WASHINGTON WIRE
December 14, 2007
Issue 155
Medical Bill Still Up in the Air
Congress to Consider Omnibus Spending Bill Next Week
Lawmakers, Hospital Groups Criticize CMS' RAC Program
Hearings
Top Story
Medicare Bill Still Up in the Air
After weeks of negotiations, House and Senate leaders appear to have made little progress on a Medicare package that would stave off a scheduled 10% physician reimbursement cut next year, as well as potentially make other changes to the Medicare and Medicaid programs. While it is now clear that any Medicare legislation that makes its way to the President's desk will be a much smaller package than stakeholders originally anticipated, with the end of the year approaching, the chances of Congress passing any such bill are decreasing.
Last week, Senate Finance Committee Chairman Max Baucus (D-MT) announced that his committee would not be marking-up a Medicare package, but would instead move directly to negotiations with the House. The House had approved a broad Medicare package earlier in the year, which was expected to be pared down during negotiations.
With no shortage of Democratic Medicare and Medicaid priorities beyond the physician payment fix, negotiations have centered on how to pay for a package. Weeks ago, substantial cuts to the Medicare managed care program (Medicare Advantage) seemed imminent, but when the Bush Administration issued a veto threat on legislation that broadly cut the managed care program, lawmakers were forced to significantly scale back their priority list and look for other ways to pay for the doctor fix. The White House has, though, blessed the elimination of certain payments for indirect medical education under Medicare Advantage as a potential funding source for the bill and it now appears a likely, but partial, "pay-for."
With widespread disagreement between House and Senate leadership on the content of the bill and between Democrats and Republicans on how to pay for the package, bicameral and bipartisan negotiations all but broke down this week. On Thursday, House Speaker Pelosi (D-CA) announced that any new Medicare legislation this year would have to originate in the Senate. And, with the end of the session soon approaching, Senate Minority Leader McConnell (R-KY) stated today that any Medicare legislation will have to be considered by unanimous consent.
At this point, in order to get the needed Republican votes, the Medicare bill will likely have to be very "slim." With one week left on the 2007 Congressional calendar, Democratic leaders must now decide if they should pass a bare-bones Medicare bill that accomplishes few of their party's priorities, or wait until early next year to address the physician payment issue.
Health Care News
Congress to Consider Omnibus Spending Bill Next Week
Congress approved a week-long continuing resolution (CR) this week to allow additional time for Members to compile an expected omnibus spending package that will complete their remaining appropriations work for fiscal year (FY) 2008.
Democratic leaders have been at odds with President Bush and many Congressional Republicans over the spending levels in the FY 2008 appropriations bills. While Democrats would like to increase spending on many domestic programs including health, education and labor programs, the President has vowed to veto any legislation that goes beyond his $933 billion overall request for discretionary spending.
Lacking the needed Republican support for a veto override, House and Senate leaders appear to be bowing to the President's demands. Stakeholders anticipate an omnibus spending bill on the House floor next week that will largely meet the President's spending request, but for an additional $3.7 billion for veterans. Speaker Pelosi (D-CA) stated on Thursday that she hopes to have the omnibus text available over the weekend and a review by the House Rules Committee on Monday.
Lawmakers, Hospital Groups Criticize CMS' RAC Program
In a letter sent to lawmakers earlier this week, the American Hospital Association, the California Hospital Association, and the Healthcare Association of New York State lodged their continuing concern with the Medicare Recovery Audit Contractors (RAC) program.
Under the Medicare Modernization Act of 2003, the Centers for Medicare and Medicaid Services (CMS) established the RAC demonstration program in California, Florida and New York to identify improper Medicare overpayments and underpayments for hospital inpatient and outpatient, skilled nursing facility, physician, ambulance and laboratory, and durable medical equipment services. Under the demonstration project, RACs can review the last four years of provider claims for these services excluding services provided in the current fiscal year. In 2006 Congress made the RAC program permanent, allowing for expansion to all 50 states by 2010.
For months several lawmakers, including Congresswoman Lois Capps (D-CA), have claimed that the program is flawed and specifically, that the California RAC contractor has been overly-aggressive in its review of claims from inpatient rehabilitation hospitals and units. In August, the agency "paused" RAC reviews of inpatient rehabilitation facility claims in California and initiated an independent review of those claims that had been denied by the RAC. This audit revealed a 40% error rate.
On December 7th, CMS Administrator Kerry Weems, sent a letter to lawmakers outlining the agency's anticipated changes to the permanent RAC program as well as the demonstration RACs. Among the changes, the program will now require RACs to have a medical director and for RACs to refund any associated contingency fees if a determination is overturned at any stage of appeal.
A letter sent in response this week from the three hospital associations states that, while the December 7th CMS letter details positive changes, problems remain with the RAC demonstration program that CMS has yet to resolve. Among the stakeholders' recommendations are better CMS oversight and transparency of the program, as well as a change to the payment system for RAC contractors to eliminate the contingency-based fees.
Also this week, Congresswoman Capps stated that she plans to move forward with legislation (HR 4105) to suspend the RAC program for one year. The legislation currently has 26 cosponsors in the House.
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Hearings
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