Washington Report –October, 2003
Bill Finerfrock
Capitol Associates
Other than that Mrs. Lincoln, What did you think of the play?
Reports out of the closed-door House-Senate Medicare conference keep telling us that the conferees are “making progress”. “They’ve achieved consensus on a number of issues is the usual refrain.” Unfortunately, they do not seem to be making progress on the really important issues.
Of the dozens and dozens of issues pending in the Medicare Conference, it would appear that agreement has been reached on a majority. The fact that conferees have resolved a majority of issues pending before the conference does not mean the conferees are substantially closer to achieving a final consensus on the entire bill. The problem is that the issues yet unresolved are so large and so significant, that everything else in the bill that has been agreed to pales in comparison.
I do not believe we are substantially closer to achieving consensus on a Medicare prescription drug/reform bill today than we were 30 days ago. Several self-imposed deadlines have come and gone over the past few weeks.
We also have to distinguish between getting a bill the conferees can agree to versus something that can pass both the House and the Senate. It is quite possible that the conferees will produce a bill but the details of that bill will be such that it cannot achieve a majority of votes in either the House or Senate.
Despite the fact that the House, Senate and White House are all controlled by the GOP, that control is deceptive.
Failure to pass a Medicare bill is the responsibility of the majority party. Just as the Democrats found during the early Clinton years, having partisan control of the levers of government does not guarantee legislative success. First, there is a significant ideological gap in both parties between the most conservative and liberal elements (yes, there are some conservative democrats and liberal republicans).
Because the size of the majority in either chamber is very narrow, the GOP leadership can ill afford to lose any members of their own conference without replacing those votes with members from the other party – a difficult task. Reconciling the ideological differences within the GOP Conference is extremely difficult.
Even if the GOP can resolve their internal policy disagreements, they must also mollify Senate Democrats who can stop the entire process by using a filibuster. While risky (this allows Republicans to blame failure on the Democrats) it is looking as if more and more Senate Democrats are prepared to stop what they consider to be a bad bill, rather than allowing such a bill to pass without their support.
While this may not come as a surprise, the fact is that the outcome of the Medicare debate will be a combination of policy and politics. The policy decisions will dictate the political response.
In legislative circles, there is a term - “poison pill”. This refers to a provision(s) in a bill that would result in the virtual death of the legislation if included in the final version. Whereas many members can rationalize voting for a bill even though they may not agree with every provision in the bill, the inclusion of a “poison pill” would be so onerous to certain Members that it would, in and of itself, result in them trying to kill the legislation.
Over the years, certain policy ideas have been offered that either the right or the left would consider “poison pills” if included in a Medicare bill. As a consequence, these provisions get talked about a lot but rarely get included in a bill because of the violent reaction it would engender from opponents of the proposal.
The current Medicare legislation is no different than its predecessors in this regard. There are certain provisions that if included in the final version of the bill, would have to be considered “poison pills”.
For example, House Republican conservatives have stated that if there are not enforceable spending controls and structural reforms included in the currently pending Medicare bill, they will not allow the bill to pass. Equally vocal have been Senate Democrat liberals who vow to stop any Medicare bill that includes premium support provisions or means testing.
Individual members may have their own poison pills. Many rural legislators have stated that they will not vote for the final bill if it does not include significant improvement in provider payments for rural hospitals and physicians. Several Urban legislators have stated that there must be something in the bill for Academic Medical Centers.
The narrow majorities enjoyed by the GOP in the House and Senate make this a very difficult process. Also, it is not clear that the White House is as engaged in the process as some might hope. I recently had an off-the-record lunch (along with about 25 other health care lobbyists) with “a senior White House official”. Unfortunately, nothing occurred during this meeting to convince me that we were any closer to getting a Medicare bill passed.
Last week, President Bush gave a major speech on his goals for achieving Medicare reform and establishing a prescription drug benefit. If you would like to read the President’s speech, go to:
http://www.whitehouse.gov/news/releases/2003/10/20031029-1.html
I heard much of the speech and frankly, I thought it was a bit tepid. As I read the speech, I felt it was even more restrained. It does not appear that the President is willing to expend a great deal of political capital for this Medicare bill, despite his statements of support. The political life of legislation is often like the weather in Washington, DC, stick around for a few minutes and it will change. Although the Medicare bill is not on life-support, it is having heart palpitations and someone needs to intervene or the patient may not survive.
CMS Announces 2004 Physician Fee Schedule and Payment Policy Changes
On October 30, the Centers for Medicare and Medicaid Services (CMS) announced the final rule for updating the Medicare Part B payment rates for 2004
According to the announcement, dramatic growth in physician services in 2002 has resulted in a projected negative update of 4.5 percent. In the press release announcing this projected decrease, CMS Administrator Tom Scully stated, “The Medicare reform package now pending before Congress contains a provision that would adjust these payments for 2004. However, CMS has no option other than to base this final rule on the current law. If Congress does pass legislation improving payments to physicians, CMS will implement the new payment rates as quickly as possible.”
A number of other policy changes were announced in this final rule. To view the press release announcing the changes, go to:
http://cms.hhs.gov/media/press/release.asp?Counter=889
To view the actual rule, go to:
http://www.cms.gov/regulations/pfs/2004fc/default.asp
HHS Announces Medicare Premium and Deductible Rates for 2004
On October 16, the Department of Health and Human Services (HHS) announced the Medicare premium, deductible and coinsurance amounts to be paid by Medicare beneficiaries in 2004.
The Medicare Part A beneficiary deductible, which pays for inpatient hospital, SNF, and some home health care, will be $876 in 2004. This is an increase of $36 from the 2003 deductible of $840. The monthly Medicare Part B premium, which covers physician services, outpatient hospital services, certain home health services, DME and other items, will be $66.60. This is an increase of 13.5 percent or $7.90 over the $58.70 premium for 2003.
Medicare deductibles and premiums are updated annually in accordance with formulas set by law. The Part B premium is required to be the amount needed to cover 25 percent of estimated program costs for enrollees aged 65 and older. General revenue tax dollars cover the other 75 percent of the costs. The same statute prescribes the method for computing the Part A inpatient hospital deductible.
The Part A deductible only applies to those beneficiaries enrolled in the traditional Medicare. Those beneficiaries who enroll in a Medicare+Choice plan may not be affected by the Part A increase. Those M+C beneficiaries may receive additional benefits or have different cost-sharing arrangements with their M+C plan.
To view the press release announcing the 2004 Medicare premium and deductible rates, go to:
http://www.hhs.gov/news/press/2003pres/20031016.html
When Life Meets Art…
There you are, sitting in your office, minding your own business when suddenly, Hollywood invades your space. That’s what happened at Capitol Associates a few weeks ago when the producers of the new HBO series “K Street” decided to use our offices as the site for the mythical lobbying firm.
K Street is a real area of Washington, DC with a very high concentration of law firms and lobbyists. For the record, the Capitol Associates offices are located on “C Street, NE” a considerable distance from the reputed “K Street, NW” offices.
As I came out of our front door, I was met by actors, directors, gophers, sound men and women, producers and other people associated with the filming of this series. I recognized one of the actors from his previous work but because I had never seen the K Street show, I didn’t know his role in the program. Turns out this distinguished looking, silver haired gentleman was the CEO of the mythical lobbying firm. In a sincere offer of “life imitating art”, I offered to fill in for him or provide him with some advice, but was met with a hard stare and a “thanks, but no thanks” response. Some might argue that I missed my shot at fame and fortune but I think they missed their opportunity to get a true inside look into the glamorous world of lobbying.
For what it’s worth, my office made it onto the small screen as the location of the lobbying firm. So, if you happen to see the show and the exterior shot is of a series of brick buildings with an American Flag hanging from one of the windows, that’s Capitol Associates, the home of HBMA’s Washington Office.
Medicare National Coverage Decisions
On September 26, the Centers for Medicare and Medicaid Services(CMS) issued a proposed change in the way national Coverage decisions will be made by CMS. The notice announced a revision to the process CMS will use to make a national coverage determination for a specific item or service under various sections of the Social Security Act, as revised by sections of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. One of the principle objectives of the proposal is to further clarify CMS’s decision-making process and increase the opportunities for public participation.
According to the announcement in the September 26 Federal Register, this notice replaces the April 27, 1999 notice and will be effective on October 27, 2003. Improvements include the
following:
* Updating and organizing the reconsideration process into one section, and distinguishing it from an initial request to make an NCD.
* Defining, streamlining, and organizing the contact/inquiry information into one section.
* Revising, formalizing, and updating the elements that constitute a complete, formal request to reflect best practices.
* Adding a section on information that does not constitute a complete, formal request.
* Updating and clarifying the conditions for acceptance of a complete, formal request.
* Making it clear that all evidence currently available must be adequate for us to conclude that the item or service is reasonable and necessary.
* Establishing two main tracks for the initial NCD request. One track is a highly time-structured track only available to aggrieved parties. The other track is open to anyone, including aggrieved parties, beneficiaries, and manufacturers, and offers a more collaborative and less time-stringent process.
To view the proposal, go to:
http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/03-24361.htm
The new process became effective on October 27, 2003.
One Man’s Ceiling is another Man’s floor…
With all due respect to Paul Simon, I thought that those words from his 1973 song captured the essence of a recent proposal put forth by the HHS Inspector General’s office on fraud and abuse.
We can all say that we are opposed to fraud. Recently, the Inspector General’s office announced a proposed definition of fraud that may cause some folks to rethink their position.
According to a proposal that appeared in the Federal Register on September 15, 2003, the Office of the Inspector General is proposing to change how that office would define Medicare fraud.
The proposed rule, published on September 15, would amend OIG exclusion regulations addressing excessive claims, by including definitions for the terms ``substantially in excess'' and ``usual charges,'' and by clarifying the ``good cause'' exception. Comments on this proposal must be submitted by November 14. The HBMA Government Relations Committee is in the process of developing a response to the OIG’s proposal. The current proposal WOULD NOT cover physician services. However, if this policy is established for services other than physician services, it is reasonable to presume that this could be extended at some point in the future.
Current law provides that the Secretary may exclude any individual or entity from participation in any Federal health care program if the Secretary determines that the individual or entity:
“has submitted or caused to be submitted bills or requests for payment (where such bills or requests are based on charges or cost) under Medicare or a State health care program containing charges (or, in applicable cases, requests for payment of costs) for items or services furnished substantially in excess of such individual's or entity's usual charges (or, in applicable cases, substantially in excess of such individual's or entity's costs) for such items or services, unless the Secretary finds there is good cause for such bills or requests containing such charges or costs.”