American College of Physicians: Internal Medicine — Doctors for Adults ®


Awaiting the next chapter of SCHIP, Medicare saga

From the November/December ACP Observer, copyright 2007 by the American College of Physicians.

Earlier this fall, ACP joined with the American Medical Association, AARP, and hundreds of other patient advocacy groups to endorse the Children’s Health and Medicare Protection (CHAMP) Act. We supported the bill because it combined essential Medicare improvements, including relief from physician payment cuts, with coverage of low-income children.

Weeks later, Congress decided to drop all Medicare provisions from a compromise SCHIP bill, leading some to conclude CHAMP’s Medicare improvements, including a halt to pending physician payment cuts, are dead.

The truth is that although it may seem like CHAMP is on the ropes, it is by no means out for the count. In fact, many of its provisions may yet become law, but only after many more weeks of confusing and complex legislative machinations.

Legislative maneuvering

To recap how things got to the current state of confusion, a majority of the House of Representatives voted for CHAMP, even though it required controversial budget offsets such as increases in tobacco taxes and cuts in payments to Medicare Advantage plans to pay for its $70 billion price tag. The House vote was mostly along party lines—a handful of Democrats didn’t support it and only a few Republicans did.

The Senate, though, needs 60 votes to get almost anything done, because anything less than that can be stopped by a filibuster. To get enough Democratic and Republican votes to reach this threshold, Senate leaders decided to propose a scaled down bill, one that re-authorizes SCHIP but does not include any provisions related to Medicare. This bill was then approved handily by the Senate.

House and Senate negotiators then met behind closed doors to work out the differences between the two bills. Although Speaker Nancy Pelosi (D-CA) and other House leaders reportedly tried to persuade their Senate counterparts to accept at least some of CHAMP’s Medicare provisions, the House leadership ended up accepting the Senate’s position that only a “clean” ( SCHIP only ) bill could get the 60 requisite votes in the Senate before SCHIP expired on Sept. 30. An agreement was reached on a compromise that authorizes $35 billion for SCHIP and increases tobacco taxes to pay for it. The compromise was then approved by large bipartisan majorities in both arms of Congress.

This isn’t the end of the story, though. Despite pleas from many GOP lawmakers to support the compromise, President Bush reiterated his view that it would lead to government-run health care and vetoed it. Congressional leaders were not confident that they had enough votes to override it. In the event the veto is sustained, Congress promised to pass a short-term extension of SCHIP, keeping it going for several more weeks while working out differences with the White House on a longer extension.

One way or another, Congress and the President will agree to some form of SCHIP, because no one wants to shoulder the blame for killing health care coverage for poor children.

Whither Medicare?

Where does this leave Medicare? Senate leaders have promised to move forward on separate legislation to address the physician payment cuts, among other issues, and the House is willing to bring the CHAMP provisions back into discussion with the Senate once it has passed its own Medicare bill.

ACP made its views clear in a letter to congressional leaders the day after they reached an agreement on the SCHIP compromise. While expressing “deep concern and disappointment” about the decision to drop the Medicare improvements from the compromise bill, ACP reiterated its continued support for reauthorizing SCHIP. ACP urged Congress to reach prompt agreement on Medicare legislation that, at a minimum, would include provisions to:

  • replace the Medicare physician payment cuts with positive updates,
  • pay for those updates in a fiscally responsible manner that doesn’t cause deeper cuts in future years,
  • expand the Medicare medical home demonstration project, and
  • expand coverage for preventive and mental health benefits.

Early indications are that the Senate Finance Committee, which oversees Medicare, is looking at these CHAMP provisions as a starting point for its own bill. The problem remains how to pay for the physician payment updates and other Medicare improvements. Without Medicare Advantage savings, which the Senate had previously said could not be part of an SCHIP bill, Congress will have a hard time finding budget offsets sufficient and politically palatable enough to fund physician payment updates.

This may tempt the Senate to bring down costs by providing only one year of positive updates or by lowering the amount of updates, such as by freezing rates for another year. Or it could repeat the failed practice of paying for the updates in a way that leads to bigger and bigger physician payment cuts and required budget offsets to pay for them in subsequent years.

The outcome won’t be known for many more rounds of debate. With sustained advocacy by ACP and its allies, at both the national and grass roots levels, we still have an excellent chance of seeing our most important priorities from CHAMP enacted into law. These include fixing the Medicare physician payment cuts without digging the hole deeper, improved coverage for mental health and prevention, and expanding the Medicare medical home demonstration. CHAMP may be down for now, but it’s far from finished.


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