CBO Estimates That GOP Proposal To Clarify HHS Authority on Provider Payments Would Cost $43B Over 10 Years

The Congressional Budget Office on May 15 said that a House Republican proposal "clarifying" the Bush administration's legal authority to address what they call a "glitch" in the Medicare physician reimbursement formula would cost $43 billion over 10 years, CongressDaily/AM reports. House Ways and Means Committee Chair Bill Thomas (R-Calif.) hoped to attach the clarification language to the fiscal year 2002 supplemental appropriations bill, which the House Appropriations Committee approved on May 15. In addition, House Energy and Commerce Committee Chair Billy Tauzin (R-La.) planned to add the language to the conference report of an anti-bioterrorism bill. House Republicans had asked the CBO not to provide a cost estimate for the language, which would they said would "merely settle" the question of whether HHS has the "authority to correct a previous estimating error" in the Medicare physician reimbursement formula (Rovner, CongressDaily/AM, 5/16). The American Medical Association and 40 other groups on May 13 released a legal analysis that found HHS has the authority to correct the formula, which resulted in a 5.4% reduction in reimbursements for physicians this year. According to the analysis, HHS should not have considered prescription drug costs in the formula. The analysis also found that errors in 1998 and 1999 estimates led to the decrease in reimbursements this year. The analysis concluded that corrections to the formula made by HHS could increase physician reimbursements by $62 million. The Bush administration has said that only Congress can change the formula (Kaiser Daily Health Policy Report, 5/14).

'Pressure' on Republicans
House Republicans hoped that the proposed clarification language "would take some of the pressure off as they struggle to craft a provider section" for their Medicare reform proposal, which includes a prescription drug benefit. GOP lawmakers have faced criticism from hospitals, which questioned a Republican proposal to reduce their Medicare reimbursements to increase them for physicians, nursing homes and home health agencies (CongressDaily/AM, 5/16).