September 2002
Volume 66 |
Number 9
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WASHINGTON REPORT
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Senate Fails to Adopt Medicare
Drug Bill; Separate Mark-Up of Provider Bill Likely
Michael Scott, J.D., Director
Governmental and Legal Affairs
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Just prior to adjournment for the August recess, a compromise
Medicare prescription drug bill in the Senate failed to gain the
60 votes necessary to overcome a budgetary point of order. Barring
a significant change of position by several Senators after Labor
Day, the vote brings to an end any possibility of prescription
drug legislation reaching the President's desk in 2002 and also
raises some uncertainty about congressional action on improved
Medicare reimbursement for providers, including physicians, beginning
next year.
As previously reported in this column, the House passed its version
of a Medicare prescription drug bill in late June. Contained in
that bill was a provision calling for physician updates of approximately
2 percent in the years 2003 through 2005, followed by a drastic
negative update in 2006 unless Congress acts further. None of
the several drug bills considered in the Senate contained any
provision dealing with provider reimbursement; in fact, no provider
package was ever seriously advanced in the Senate during the prescription
drug bill debate.
At this writing, it now appears that the greatest likelihood
for congressional action on provider updates lies in the Senate
Finance Committee, which is expected to turn its attention to
this issue upon return of Congress to Washington after Labor Day.
If that committee produces a bill that is in turn adopted by the
Senate as a whole, Senate and House conferees would then meet
to hammer out an agreed bill on provider reimbursement.
Complicating further consideration of the provider issues are
the budgetary limitations under which the two congressional bodies
can operate. In the House, that limitation was set at $350 billion
for Medicare improvements over the next 10 years, and the House
drug bill, including new provider payments, meets that standard.
The Senate, on the other hand, found itself unable to pass a budget
resolution for FY 2003 and, as a consequence under Senate rules,
was limited to $300 billion over 10 years for Medicare improvements
– the approved amount for the prior fiscal year.
Should the impasse in the Senate on prescription drug legislation
continue after Labor Day, theoretically the budget limit for provider
reimbursement would radically improve because it need not take
into account the cost of a new drug benefit. Seniors advocates,
including the American Association of Retired Persons, however,
can be expected to launch a virulent attack on larger provider
payments in the absence of action on the prescription drug issue.
One of the difficulties for physician groups, including the Coalition
for Fair Medicare Payment, is that neither the staff of the Senate
Finance Committee nor any individual Senator has put forth a proposal
that individual physicians could be expected to accept. A major
reason for this vacuum of leadership is the fact that because
of estimation errors in 1998 and 1999, the budgetary cost of rebasing
the Medicare update formula to correct the errors (and still giving
physicians no increases for 10 years) is estimated at more than
$40 billion. The "magic" of the House bill is that although
it gives modest updates for three years, it does not attempt to
rebase the formula, thus holding the cost at under $20 billion
over 10 years, when one takes into account a radical drop in reimbursement
beginning in 2006.
There are strong incentives for physicians to seek a "fix"
in the formula that rebases it to eliminate the effect of the
1998-99 Centers for Medicare & Medicaid Services (CMS) errors
(errors that CMS now admits but says it is legally powerless to
correct). The real task, however, is to accomplish this in the
context of acceptable payment updates over the next decade. At
a minimum, it is likely that the Senate Finance Committee will
fashion a temporary fix along the lines of the House bill; the
trick is to get the Committee to fashion something better that
will be both acceptable to physicians and meet congressional budget
limitations.
President Pushes Liability Reforms
In late July, President George W. Bush delivered a major health
policy speech in North Carolina, calling for adoption of federal
professional liability reforms for health care providers, including
a cap of $250,000 on noneconomic damages along the lines of California's
highly successful Medical Injury Compensation Reform Act (MICRA)
statute. Not coincidentally, the speech was given on the home
turf of Senator John R. Edwards (D-NC), a former medical malpractice
lawyer, who is expected to seek the Democratic nomination for
President in 2004.
The President's speech gave added impetus to the "HEALTH"
bill (H.R. 4600, "Help, Efficient, Accessible, Low-cost,
Timely Healthcare Act of 2002"), which would impose federal
MICRA-like limits on professional liability suits and awards.
As the House adjourned in late July, that bill enjoyed 103 sponsors
and is being strongly supported by medical groups, including ASA.
It is a fact, however, that the House has passed a professional
liability bill on several occasions only to have the bill die
in the Senate. Even the strongest proponents of liability reform
can count only 40 to 45 Senate votes for any kind of medical liability
bill; during debate on the drug prescription bill in late July,
a professional liability proposal by Senator Mitch McConnell (R-KY),
which contained no cap on noneconomic damages, was tabled, 57-42.
Patients' Rights Talks Flounder
Discussions between the Administration and Senate representatives
aimed at breaking the logjam on passage of patients' rights legislation
appear to be at an impasse over the issue of the extent of liability
for erroneous coverage or treatment decisions.
For several months since the passage of patient protection bills
by the House and Senate last year, Senators John McCain (R-AZ),
Edward M. Kennedy (D-MA) and John R. Edwards (D-NC) have been
engaged in desultory negotiations with White House staff in an
effort to resolve the different liability provisions of the two
bills.
ASA and a large number of medical specialty organizations, working
together as the Coalition for Fair Medicare Payment, had endorsed
the House bill – supported by the Administration – because
it contained the patient protections advocated by those organizations.
It also contained liability protections, which although not as
stringent as those contained in the Senate bill, were deemed adequate
to assure the availability of the advocated protections. Conferees
for resolution of the House and Senate bill provisions were never
appointed.
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