House Passes Medicare-SCHIP Legislation

Armen Hareyan's picture

The House on Wednesdayvoted 411-3 to approve legislation (S 2499) that would delay for six months a10% physician fee cut and extend SCHIP through March 2009, CQ Todayreports. HHS Secretary Mike Leavitt said that PresidentBush is expected to sign the measure (Armstrong, CQ Today, 12/19).

The bill would increase Medicare physician fees by 0.5% for six months andwould extend several programs that provide higher Medicare reimbursement ratesto rural health care providers and hospital laboratories. The measure alsowould extend SCHIP funding through March 31, 2009. A summary distributed by theSenate Finance Committee showed that the legislation wouldprovide enough funding for states to maintain their current enrollment levels.In addition, the bill would extend for six months rural and low-incomesubsidies, as well as payments for rehabilitative therapy under Medicare.

The Congressional Budget Office on Tuesday estimated that themeasure would cost $5.3 billion over five years. The costs would be offset by$1.5 billion in cuts from a "stabilization fund" created under theMedicare prescription drug benefit to attract preferred provider organizationplans to underserved areas; $1.4 billion in reduced payments to hospitals forinpatient rehabilitation services; and $1 billion in reduced payments for drugsadministered by physicians rather than taken at home by beneficiaries. Inaddition, a data reporting requirement for Medicare Secondary Payer shouldreduce fraud and abuse, creating savings for Medicare. Under the program,Medicare takes over payment liability from private insurers after they havepaid to treat certain conditions over a specific period of time (Kaiser Daily Health Policy Report, 12/19).

Medicare Physician FeeCut Outlook

The legislation does notaddress future physician fee cuts, which means the 10% reduction will takeeffect when the delay expires in June 2008 unless additional legislative actionis taken (CQ Today, 12/19). House Energy and Commerce Health Subcommittee Chair Frank Pallone (D-N.J.) said that heexpects Congress in June 2009 to pass another short-term delay of the fee cutbecause the White House is opposed to offsets that would stop the cut for alonger period of time (Johnson, CongressDaily, 12/20).


According to CQ Today, the six-month delay will force lawmakers"to deal with the issue again in the midst of a presidential election,when neither party seems likely to budge much on compromises that weredifficult enough this time around" (CQ Today, 12/19). The WhiteHouse has strongly opposed any cuts to Medicare Advantage and raising tobaccotaxes to pay for a permanent fix, Pallone said. "You can't raise taxes,even if it's tobacco taxes," Pallone said, adding, "You can't dipinto Medicare Advantage because that's a special interest program that theRepublicans don't want to cut. What am I going to do? I don't want to cutMedicare" (CongressDaily, 12/20).

SCHIP Outlook

White House spokespersonDana Perino in a statement said, "With this (SCHIP) bill, we can be assuredthat children will continue to have coverage, and Democrats won't be able toplay election-year politics with children's health" (Neikirk, Chicago Tribune, 12/20).

The measure does not address an SCHIP policy directive announced in August by CMS thatstates must enroll 95% of children in families with incomes up to 250% of thefederal poverty level before expanding eligibility, The Hill reports. Acting CMS Administrator Kerry Weemssaid that the Bush administration would not require states to disenrollchildren from the program despite the requirement. House Energy and Commerce Committee Chair John Dingell (D-Mich.) saidthat Weems' statement contradicts the policy, adding, "Perhaps CMSofficials are reading their directive differently than the rest of us."

An analysis by the Georgetown University Health Policy Institute's Center for Children and Families found that 14 states provide SCHIPcoverage to children in families with incomes greater than 250% of the povertylevel and that they "will likely be forced to roll back their eligibilitylevels at some point before August 2008 or assume new coverage costs with statefunds." Democratic Caucus Chair Rahm Emanuel (Ill.) on the House floorWednesday said, "Because of the president's executive order, kids in thosestates will actually come off the rolls in August." The National Governors Association on Monday sent a letter to Congress asking itto "address the issue raised in the ... guidance issued by CMS"(Young, The Hill, 12/20).

Emanuel said SCHIP will be addressed this summer, when the new rules takeeffect. He said, "What we can't resolve, the American people will resolvein November," adding, "This will be the first thing a Democraticpresident will get done. We don't need March '09" (Johnson, CongressDaily,12/19).

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