Senate Finance Committee Chairman Max Baucus, D-Mont, says he intends to begin negotiating with the House on Medicare legislation despite a veto threat from the Bush administration.

“Finance Committee negotiations on a Medicare bill have been very productive, and there’s now a good basis for negotiation with the House,” Baucus said Wednesday in a statement. “It’s important to move as quickly as possible toward a final Medicare bill before the end of this year.”

Baucus’s office reports that Baucus has withdrawn a formal request for a Finance Committee Medicare Advantage markup session.

Markup sessions give committee members a chance to amend and vote on a bill.

“I would still like to have a markup next week, but I’m not going to guarantee there will be one,” Baucus said. “With every passing day, it’s a little less likely.”

If members of the Finance Committee cannot draft a compromise bill quickly, any Medicare Advantage provisions may have to go into an omnibus spending bill, Baucus said.

Michael Leavitt, secretary of the U.S. Department of Health and Human Services, the parent of the Centers for Medicare and Medicaid Services, describes the Medicare Advantage bill provisions that could trigger a veto in a letter sent Tuesday to Baucus and Sen. Charles Grassley, R-Iowa, the most senior Republican on the Finance Committee.

President Bush cannot sign any Medicare Advantage bill that “results in the loss of access to [health care] services, benefits, or choices in the Medicare Advantage program,” Leavitt writes in the letter.

If lawmakers want to maintain physician pay, they should do so by “responsibly adjusting payments to other providers” who are reimbursed under traditional Medicare, Leavitt writes.

Bush also cannot sign a bill that includes any provision that “disturbs, undermines, or overturns the many successes of the new Medicare prescription drug benefit” or “undermines efforts to promote fiscal solvency in the Medicare and Medicaid programs,” Leavitt writes.

Leavitt does not refer directly to state oversight, but lawmakers believe that Leavitt is implying indirectly that Bush might veto a bill that would give states more authority over Medicare Advantage plans.

Analysts at the Congress Budget Officer have estimated that federal government costs for Medicare Advantage plan members may be 12% higher than costs for traditional Medicare program beneficiaries.

Some members of Congress would like to shift what they say is excess Medicare Advantage program funding in to efforts to maintain funding for physician payments or to provide health coverage for Americans who are uninsured.

Senators from Western states and other lawmakers who represent rural districts predict that Medicare Advantage program cuts could leave beneficiaries in rural areas without adequate coverage.

America’s Health Insurance Plans, Washington, a group that represents many Medicare Advantage plans, other organizations and independent experts have criticized the CBO analysis, arguing that it fails to recognize the value of the extra benefits that Medicare Advantage plans provide, such as extra preventive care benefits.

“We have been very clear in all our outreach to members of Congress that Medicare Advantage payment reductions mean one thing: They will take away benefits from MA beneficiaries, many of whom make less than $20,000 a year in order to pay for a physician fix without any view toward quality improvement in Medicare,” says AHIP spokesman Mohit Ghose.

Regarding the state oversight issue, Ghose says the AHIP board voted in May to establish marketing principles that call for AHIP member companies to work the National Association of Insurance Commissioners, Kansas City, Mo., as well as with federal regulators, beneficiary groups and broker groups to develop new, uniform processes and criteria for reporting broker, agent and plan employee misconduct.

Baucus notes that his proposal to cut Medicare Advantage plan funding to help avert cuts in Medicare physician payments would focus almost entirely on Medicare Advantage private fee-for-service plans, and not on Medicare Advantage health maintenance organization and preferred provider plans.

About 7.7 million of the 43 million Medicare beneficiaries are enrolled in Medicare Advantage plans, and about 1.6 million beneficiaries are enrolled in the relatively new Medicare Advantage private FFS plans. Congressional committees have held several hearings in the past year in response to complaints about Medicare Advantage private FFS marketing efforts.