Congress Overrides Veto Of Medicare Bill To Delay Physician Payment Cut

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Primary Care / General Practice
Article Date: 17 Jul 2008 - 11:00 PDT

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A 10.6% reduction to Medicare physician fees will be delayed for 18 months because legislation (HR 6331) became law on Tuesday after both chambers of Congress voted to override President Bush's veto of the bill earlier in the day, the Wall Street Journal reports (Wilde Mathews, Wall Street Journal, 7/16). The reduction in fees took effect on July 1, but CMS delayed processing of claims. However, CMS by law on Tuesday was required to begin processing claims reflecting the fee cut, CongressDaily reports (Edney, CongressDaily, 7/16). The House voted 383-41 and the Senate voted 70-26 to override the veto (Wall Street Journal, 7/16).

The law replaces the reduction in fees with a rate freeze for 2008 and a 1.1% increase in 2009, the AP/Philadelphia Inquirer reports (Freking, AP/Philadelphia Inquirer, 7/16). It will cost about $20 billion over five years, but much of the cost will be offset by reductions in payments to Medicare Advantage plans (Wall Street Journal, 7/16). The law reduces payments to the plans by about $14 billion over five years, the Washington Post reports (Abramowitz/Kane, Washington Post, 7/16). The MA changes include cuts to indirect medical education payments and new limits on so-called private fee-for-service plans (Wall Street Journal, 7/16).

Veto
Bush in his veto wrote that although he supports delaying the reduction to physician fees, the bill would reduce "access, benefits and choices for all beneficiaries" because of the cuts to MA plans (AP/Philadelphia Inquirer, 7/16). Bush also wrote that a provision rolling back and delaying a Medicare competitive bidding program for durable medical equipment that began on July 1 could open the Medicare Trust Fund to litigation by companies who won contracts. In addition, Bush wrote that another provision of the measure would increase costs for the Medicare drug benefit by giving CMS the authority to force drug plans to pay for treatments in certain classes of drugs (Wall Street Journal, 7/16).

Currently, drug plans establish their own formularies, except for drugs in six disease categories in which CMS requires insurers to cover almost every drug. The categories include antiretroviral treatments for HIV/AIDS, antipsychotics, immunosuppressants for transplants, chemotherapy treatments and anti-convulsants to prevent seizures. The provision would give HHS the authority to add drugs beyond those six categories if there would be "major or life-threatening clinical consequences" if the treatment were not covered (Kaiser Daily Health Policy Report, 7/15).

"If, as is likely, implementation of the provision results in an increase in the number of protected drug classes, it will lead to increased beneficiary premiums and copayments, higher drug prices and lower drug rebates," Bush wrote (Edney, CongressDaily, 7/15).

Other Provisions
Among other provisions of the law are:

• A rollback and delay for 18 months of the DME bidding program, which is expected to save $1 billion annually when fully implemented (Armstrong, CQ Today, 7/15);
  
  
• The implementation of an electronic prescribing initiative that links physician reimbursement in Medicare to use of the technology (CongressDaily, 7/16);
  
  
• The creation of new marketing rules for private insurance plans under MA (Pear, New York Times, 7/16);
  
  
• An extension of a process for beneficiaries to gain exemption from annual payment caps for physical, occupational and speech therapy services;
  
  
• A requirement that drug plans reimburse pharmacies within 14 days for drugs they dispense to beneficiaries;
  
  
• A repeal of a Medicare competitive bidding program for private laboratory services (Young, The Hill, 7/15);
  
  
• A reduction in beneficiary copays for mental health services;
  
  
• An increase in low-income assistance for Medicare beneficiaries (Gaouette, Los Angeles Times, 7/16); and
  
  
• A delay of a change to the "Average Manufacturer Price" for drugs covered under Medicaid (The Hill, 7/15).

According to the Los Angeles Times, the bill's passage also means there will be a delay in fee cuts to physicians who treat the 9.2 million military personnel and their families who receive care through Tricare, which bases its rates on Medicare (Los Angeles Times, 7/16).

Future Fee Reduction
Health care experts said that the law only delays issues related to Medicare's physician fee structure and that lawmakers will be forced to either address those issues or allow a major reduction in fees in the future, the Post reports (Washington Post, 7/16). Rep. Jim McCrery (R-La.) said that the law will create a 20% fee reduction after the 18-month delay ends in 2010 (New York Times, 7/16). According to CQ Today, halting that fee reduction could be "part of a broader health care overhaul during the next presidency" (CQ Today, 7/15). The Los Angeles Times reports that the "vote could set the stage for cooperation on health care reform under a new administration" (Los Angeles Times, 7/16).

Democratic 'Victory'
According to CQ Today, "The override marked a victory in a long ideological battle between Bush and congressional Democrats, largely over" privatization of the Medicare program (CQ Today, 7/15). In the veto override vote, 153 Republicans in the House voted against Bush, an increase of 24 since the bill passed, according to the Post (Pershing, "Capitol Briefing," Washington Post, 7/15). Twenty-one Republican senators voted for the override (Wall Street Journal, 7/16). Four of the Republican senators who voted for the override voted against the bill ("Capitol Briefing," Washington Post, 7/15).

Many Republicans were targeted by medical groups in advertisements over the Fourth of July recess for their votes against the bill, Roll Call reports (Taylor, Roll Call, 7/15). According to CongressDaily, lawmakers, "particularly Republicans," said the Medicare conflict "solidified their resolve" to find a permanent solution to the Medicare payment formula that requires that they continually offset payment reductions to physicians (CongressDaily, 7/16).

Editorial, Opinion Pieces
Two newspapers on Wednesday published an editorial and two opinion pieces about the override votes. Summaries appear below.

• Washington Post: Bush did not veto the Medicare bill "because he disagrees with the fundamental purpose," he did it because the "administration's main beef is paying the cost, $13.8 billion over five years, by reducing projected payments to Medicare Advantage plans," a Post editorial states. According to the Post, MA plans "could be a cost-effective alternative to traditional Medicare;" however, the "problem is that these plans now enjoy an undue advantage: They are paid, on average, 13% more per beneficiary than traditional Medicare costs." According to the Post, the savings from MA plans would be less than 2% of the government's cost of the plans over the next five years, while enrollment in the plans is expected to continue to grow by 25% over that same period. Although Bush "said he vetoed the bill because 'taking choices away from seniors to pay physicians is wrong,' ... no choices are taken away," according to the Post. The editorial concludes, "It's telling that not even lawmakers of his own party were cowed by the president's effort to scare seniors" (Washington Post, 7/16).
  
  
• Mike Leavitt, Washington Times: "Any member of Congress who believes in the free market or who takes seriously the need for entitlement reform should [have voted] to sustain the president's veto," HHS Secretary Leavitt writes in a Times opinion piece. According to Leavitt, "No one objects to fixing" the scheduled reduction in physician fees, but what "is not sensible or unobjectionable is the rest of the bill, which hurts both taxpayers and Medicare beneficiaries." He continues that "Democrats in Congress have loaded this bill with provisions that undermine consumer choice and, worse, pave the way to still more government control of Americans' personal health care decisions." Leavitt writes that the bill "undermines" Medicare Part D, "lays the ax" to MA and "aborts a major money-saving reform for consumers and taxpayers -- by effectively killing a new program for the purchase of durable medical equipment." Leavitt concludes, "If we want a health care system that promotes value -- that promotes the highest-quality care at the lowest possible prices -- Congress simply must do better" (Leavitt, Washington Times, 7/16).
  
  
• Rep. Jeb Hensarling (R-Texas), Washington Times: Behind "the scenes of the physician reimbursement debate lies an interesting paradox in the way Congressional Democrats protect wealthy seniors, while exposing large numbers of low-income beneficiaries whom the legislation purports to protect," Hensarling writes in a Times opinion piece. He writes that included in the bill are "provisions that would expand eligibility for subsidy programs that aid low-income beneficiaries with Part B premium payments, deductibles, and co-insurance," which, "[c]oupled with several proposals [that are] designed to increase outreach to low-income populations ... would cost hardworking Americans $7 billion over the next 10 years." Hensarling adds that the "expanded subsidies for low-income individuals -- as well as the physician reimbursement provisions and other related Medicare provisions -- are paid for by cuts to Medicare Advantage plans that provide coverage to millions of seniors." He adds that the "paradox arrives in the discovery that Medicare Advantage plans disproportionately serve low-income and minority populations." Hensarling concludes, "Congressional Democrats are cutting benefits for some low-income seniors -- in order to extend benefits to other low-income seniors," while "proposals to increase Part D premiums for the wealthiest Medicare beneficiaries ... languish in legislative purgatory" (Hensarling, Washington Times, 7/16).

Broadcast Coverage
CNN's "Situation Room" on Tuesday included coverage of the override votes (Koch, "Situation Room," CNN, 7/15).

NPR's "Morning Edition" on Wednesday also included coverage of the override votes (Rovner, "Morning Edition," NPR, 7/16).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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