Thursday, September 20, 2007

Medicare Advantage Cuts Still on the Table to Offset the Medicare Physician Fee Fix

The House/Senate deal to renew the State Children's Health Insurance Program (SCHIP) does not include a fix to the January 2008 10% Medicare physician fee cut. It also doesn't include the $51 billion in cuts to the Medicare Advantage (MA) program the House had in their bill to pay for that fix and other Medicare improvements.

As I have said many times before, that only means that the Medicare physician fix is going to get booted to the year-end budget work--the docs aren't going to get a 10% fee cut.

The big question is just how big will the MA cuts be in order to pay for the doc fix.

The key Senator in the middle of all of this is Max Baucus (D-MT)--the Senate Finance Chair. He is much more moderate on the Medicare Advantage issue than his counterparts in the House. I have long believed where Baucus comes out on this is the place where a compromise will be found.

This week, the Wall Street Journal quoted Baucus as saying he is contemplating cuts in payments to Medicare Advantage insurers that are "not as much" as the cuts that were passed by the House. "But some," Baucus said, "It will be significant."

The House wanted to cut $51 billion over five years beginning in 2009.

The Senate will be more concerned about maintaining payments in rural areas and will have a more favorable view of the standard Medicare Advantage plans. The sore point will likely be the insurers who have been gaming the Private Fee For Service payment system in urban markets.

The House still wants huge cuts. Speaker Nancy Pelosi this week said, "Do we want to stop the privatization of Medicare? Yes." That's pretty clear.

This will all be decided at year-end when the Democratic committee chairs have almost total control of the budget process.

So, the Dems in the House want to stop the privatization of Medicare and Baucus wants "significant" cuts.

Talk about a rock and a hard place!
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