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Veto Threat Over Medicare Cuts

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A proposal to eliminate a fund for regional preferred provider organizations participating in the Medicare Advantage program has touched off a conflict between the Senate and the White House, which said that any budget reconciliation bill it receives that would cut the fund will face a veto.

Legislation in the Senate, S. 1932, proposes a total of $39.1 billion in budget cuts over the next five years and was drafted as part of an effort to pay for Hurricane Katrina aid without further increasing the federal budget deficit. The bill is a combination of budget packages that were approved by eight different Senate committees and was scheduled for a vote on the Senate floor after press time.

Although the administration said it “strongly supports” Senate passage of the bill, as well as the goal of “budget discipline,” it also stressed its opposition to the provision that would cancel the establishment of the so-called Medicare Advantage Regional Plan Stabilization Fund. The goal of the fund, the White House said, was to ensure that regional PPOs participate in the program, helping it to grow and providing an incentive for them to offer more choices to Medicare beneficiaries, particularly in rural areas.

“If a final bill is presented to the President that limits the choices of seniors, takes away their prescription drug coverage or cuts the stabilization fund to increase Medicare spending,” the White House stressed, “the President’s senior advisors will recommend that he veto the bill.”

The maximum funding for budget reconciliation legislation was established during the spring, long before devastation wrought by Hurricane Katrina, and had already established a decrease in Congress’s overall spending authority of $12 billion.

Health insurers also have opposed the cut to the Medicare program, which they said would run counter to changes made only two years ago that were designed to bring stability to the program.

“Just days away from the period when beneficiaries begin making their choices for 2006, it is critically important that Congress not make changes to the Medicare legislation it passed less than two years ago,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans, in a letter sent to all senators at the outset of deliberations on S. 1932 last week.

“This sharp reversal in policy is directly at odds with the efforts that Congress made just two years ago to stabilize the program and expand choices for beneficiaries,” Ignagni said in her letter.

The administration also expressed concern on a number of other Medicaid provisions in the budget bill, including those that would change the basis for reimbursement of prescription drugs, revise the asset transfer rules and expand the state long term care partnership program.

The White House did not list its specific objections to the proposals, other than to say that they “may be burdensome to implement or inconsistent with the President’s budget.”

The insurance industry has sought expansion of the “long term care partnership” proposal, which would allow individuals to qualify for state Medicaid benefits without first disposing of all their assets. Insurers also have expressed concerns, however, over a provision in the Senate bill that would mandate that all LTC policies include inflation protection for their benefits, which the insurers believe would increase the price of coverage and make the coverage less attractive to consumers.

Additionally of concern for insurers are provisions that would limit the amount of time in which an insurer could contest a claim, ensuring uniformity between a nationwide partnership program and those in the four states already participating in them, and state reciprocity issues.

The House is scheduled to vote soon on its spending plan, which is expected to cut $50 billion from federal benefit programs over the next five years.

Senate bill would eliminate a fund for regional PPOs participating in the Medicare Advantage program


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