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Dueling Bills Both Make Cuts To Medicare Advantage Program

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The two top members of the Senate Finance Committee have introduced competing bills that would make significant cuts in the Medicare Advantage program and at the same time codify limits on the marketing of these plans.

The bills by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and Sen. Charles Grassley, R-Iowa, its ranking member, are designed to forestall 11% cuts in payments to doctors under regular fee-for-service under Medicare that are scheduled to go into effect July 1.

A vote on Baucus’ bill, S. 3101, was scheduled to be held as soon as June 12 or perhaps early this week.

According to the Congressional Budget Office, the legislation introduced by Baucus would cut Medicare Advantage programs by $13 billion over 5 years.

The alternative legislation introduced by Grassley was projected to cut the Medicare Advantage program by $12.5 billion over 5 years. One of the ways it would do this would be by phasing out payments to MA providers for indirect medical education.

Grassley’s bill proposes cuts in other programs, but the key to its savings is that it does not relax restrictions currently imposed on Medicare beneficiaries as called for in Baucus’ bill.

Grassley said this more conservative bill will not prompt the presidential veto that the administration has promised for Baucus’ legislation.

A spokesman for America’s Health Insurance Plans said the “issue is that Congress is asking seniors to pay for the physician fix.”

It is important “for Congress to look at the effect these cuts will have on seniors living in their districts,” added the AHIP official.

One provision of the Baucus bill exempts the value of life insurance from being used to determine eligibility for low-income subsidies under the Medicare program.

It would apparently retain current law, according to an official of the American Council of Life Insurers. “Sen. Baucus and the full Senate are on the right track,” said Jack Dolan, an ACLI spokesman. “Life insurance is first and foremost protection for loved ones. It is designed to bring peace of mind to the insured. That’s an intangible asset.”

The Grassley bill also requires Medicare Advantage plans to submit data for quality analysis and reporting, whether the services are provided under contract or not.

The enforcement mechanisms in the two bills are similar, and are based on an agreement with the AHIP board negotiated in March. Most are included in a regulation proposed by the Centers for Medicare and Medicaid Services last month. They would go into effect for the 2009 enrollment year.

Specifically, the Grassley bill bars Medicare Advantage and prescription drug plans from paying cash for enrollment; offering gifts to potential enrollees; door-to-door sales, cold-calling, or other such personal contact; and marketing non-health related products to potential enrollees.

Medicare Advantage and prescription drug plans must use state-licensed and appointed marketing representatives under the two bills.

They would also be required to comply with state requests for information about licensed agent or brokers, as well as require CMS to issue rules governing commissions and other compensation, as well as mandating training and testing of marketing representatives.