Congress OKs temporary reprieve on Medicare pay cut, renews SCHIP

Washington -- In the closing days of the 2007 session, Congress prevented a Medicare payment cut and kept the State Children's Health Insurance Program alive, but both moves are only temporary.

By unanimous consent on Dec. 18, 2007, the Senate passed the Medicare, Medicaid and SCHIP Extension Act of 2007. The House passed the same legislation 411-3 the next day, and a White House official indicated President Bush would sign the measure.

Instead of facing a 10.1% across-the-board cut in Medicare reimbursement beginning Jan. 1, physicians were given a 0.5% increase. But the boost expires June 30, meaning that the reduction will go into effect in July unless lawmakers approve another bill that would continue to stave it off. Without such a move, the Medicare payment formula would act as if the boost had never happened, and rates as of July 1 would be 10.1% lower than in 2007. The bill also extends payment provisions for rural physicians.

In light of the action, the Centers for Medicare & Medicaid Services extended the deadline for changing Medicare participation status to Feb. 15.

While physician organizations said the half-percent increase is better than a double-digit percentage cut, they are still disappointed that Congress was unable to enact a longer-term Medicare solution. The AMA and other groups were pushing for two years of increases that would reflect the rise in the annual cost of providing medical care.

AMA Board of Trustees Chair Edward L. Langston, MD, said it was extremely disappointing that months of work in the House this year produced only a six-month reprieve. The short-term nature of the bill "creates uncertainty for both Medicare patients and physicians."

"We strongly urge Congress to break the tradition of short-term interventions that are not funded and fail to chart a course for replacing a flawed payment formula that is a barrier to improving quality and access to care for seniors," he added.

The six-month postponement of the cut means physician organizations need to keep pressuring lawmakers to act as soon as the new session starts, said James King, MD, president of the American Academy of Family Physicians. "Yes, they've stopped the hemorrhaging that would have occurred, but we still have the problem of trying to get right back to work with Congress in the first of the year."

The AARP described the measure as "woefully inadequate."

"Enactment of this legislation does little to protect millions of Medicare beneficiaries from higher monthly premiums and only temporarily averts the problems beneficiaries would face finding a physician if payment cuts take place," said David Sloane, AARP director of government relations.

The entire package was expected to cost about $6 billion, according to the Senate Finance Committee. The six-month reprieve for doctors alone would cost $1.4 billion over five years, estimates the Congressional Budget Office. The cost was offset by cuts to a special stabilization fund for Medicare Advantage plans.

Lawmakers tried to craft a pay raise that would go beyond six months, but disagreements between the parties and the White House prompted leaders to pursue a bare-bones approach that could pass both houses and obtain the president's signature.

Senate Democrats, for instance, were pushing for a two-year update that would have paid for annual pay increases by equalizing per-capita pay between traditional Medicare and Medicare Advantage -- a move supported by the AMA and AARP. But Senate Republicans threatened to block the measure, and President Bush threatened to veto any bill that cut Medicare pay to private plans.

In August 2007 the House approved a two-year Medicare payment update as part of a massive Medicare and SCHIP package, but congressional negotiators deleted Medicare language before passing the bill. Bush vetoed the resulting SCHIP expansion measure.

Party differences on SCHIP remain

The newly passed 18-month SCHIP extension takes the issue off the legislative front burner for 2008.

Drs. Langston and King said they appreciate the action. "The renewal of SCHIP is a true gift to families in need," Dr. Langston said.

The legislation would maintain the current enrollment of roughly 6 million by adding $800 million to the existing annual SCHIP funding of $5 billion. Without that extra funding, at least 19 states would have faced program shortfalls in 2008, according to the Congressional Budget Office.

While the extension sets the stage for efforts in 2009 to expand SCHIP, passage doesn't resolve the party differences that kept Democrats from having their version of a five-year program reauthorization adopted. They championed a $60 billion renewal, funded in part by a 61-cent federal cigarette tax increase. It would have expanded SCHIP enrollment by 4 million to reach 10 million. Bush vetoed two similar versions of the bill.

The president and some other Republicans want an SCHIP reauthorization that immediately keeps the program from covering any adults and from covering children in families earning more than 250% of the federal poverty level. They also favor tough enforcement to keep illegal immigrants from enrolling and oppose funding via a tax increase. About 600,000 adults are enrolled in SCHIP.

The passed legislation meets some of their criteria. It does not override an August 2007 Centers for Medicare & Medicaid Services rule limiting SCHIP enrollment to families earning 250% of the federal poverty level. States can exceed that threshold only if the program covers 95% of children in families earning 200% or less of the poverty level, among other requirements. Five states have filed lawsuits against CMS to block the regulation, saying the agency didn't use the proper public comment process. The rule would become effective Aug. 17.

Democrats, such as Rep. John Dingell (D, Mich.), chair of the Energy and Commerce Committee, were disappointed that Congress came within 11 votes of overriding a veto without succeeding. "Unfortunately, Republicans in the House and Senate have chosen to join the president's efforts to deny health care to an additional 4 million uninsured children."

Since last summer, many Republicans have complained that Democrats have ignored their input on SCHIP, but the Bush vetoes turned out to be a powerful weapon. Said Minority Leader Sen. Mitch McConnell: "Again and again, we've insisted the minority be heard and, in the end, we were."