Medicare Reform Hits Snag as Administration Threatens Veto if Physician Pay Cut is Reduced

Health groups want Medicare physicians to use electronic prescribing or face financial penalties
By Kaiser Network - Dec. 6, 2007
The Medicare reform package be shaped in the Senate Finance Committee hit a snag yesterday and the Democratic chairman says he needs to consult with House Democrats before proceeding on the legislation. A major piece of the plan is to roll back the 10 percent pay cuts for doctors that Medicare is set to enforce for 2008. Republicans on the committee were fighting for a short-term roll back of the cut when a letter suddenly appeared from the Health and Human Services Secretary that threatened a Bush veto under certain conditions.

Senate Finance Committee Chair Baucus Cancels Medicare Bill Mark Up, Will Negotiate With House Dem
Senate Finance Committee Chair Max Baucus (D-Mont.) on Wednesday canceled plans for a mark up of Medicare legislation and instead will negotiate directly with House Democrats on the measure, CQ HealthBeat reports. The bill would block a 10% cut in Medicare physician fees.

According to CQ HealthBeat, Baucus has "struggled" with committee Republicans over whether to block the physician cuts for one year or two years, as well as on reductions to Medicare Advantage payments to help fund the physician fee fix. Baucus canceled a mark up one day after the Bush administration threatened to veto any bill that includes cuts to MA plans (CQ HealthBeat, 12/5).

HHS Secretary Mike Leavitt on Tuesday in a letter to the Finance Committee wrote that a veto would be recommended for any bill that "results in a loss of access to health care services, benefits or choices" in the MA program; "raises taxes ... to fund spending increases"; or alters Medicare's fiscal status by overturning administration regulatory decisions (Kaiser Daily Health Policy Report, 12/5). (Read text of Leavitt letter below this news story.)

Finance Committee ranking member Chuck Grassley (R-Iowa) on Wednesday said of the veto threat: "What they're really saying is, 'We don't care if the doctors take a 10% cut'" (CQ HealthBeat, 12/5).

E-Prescribing

A coalition of health care and consumer groups announced support for legislation that would require Medicare physicians by 2011 to use electronic prescribing or face financial penalties, CQ HealthBeat reports. The bill's sponsors include Sens. John Kerry (D-Mass.), Debbie Stabenow (D-Mich.) and John Ensign (R-Nev.), and Reps. Allyson Schwartz (D-Pa.) and Jon Porter (R-Nev.).

Bill Vaughan, senior policy analyst at Consumers Union, on Wednesday in a letter to the Senate wrote that the group wants Congress to implement e-prescribing in Medicare and Medicaid and called for the legislation to be included in the Medicare package. The e-prescribing measure would provide physicians with a bonus for each e-prescription written and provide funding for start-up costs associated with adopting the technology. It also would authorize the HHS secretary to provide physicians with one- or two-year hardship waivers if they have difficulty acquiring the technology.

The Bush administration has asked that health information technology adoption requirements be included in any Medicare legislation that would prevent a physician fee cut.

Kerry said, "E-prescribing will save money, save time, save doctors from piles of paperwork and, most importantly, save lives," adding, "Deaths and injuries from handwritten prescriptions could be nearly eliminated if e-prescriptions were adopted on a wide scale. We need to seize this bipartisan opportunity and make this common-sense reform a reality now" (Carey, CQ HealthBeat, 12/5).

Secretary Leavitt Letter to Senators on Medicare Physician Payment Legislation

Text of letter sent to Sen. Max Baucus, chairman, and Sen. Charles Grassley, ranking Republican, on Senate Finance Committee

“We understand the Senate Finance Committee soon intends to consider draft legislation to block the upcoming statutorily mandated reduction in payments to physicians under the fee-for-service Medicare program. As you know, this 10 percent cut would otherwise occur on January 1, 2008. I write to reiterate the Administration's commitment to strengthen and improve Medicare, and to ensure our Nation's seniors continue to have access to, and choices among, high-quality benefits through this important program.

“The Administration looks forward to working with Congress on appropriately offsetting legislation to mitigate the cut to physician reimbursement rates under Medicare. To that end, we ask that Congress adhere to the following principles for an update to the physician fee schedule.

“Such a bill should:

● Pay for any adjustment to the physician fee schedule formula by responsibly adjusting payments to other providers in the fee-for-service Medicare program.

● Bear in mind the impact on beneficiary premiums of potential increases in Part B spending for physicians, when considering appropriate offsets.

● Condition receipt of a portion of any fee adjustment to adoption of certified electronic health information technology. Physicians who do not adopt appropriate, available technology should receive a lower payment than those who do.

● Implement payment policies to ensure patients receive high-quality care in the most medically appropriate and efficient setting without increasing costs for taxpayers or for Medicare and its beneficiaries.

“Conversely, the President's senior advisors would recommend a veto of any bill that:

● Raises taxes on the American people to fund spending increases.

● Results in the loss of access to health care services, benefits, or choices in the Medicare Advantage program, through which nearly 20 percent of seniors and Medicare beneficiaries with disabilities currently receive their benefits.

● Disturbs, undermines, or overturns the many successes of the new Medicare prescription drug benefit.

● Undermines efforts to promote fiscal solvency in the Medicare and Medicaid programs. For example, legislation should not repeal the Medicare funding warning or erode the programs' fiscal integrity by overturning regulatory policies developed by the Administration.

“We look forward to working with you to produce legislation that the President can sign into law. The Office of Management and Budget advises that from the standpoint of the Administration's program, there is no objection to the transmittal of this letter.”

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