Sunday, September 16, 2007

SCHIP Negotiations Not Going Well--Medicare Physician Fee Cuts and Medicare Advantage Payments Hang in the Balance

Negotiations between the House and Senate over how to extend the State Children's Health Insurance Program (SCHIP) before its September 30 deadline are not making much progress.

The Senate passed a bipartisan extension of the plan that included $35 billion in new spending and paid for it with a hefty 61 cent per pack tobacco tax.

The House passed a solely Democratic bill that would spend $60 billion on the SCHIP extension as well as fix the upcoming January 2008 10% Medicare physician fee cuts. The House would pay for its bill with a smaller tobacco tax and a phase-out of "extra" private Medicare payments beginning in 2009.

With confidence, I can tell you the following:
  1. The negotiations aren't over. Just like the typical high school student, Congress tends to leave things to the very last minute. It is still possible a deal can be struck before September 30th.
  2. If a deal isn't done, SCHIP will get a temporary funding resolution past the September 30th deadline to keep the program going at current levels--it isn't going to abruptly end.
  3. The docs aren't going to get anything like the upcoming 10% fee cut they are facing on January 1--the doctor lobby is way too powerful to let that happen.
  4. Medicare Advantage cuts will fund at least the resolution to the doctor fee problem.
How much of this happens in September and how much of this gets booted to the year-end final budget clean-up where Democratic committee chairmen are almost entirely in control, remains to be seen.

I have always thought the doc cut and Medicare Advantage funding issues would be decided at year-end.

The only hope the health plans have to avoid a Medicare Advantage payment cut is that there is a budget train wreck with Democrats putting up a budget at year-end which Bush vetoes and nothing gets done. A budget train wreck could well leave SCHIP in limbo and the docs with a 10% Medicare physician fee cut and a political mess across the board. It isn't something either Democrats or Republicans want to see going into an election year.

For those of you who have been reading my regular updates on this issue, nothing is going on that is a surprise.

Stay tuned!

The history: SCHIP Reauthorization and High Stakes Politics

A budget train wreck? Why Is President Bush So Willing to Veto Spending Bills All of a Sudden?
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