Medicare pay hike on tougher road after being stripped from SCHIP bill

Washington -- Hopes that a two-year Medicare physician payment increase would head to the White House on the back of a popular children's health insurance measure were dashed late last month. Lawmakers decided to remove the Medicare language from the bill.

The House and the Senate in early August passed legislation that would reauthorize and expand the expiring State Children's Health Insurance Program. Unlike the Senate bill, the House version also included provisions that would raise Medicare physician payments by 0.5% in both 2008 and 2009 to prevent annual cuts required by law.

Physician organizations, including the American Medical Association, had hoped that negotiators crafting a compromise between the two significantly different measures would preserve the Medicare language in their final bill. But lawmakers decided to take a different path.

"As part of the compromise between the Senate and the House, House leaders have agreed to put aside Medicare for the time being so we can focus on getting health insurance to children," said Sen. Charles Grassley (Iowa), the Finance Committee's top Republican.

The upper chamber's original legislation passed by a bipartisan vote of 68-31, while the House bill passed by a largely party-line vote of 225-204. Negotiators decided to drop the Medicare provisions from the SCHIP bill when Senate Republicans threatened to withdraw support if they did not.

The GOP opposition was not based on the physician payment increase, but on a source of its funding -- elimination of federal subsidies to Medicare private plans.

The decision to delay addressing a Medicare payment increase prompted swift denunciation by physician organizations. "The AMA is deeply disappointed that congressional leaders have decided to defer action to stop Medicare cuts to physicians," said AMA President-elect Nancy H. Nielsen, MD, PhD. "Congress has two important access-to-health-care priorities that must be addressed this year -- renewing health care coverage for kids and preserving seniors' access to care."

A new route for Medicare

Lawmakers said they were not dropping physician payment as a priority. But the campaign to preserve access to care by boosting doctors' rates will not be able to rely on the strength of children's health coverage as an issue to achieve legislative success.

Physician organizations now must change gears to push a Medicare-only bill that can move through Congress on its own or attached to another piece of legislation. Because the House already has approved the two-year payment increase, as well as the reductions to Medicare Advantage plans to help pay for it, the focus will be on gaining enough support in the Senate for passage.

"We urge you to do everything possible to assure that agreement is reached soon with your Senate colleagues on legislation that includes these essential Medicare improvements," wrote David C. Dale, MD, the American College of Physicians' president, in a letter to House lawmakers.

The AMA continues to join AARP on the Medicare issue. The organizations launched a fresh round of joint print advertisements calling for swift congressional action. The seniors group supports the doctors' pay raise in concert with a package of enhanced Medicare benefits that was included in the House-passed measure.

Congress once again could find itself scrambling to approve a temporary payment patch as the session comes to an end and as the Jan. 1 effective date for next year's estimated 9.9% cut approaches.

A solo Medicare bill would face numerous challenges. If not enough senators get on board with elimination of Medicare private plan subsidies, lawmakers would need to find another way to offset the estimated cost of reversing the physician pay cuts -- $65 billion over 10 years.

Likely veto for SCHIP

Even without the Medicare language, the children's health legislation at press time was headed for a likely defeat at the hand of President Bush.

Bush objects to the size of the SCHIP expansion in the compromise bill. Congressional negotiators agreed to add $35 billion to the program over five years, but the president has called for only a $5 billion boost. The White House on Sept. 25 released a policy statement indicating that Bush was standing firm in his opposition.

"The current bill goes too far toward federalizing health care and turns a program meant to help low-income children into one that covers children in some households with incomes of up to $83,000 a year," the statement said. "If [the measure] were presented to the president in its current form, he would veto the bill."

Despite the threat, the House on the same day passed the compromise legislation by a vote of 265-159, which would not be a sufficient majority to override Bush's veto. The Senate was expected to approve the bill later in the week with a veto-proof majority.

Lawmakers have mentioned the possibility of following up on a successful veto by approving a short-term extension of SCHIP at current funding levels to give Congress and the White House more time to hammer out a long-term solution. Without such a temporary fix, the children's health program would expire on Sept. 30.

A diverse group of organizations representing physicians, insurers, employers and consumers came together in advance of the SCHIP votes with a plea for Congress and the White House to enact the program expansion as lawmakers have written it.

"Already, some states can no longer accept new children into this federal-state program because they don't know if the funding is going to be there next month to support new enrollment," AMA Board of Trustees Chair Edward L. Langston, MD, said at a Sept. 24 event with members of the Health Coverage Coalition for the Uninsured. "Let's not make America's children wait any longer for the health care they need."