Medicare Compliance & Reimbursement

States will get $20 billion in new federal money under the economic growth package passed by Congress and supported by President George Bush. Rural health care providers, however, must wait some more for the $25 billion that they would have received under Senate Finance Committee chair Charles Grassley's (R-IA) amendment to the Senate version of the bill.

Republicans say the entire package will cost $350 billion over ten years. Democrats, however, say the cost will turn out to be far more because lawmakers will not allow reduced taxes on dividends and capital gains to return to current rates in 2008, as the legislation dictates. The bill comes against the backdrop of the Congressional Budget Office's recent prediction that the federal government will end fiscal year 2003 with a budget deficit of over $300 billion, up almost $50 billion from CBO's estimate only a month earlier but still below many private forecasts.

Half of the state money will go to state Medicaid programs in the form of a temporary increase in the rate at which the federal government matches state Medicaid expenditures. The other $10 billion will be distributed in the form of flexible grants that can be used for health care but also for a range of other purposes.

Grassley's package, intended to bring Medicare reimbursements for rural hospitals, physicians, skilled nursing facilities, and other providers up to the level of their urban counterparts, didn't make the final cut. The Iowan ran into House opposition, notably from Ways and Means chair Bill Thomas (R-CA) and Energy and Commerce chair Billy Tauzin (R-LA), based largely on the way his amendment structured cost offsets that would have reduced Medicare payments for durable medical equipment and for the small set of prescription drugs the program already covers.

"By failing to include any provisions that would allow for the adjustment of payments to physicians who administer drugs," Grassley's proposed drug cost reduction "places Medicare patients at grave risk of having their access to quality chemotherapy and related services sharply reduced," Tauzin wrote in a May 21 letter to House Speaker Dennis Hastert (R-IL) and Senate Majority Leader Bill Frist (R-TN). Tauzin says he and Thomas "expect to have a final proposal prepared within the next two weeks that will take into account many of the concerns identified by physicians, while also eliminating the excessive payments for drugs."

As a consolation prize, Grassley got a May 22 presidential letter. "I will support the increased Medicare funding for rural providers contained in your amendment as a part of a bill that implements our shared goal for Medicare reform," the president wrote to Grassley.

Of course, whether such a bill will pass Congress is still very much an open question. "I don't know if we're going to get a Medicare bill," said Iowa's other Senator, Democrat Tom Harkin, who cosponsored Grassley's amendment and has himself long pushed for geographic equity in Medicare, according to CQ Today. Grassley concurred: Medicare reform legislation is "legitimately a more appropriate place to deal with this," but there may be a Democrat filibuster, and if there is "I don't have a vehicle to get this to the President," he acknowledged.

Moreover, there's plenty of purely intra-Republican controversy over how much and what kind of reform should accompany adding a drug benefit to Medicare. The House, which has passed bills incorporating drug-only coverage the last couple of years, has shown little enthusiasm for the administration's desire to push beneficiaries into private plans that would offer drugs as part of an integrated benefit package.

"The next time you talk to the White House guys," one GOP aide advised May 21, ask "what's the goal? Is it just to get people into private plans, or is it to save money, or is it to deliver care most efficiently?" If the goal is "just to say they're now in Aetna, rather than in Medicare, I don't think we've achieved anything." If, on the other hand, the White House goal is provide efficient care, then "there's ways to work with it," the staffer continued, but also expressed deep skepticism about getting private plans into rural areas at an affordable cost.