Medicare Compliance & Reimbursement

After an all-day June 12 mark-up, the Senate Finance Committee approved a bill that would add prescription drugs to Medicare and carve out a new role in the program for preferred provider organizations. The 16 to 5 favorable vote evidenced the momentum that has built up behind the effort to give seniors a drug benefit, which conventional wisdom only recently had consigned to another year of futility. The full Senate will take up the bill, S. 1, on Monday, and Majority Leader Bill Frist (R-TN) has vowed to pass it before the July 4th recess. Also on June 12, House Ways and Means Chair Bill Thomas (R-CA) and Energy and Commerce chair Billy Tauzin (R-LA) unveiled their version of Medicare prescription drug legislation. Thomas said his committee will mark up the bill on Tuesday, while Tauzin is still trying to rally all the Commerce Republicans around the plan. Under both bills, seniors who stayed in fee-for-service Medicare could get drug coverage through private stand-alone drug plans that would compete to offer coverage in multi-state regions. Alternatively, seniors could get drug coverage by joining preferred provider organizations, which would bid regionally to offer drug coverage and medical coverage, or by joining Medicare+Choice HMOs, which would bid in smaller areas such as counties. When plans bid above benchmarks, beneficiaries would pay extra to join, and beneficiaries and the government would share in the savings when plans bid below the benchmarks. The PPOs, which would feature catastrophic medical coverage and combined Part A and B deductibles, represent a new frontier for Medicare and no one knows quite what to expect. One measure of this: The actuaries at the Centers for Medicare & Medicaid Services predict that 43 percent of Medicare beneficiaries would be in private plans by 2008, including 28 percent in PPOs, while the Congressional Budget Office forecasts only 9 percent in private plans by that date, with less than one percent in PPOs. While the House and Senate proposals are similar in broad outline, the House plan contains some differences sure to raise Democratic hackles, and probably some Republican senatorial hackles as well. One example: Under Thomas and Tauzin's proposal, in 2010, Medicare fee-for-service would begin competing directly with private plans. Many have worried that this sort of competition could lead to FFS premium increases if traditional Medicare attracted disproportionate numbers of sicker and older beneficiaries, but at a briefing House GOP staffers said risk-adjustment techniques could deal with this concern. Opposition to the Senate bill was split between conservatives worried that the bill costs too much and does too little to move Medicare towards the private sector, and liberals worried about exactly the opposite. Voting no were Republicans Don Nickles [...]