Bush To Veto Medicare Physician Pay Patch Bill, HHS Official Says; Congress Ready for Override Vote

Medicare Drug Benefit Provision
The White House and some Republican lawmakers say that a provision of the bill would open the Medicare drug benefit to lobbying and political influence, CQ Today reports.

Currently, drug plans establish their formularies, except for drugs in six disease categories in which CMS requires insurers to cover almost every drug. The categories include antiretroviral treatments for HIV/AIDS, antipsychotics, immunosuppressants for transplants, chemotherapy treatments and anti-convulsants to prevent seizures. The provision would give HHS the authority to add drugs beyond those six categories if there would be "major or life-threatening clinical consequences" if the treatment were not covered.

Opponents of the provision say drug companies and patients' groups would put pressure on HHS to add treatments to the required list. In addition, they say it would increase the cost of drug plans. However, the Congressional Budget Office scored the provision as no-cost. In June, the Academy of Managed Care Pharmacy, the Pharmaceutical Care Management Association and the Rx Benefits Coalition wrote letters to lawmakers opposing the provision. PCMA said that it would limit the ability of pharmacy benefit managers to negotiate drug discounts.

Proponents of the provision say that its language is strict enough that it will not result in new additions to the required list. An aide to Baucus, who first introduced the language, said HHS would have to justify any additions through a formal rule-making process for drugs to be added. In addition, the aide said that the provision would guarantee drugs already on the formulary remain there. Currently, the administration has to renew protections annually, and each year, some patients' groups and physicians question whether the administration will remove drugs from the list (Armstrong [2], CQ Today, 7/14).

Medicare Bill Ignores Long-Term Problems
Critics of the bill delaying the 10.6% reduction to physician fees say it ignores long-term problems with entitlement spending, the Christian Science Monitor reports. Gail Wilensky, a senior fellow at Project Hope and former chair of the Medicare Payment Advisory Commission, said that the measure "in no way solves the fundamental problem of Medicare in general -- or the very significant problem of how we reimburse physicians and the perverse incentives of the current system."

Wilensky said that in the short term, the system for calculating physician payments under Medicare needs to be changed so that it does not reward physicians who do more complex services. Wilensky added that the unfunded liability for the program needs to be addressed for the long term. Health experts say that Medicare's unfunded liability is more than $70 trillion.

Michael Tanner, a senior fellow at the Cato Institute, said that Congress targets physician reimbursement rates because they are "low-hanging fruit, rather than making structural changes." However, Congress blocks the cuts every year and is going to "end up not making any changes in the Medicare system at all," which is "hurtling toward insolvency," he said (Russell Chaddock, Christian Science Monitor, 7/15).

CMS To Process Claims With Fee Cut
The temporary delay on claims processing CMS enacted to allow more time for Congress to block reductions to physician fees expires Tuesday, and the agency will begin processing claims from July 1 with a 10.6% cut, CongressDaily reports. CMS spokesperson Peter Ashkenaz said that by law the agency cannot delay the fee any further. According to CongressDaily, "Bouncing CMS between implementing the cut and staving it off in the span of just a few days could prove difficult" (Edney, CongressDaily, 7/15).

Letter to the Editor
Paul Krugman in his New York Times column makes an "optimistic assessment of the chances for universal health care" but "didn't mention the basic problem of cost control," Arnold Relman and Marcia Angell, both physicians and former editors of the New England Journal of Medicine, write in a Times letter to the editor. The physicians write that CBO projects that Medicare spending, if unchanged, "will soon break the federal budget." In addition, they write that private insurance is "rising even more rapidly." Relman and Angell conclude, "If we want universal coverage, we will have to control costs, and that will require reforming the way we pay for medical care and the way it is organized and delivered," adding, "Simply making insurance available to everyone won't suffice" (Relman/Angell, New York Times, 7/15).