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The House has moved to protect Medicare. Why won’t the Senate?

ASK THIS | May 22, 2008

In previous articles Judith Stein has described how the move of millions to private Medicare Advantage plans is destroying traditional Medicare in America. Here she lays out questions and answers on Medicare issues now before Congress.

By Judith Stein

The economy is in the tank, the federal budget needs balancing, and we are spending over $150 billion on private Medicare plans that do nothing better than the original Medicare public program – except spend our money.

What can we expect Congress and the Administration to do about Medicare?

Q.  Will anything be done to cut Medicare Advantage subsidies or demand more responsibility from them?

The House of Representatives passed cuts to the lavish private Medicare Advantage plan subsidies in last session’s Children’s Health and Medicare Protection Act, or CHAMP. The House also passed other limitations on marketing and mandates for private Medicare responsibility. These measures failed to pass in the Senate, however. Hence Medicare Advantage issues are now in the Senate’s hands. 

There is little hope that the Senate will move to cut or reduce the lavish Medicare Advantage subsidies. The president has indicated he would veto cuts and the Senate doesn’t have the votes to override. So it is likely that billions of dollars will continue to be sent unnecessarily to private Medicare plans.

There may be a move to add restrictions to Private-Fee-For-Service plans, such as requiring networks and/or quality reporting, and to continue capping the number of such plans. It is also possible that the Senate will pass marketing restrictions on Medicare Advantage  plans. It is just as likely, however, that the Senate will skirt the marketing issue and rely upon the watered-down limits included in rules recently proposed by the Centers for Medicare & Medicaid (CMS).

Q. Will Congress continue the current moratorium on Medicare physician payment reductions?

While billions of dollars are wasted on private Medicare plans, physicians who care for older and disabled people face an extraordinary Medicare payment reduction. They will suffer a 10.6% reduction in payments under Medicare on July 1, followed by another 5% reduction on January 1, 2009, if Congress does not extend the moratorium on this rate reduction. The moratorium was passed in December 2007, and is set to expire on June 30, 2008.

Even with a “Doctor Fix,” as this moratorium has become known, that eliminates the reductions but does not increase payments, physician payments will be held at .5% over the 2006 rates plus an additional possible 1.5% if they complete certain reporting requirements. It is likely that the Doctor Fix will be passed before the June 30 deadline and it may or may not include a small (.5%) increase.

Q. Will the bill include any improvements for beneficiaries?   

Only a few beneficiary improvements are under consideration. They include:

  • Improvements to the Part D low income subsidy and to the Medicare Savings Programs (that help low income people pay Medicare cost-sharing)       
  • Reductions in cost-sharing for mental health benefits    
  • Elimination of or reduction in cost-sharing for preventive benefits   
  • A number of other “extenders,” meaning extensions of existing provisions that, like the moratorium on physician payment cuts, would otherwise expire. These include provisions affecting rural health care providers, as well as extension of one of the Medicare Savings Programs, known as “QI,” and the appeals process for the annual dollar cap on out-patient therapy.

That’s likely to be it for this session of Congress. Perhaps the Senate and the Bush Administration will resist cost-effective improvements to the traditional Medicare program that would benefit all people with Medicare because they recognize that improvements to traditional Medicare would make people less like to enroll in private Medicare Advantage plans. Just a thought.

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