Medicare Bill That Would Delay Physician Fee Cut Approved

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PhysicianFee Cut

The Senate on Tuesday byvoice vote approved a "bare-bones" Medicare bill (S 2499) that woulddelay for six months a 10% physician fee cut and would extend SCHIP throughMarch 2009, CQ Today reports. House Majority Leader Steny Hoyer(D-Md.) said the House will take up the measure on Wednesday.

The legislation would increase Medicare physician fees by 0.5% for six monthsand would extend several programs that provide higher Medicare reimbursementrates to rural health care providers and hospital laboratories. However, thelegislation does not address future physician fee cuts, which means the 10% cutwill go back into effect after the six months without additional legislativeaction.

The measure also would extend SCHIP funding through March 31, 2009. A summarydistributed by the Senate Finance Committee showed that the legislation wouldprovide enough funding for states to maintain their current enrollment levels(Armstrong, CQ Today, 12/18). In addition, the bill would extendfor six months rural and low-income subsidies, as well as payments forrehabilitative therapy under Medicare (Johnson, CongressDaily,12/18).

Other Provisions

The bill also would:

  • Bar Medicare Advantage special needs plans from expanding service areas through Dec. 31, 2009, and prevent new SNPs from entering the program until that time;
  • Place a "limited" moratorium on new long-term acute-care hospitals and establish new facility and medical review requirements to ensure patients receive appropriate levels of care at the facilities;
  • Extend a system in which physicians report quality-of-care data;
  • Extend through June 30, 2008, a Medicaid program that helps low-income seniors and individuals pay their Medicare premiums;
  • Extend the current abstinence-only education program until June 30, 2008; and
  • Extend through June 30, 2008, a transitional medical assistance program that helps low-income individuals move from welfare to work by maintaining health insurance for children (Carey/Reichard, CQ HealthBeat, 12/18).


The Congressional Budget Office on Tuesday estimated that the measure would cost $5.3 billion over fiveyears. The costs would be offset by $1.5 billion in cuts from a"stabilization fund" created under the Medicare prescription drugbenefit to attract preferred provider organization plans to underserved areas;$1.4 billion in reduced payments to hospitals for inpatient rehabilitationservices; and $1 billion in reduced payments for drugs administered by physiciansrather than taken at home by beneficiaries. In addition, a data reportingrequirement for Medicare Secondary Payer should reduce fraud and abuse,creating savings for Medicare. Under the program, Medicare takes over paymentliability from private insurers after they have paid to treat certainconditions over a specific period of time (CQ Today, 12/18).

The bill would maintain current payment system for teaching hospitals.Republicans had proposed funding the measure by eliminating some payments formedical education, but House Ways andMeans CommitteeChair Charles Rangel (D-N.Y.) opposed the idea because he said the cuts woulddisproportionately hurt urban areas (CongressDaily, 12/18).


CBO estimated that the physician fee patch would cost $1.5 billion over fiveyears and $6.4 billion over 10 years. Extending SCHIP would cost $800 millionover 10 years. According to CBO, the legislation would save the government $100million over five years and would be cost neutral over 10 years (CQ Today,12/18).

Future of SCHIP

Extending SCHIP until 2009would be a "victory for Republicans," according to CQ Today.Democrats had aimed to extend the program for a shorter period of time to makeit a main issue during the 2008 presidential campaign. However, the"longer extension also offers a chance to secure Republican cooperation inexpanding the program to cover more uninsured children," CQ Todayreports (CQ Today, 12/18).

Finance Committee Chair Max Baucus (D-Mont.) said that the extension does notlimit when SCHIP can be discussed again, saying, "We can still bring it upand try to do (children's health) legislation before" funding expires (Reuters, 12/18). In addition, the legislation does notaddress a CMS rule that prohibits states from expandingSCHIP income eligibility limits to higher income levels if they have notcovered 95% of low-income children, so "any problems that develop as aresult of it will give lawmakers an excuse to revisit SCHIP in thesummer," CongressDaily reports (Johnson, CongressDaily,12/19).

However, The Hill reports that supporters of SCHIP "mighthave to wait for the next president and the 111th Congress to get aresult." According to The Hill, that "could be risky,since in 2009 SCHIP could well be subsumed by much larger debate over thefuture of the U.S. health care system if the focus of presidential candidateson health care issues holds steady" (Young, The Hill, 12/19).


The American Medical Association said that the six-month fix createsuncertainty for Medicare beneficiaries and the physicians who serve them. AMAsaid Congress should do away with the funding formula that created the cutsaltogether. In addition, AARP and other groups "described the Medicarelegislation that passed the Senate as woefully inadequate," hoping that"Congress would substantially lower payments" to MA plan providers"to pay for other programs that they wanted," the AP/Houston Chronicle reports.

Finance Committee ranking member Chuck Grassley (R-Iowa) said, "This is adisappointment for many of us," adding, "The purpose of movingforward with a six-month package now is to provide the opportunity for theFinance Committee to address these priorities next year" (Freking, AP/HoustonChronicle, 12/18). Senate Budget Committee ranking member Judd Gregg (R-N.H.)said of the Medicare physician fees, "There's a geometric progressionwhich makes it worse each year," adding, "So what we ought to do iscorrect it permanently, take the hit and deal with it" (CongressDaily,12/18).

House Energy and Commerce Committee ranking member Joe Barton (R-Texas)said, "If the House extends SCHIP, the next logical move is to convene acommittee hearing and begin an honest, bipartisan exploration of how to improvechildren's health insurance" (The Hill, 12/19).

Reprintedwith permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at . The Kaiser Daily Health PolicyReport is published for, a free service of The Henry J.Kaiser Family Foundation.


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