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Congressional Senate Democrats Poised to Move on Medicare Bill Under Veto Threat

Senate Democrats will move forward with their own Medicare bill in the next two weeks, but a White House veto threat delivered during negotiations will almost certainly force a compromise later this month.

Finance Chairman Max Baucus, D‑Mont., is writing the bill, the centerpiece of which is a proposal to stop a 10.6 percent cut to Medicare's physician payment rates that is scheduled to take effect July 1.

Physicians have threatened to stop seeing Medicare patients if the cuts go through.

To offset the cost of halting the cut, Baucus' legislation would trim payments to the privately operated Medicare Advantage plans, which cost taxpayers more than traditional Medicare.

Baucus decided just before the Memorial Day recess to end negotiations with Senate Republicans and produce a Democratic bill without Republican input. It will almost certainly be blocked by GOP members, with the backing of the White House.

A letter from Health and Human Services Secretary Michael O. Leavitt, dated May 22, says the administration would veto any Medicare bill that cuts payments to the private Medicare Advantage plans.

"The administration strongly opposes any policies that would reduce payments for [Medicare Advantage] plans, or target a subset of those plans for program restructuring, marketing restrictions, or enhanced state regulation," the letter reads.

Supporters of Medicare Advantage plans say the plans introduce competition into the market and will eventually drive down costs, and they contend that the private plans provide greater benefits to patients than traditional Medicare.

Specifically, Leavitt's letter also closes the door on one Medicare Advantage cut that Democrats and Republicans seemed to agree on using to pay for part of the $15 billion to $18 billion cost of stopping the physician cuts for the next 18 months. There had been general agreement to cut funding under the program that goes to hospitals, so-called Indirect Medical Education payments.

A similar cut was part of the president's fiscal 2009 budget proposal. But Leavitt's letter appears to oppose even those cuts, which would provide at least $8.9 billion in offsets over five years.

Baucus plans - with the cooperation of Majority Leader Harry Reid, D-Nev. - to bring the legislation directly to the floor in the first two weeks of June.

Republicans have made their own offer, a narrower package costing $14.9 billion over five years that would also delay the doctor cuts for 18 months. Baucus' proposal, which also includes a small increase to physician payment rates, would cost $18.2 billion over that period.

Jockeying for Additions

Even as the bill's components come together, interest groups and other lawmakers are pushing hard to get their own health policy provisions included.

Debbie Stabenow, D-Mich., is pushing for a provision to require Medicare to include information on race, sex and ethnicity in data it collects.

Stabenow is also part of a drive to include language pushing electronic prescribing, led in part by John Kerry, D-Mass. The provision is widely supported by the administration and senior Democrats on the committee.

The lobby group for large chain pharmacies, the National Association of Chain Drug Stores, is assisting in the e-prescribing effort. The drugstores are also hoping for a provision based on already-introduced legislation (HR 3700, S 1951) that would boost reimbursement rates that go to pharmacies under the Medicaid program, which stores say are too low.

And Sens. Herb Kohl, D-Wis., and Charles E. Grassley, R-Iowa, hope to include provisions intended to crack down on nursing homes with records of abusing their patients or committing errors that led to injuries and deaths - drawn from a bill (S 2641) Grassley introduced in February.

Congress has struggled for years with the issue of doctor payments under Medicare. Medicare's cost-containment formulas demand the cuts to the doctor rates, along with additional cuts in 2009 and 2010.

House Democrats say they are waiting for the Senate to act, but some on the other side of the aisle are tired of the delay.

Michael C. Burgess, R-Texas, introduced his own Medicare bill (HR 6129) in late May that would postpone the payment cuts for seven months, giving Congress a bit more time for an overhaul.

"We're about to fall off a cliff and I'm throwing us a rope," Burgess said in an interview. "We should have taken care of this months ago."


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