Hey Medicare: Drugs Aren't Cheap
The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.
Fiscal 2006 Budget Request
The president's 2006 budget request got mixed reviews from health care groups. Although some groups objected to a lack of appropriate funding for health professions programs, others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.
States Meet Their Match
States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.
Controversial Retiree Benefits
AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.
Proposed Wheelchair Rules Issued
In an effort to clarify the requirements, the Centers for Medicare and Medicaid Services has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.
A Level Playing Field for Hospitals
The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president announced in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” Aaron Krupp, senior counsel with the Medical Group Management Association, said. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, recently told reporters.