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Senate Weighs Endorsing House Bill To Slash Medicare Advantage

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The Senate at press time on June 26 was debating whether to accept earlier legislation passed by the House with a veto-proof margin which would slash the Medicare Advantage program by $13.8 billion over 5 years and codify substantive restrictions on Medicare marketing, including a greater state role.

The issue for the Senate was whether to accept the House bill or delay a decision until Congress returns to work from its July 4th recess on July 7. Congress was scheduled to recess on June 27.

The Senate is under pressure because unless Congress acts, physicians’ pay under Medicare will be cut 10.6% as of July 1 under existing legislation.

Congress is working on the bills in order to forestall the cuts in physicians’ pay as well as grant the physicians’ modest pay increases over the next 18 months.

If no deal is reached before the recess, Congress could act retroactively when it returns to reverse the cuts.

The bill passed by the House incorporates cuts to the Medicare Advantage program proposed under legislation recently introduced by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, on behalf of Senate Democrats.

Baucus wrote his bill after talks with Sen. Charles Grassley, R-Iowa, ranking minority member of that committee, on a compromise bill. To counter Baucus’ bill, Grassley introduced legislation that proposed cuts of $9.9 billion in the Medicare Advantage program.

But, both bills codify the restrictions on marketing of MA plans, and earlier last week Baucus and Grassley were working on a compromise aimed at winning enough votes to overcome a filibuster threatened by Senate Republicans and a veto of the House bill the Bush administration reiterated in a position paper released after the House vote.

But, Baucus said that, “Tuesday’s [June 24] overwhelming House vote makes clear that the Medicare Improvements for Patients and Providers Act can be that bipartisan vehicle, and just in time.”

Industry lobbyists and congressional staffers said Baucus needed 2 more votes at press time to clear the House bill for Senate passage.

The cuts and the codification of provisions imposing strong restrictions on marketing of Medicare Advantage programs are both opposed by industry, which wrote letters to key members of Congress outlining their concerns.

The $13.8 billion in cuts would come from cuts in the indirect medical education subsidy, a private-fee-for-service program offered under Medicare Advantage and from a stabilization fund created to be a reserve in cases of a potential funding shortfall.

The marketing restrictions imposed under the House bill would prohibit “cold calls” by agents and the offering of financial inducements to pressure seniors.

It would also require Medicare Advantage and Part D plans to comply with state information requests about the performance of a licensed agent or broker as part of a state investigation into the individual’s conduct.

The states would also be granted oversight authority to monitor and enforce senior protections at the state level to compensate for a perceived lack of oversight of marketing activities by the Centers for Medicare and Medicaid Services.

After the House vote, Karen Ignagni, president and CEO of America’s Health Insurance Plans, Washington, said that the House had “rushed through” the legislation, saying it would require Medicare Advantage beneficiaries “to pay for the increase in physician payments without considering the impact these cuts would have on vulnerable seniors.”

Ignagni noted that more than 10 million Medicare beneficiaries currently rely on Medicare Advantage to meet their health care needs.

She said the cuts represent 94% of the bill’s overall direct budget cuts not including interactions, and 73% of the budget cuts if interactions are counted.

And Janet Trautwein, executive vice president and CEO of NAHU, in letters to leaders in both the House and Senate, voiced “grave concerns” about codifying restrictions on MA sales practices.

She said a more appropriate solution to the problem is the ongoing rulemaking process now underway at the Centers for Medicare and Medicaid Services.

“We fervently believe that CMS’s rule making process with its full and open public comment period for all stakeholders should be allowed to move forward.” Ms. Trautwein said.

“Statutory changes at this time similar to the reforms CMS is proposing are unnecessary and unlikely to consider fully the broad range of dynamics and many nuances involved in selling and servicing products to America’s seniors,” she said. “Statutory changes may, in fact, complicate and be inconsistent with ongoing rule making,” she explained.


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