Bush Administration Threatens To Veto Any Legislation That Includes Medicare Advantage Plan Cuts

Main Category: Medicare / Medicaid / SCHIP
Article Date: 02 Jun 2008 - 9:00 PDT

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HHS Secretary Mike Leavitt in a May 22 letter wrote that President Bush's senior advisers would recommend he veto any legislation that "would result in the loss of access to additional benefits or choices in the Medicare Advantage program," the AP/San Francisco Chronicle reports (Freking, AP/San Francisco Chronicle, 5/29). The letter was sent to Senate Finance Committee ranking member Chuck Grassley (R-Iowa) after bipartisan discussions on a Medicare bill halted last week (Edney, CongressDaily, 5/29).

Finance Committee Chair Max Baucus (D-Mont.) last week said he will move forward with a Medicare package developed by Democrats that likely will be opposed by Republicans and the Bush administration. Baucus said he is retreating from crafting a bipartisan Medicare package that would delay for 18 months a 10.6% cut to physician fees. Although both parties want to halt the cut, which is scheduled to go into effect on July 1, they have been unable to agree on offsets to pay for the bill, among other issues (Kaiser Daily Health Policy Report, 5/22).

According to the AP/Chronicle, lawmakers must find at least $9 billion in offsets over the next five years from other Medicare programs. The AP/Chronicle reports that Democrats and some Republicans favor making cuts to payments for MA plans, which cover about 9.5 million beneficiaries. Baucus spokesperson Carol Guthrie said advisory commissions have said the government on average pays MA plans 13% more than it would spend on comparable patients enrolled in traditional Medicare. Guthrie said, "Congress has a duty to Medicare beneficiaries and to all taxpayers to modify payments when they are found to be out of line" (AP/San Francisco Chronicle, 5/29).

According to CongressDaily, reducing MA plan payments is an "attractive fundraiser" to offset the delay in physician fee reductions, especially with Democrats, "who are not as supportive of private-sector participation in Medicare." Grassley and Senate Minority Leader Mitch McConnell (R-Ky.) last week offered a Medicare package that would cut $8.7 billion in MA payments for indirect medical education (CongressDaily, 5/29).

Administration 'Strongly Opposes' MA Cuts
The Bush administration has said reducing MA payments would result in reduced benefits for beneficiaries (AP/San Francisco Chronicle, 5/30). Leavitt wrote, "To protect the interest of these beneficiaries, the administration strongly opposes any policies that would reduce payments for MA plans or target a subset of those plans for funding reductions, program restructuring, marketing restrictions or enhanced state regulation" (CongressDaily, 5/29). Leavitt wrote that offsets should be found through cuts to traditional Medicare fee-for-service plans (AP/San Francisco Chronicle, 5/30). According to CongressDaily, although Leavitt's letter did not specifically mention MA IME cuts, the "sweeping" opposition to MA payment reductions combined with Leavitt's letter "conjures up doubt that any reductions in the IME payments would pass muster" (CongressDaily, 5/29).

Letter 'Complicates Efforts' To Find Offsets
According to the AP/Chronicle, Leavitt's letter "complicates efforts" by lawmakers to find offsets to maintain or slightly raise current physician payment rates. Already it is "tough to find enough votes to cut payments to any health care provider in the Medicare program, let alone find enough support to overcome a presidential veto," the AP/Chronicle reports (AP/San Francisco Chronicle, 5/29).

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.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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