

In a Nov. 6 briefing, CBPP executive director Robert Greenstein said the Nickles trigger would penalize the growing movement away from hospitalization and towards outpatient and drug therapies, which are often less costly and better for the patient. The trigger's structure would also push Medicare financing towards a flat payroll tax and away from a progressive income tax.

Greenstein said a case could be made for a different cost cost-containment mechanism that would kick in based on overall Medicare spending as a percentage of the federal budget or of the gross domestic product, but he said any trigger should apply to other entitlements and tax cuts, not just Medicare.

Senate Majority Leader Bill Frist (R-TN) has said Congress would adjourn for the year on Nov. 21, so time appears to be short for an agreement.