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"Senate Medicare Proposals"
July 22, 2002
The Alliance to Improve Medicare (AIM) hosted a Congressional staff
briefing to provide information on Medicare prescription drug proposals pending in the U.S. Senate. Speakers included Elizabeth Fowler, Chief Health and Entitlements Counsel, Senate Finance Committee, Majority
Staff; Linda Fishman, Health Policy Director, Senate Finance Committee, Minority Staff; and Jeff Lemieux, Senior Economist, Progressive Policy Institute. An invited representative from the office of Senator
Chuck Hagel (R-NE) was unable to participate.
Tracey Moorhead, AIM's Executive Director, opened the briefing and
outlined AIM's statement in support of the Senate Tripartisan Medicare proposal. Ms. Moorhead stated, "AIM believes the Tripartisan proposal most closely follows AIM's principles to allow plans flexibility in
benefit design and to utilize proven, private sector health benefit management techniques to control costs and to provide more comprehensive benefits, include generous coverage for preventive health care services."
Ms. Fishman briefly outlined components of the Tripartisan proposal
(S. 2/S. 2729) introduced by Senators Breaux (D-LA), Grassley (R-IA), Jeffords (I-VT), Snowe (R-ME), and Hatch (R-UT). She stated that Sens. Breaux and Jeffords both believe that the bill's new, voluntary Part
E, high-option fee-for-service benefit is as important as the prescription drug coverage benefit.
She also discussed the bill's reinsurance model and described the Tripartisan group's original plan for "risk corridors." She stated the risk corridor mechanism was abandoned by the group because CBO had difficulty providing a budgetary impact score but that they hope to revisit that approach when possible, perhaps combining some aspects of traditional reinsurance with the newly devised risk corridor proposal.
Ms. Fowler provided an outlook on Finance Committee Chairman Baucus'
(D-MT) discussions with Senator Graham (D-FL) and representatives of the Tripartisan group, including Finance Ranking Minority Member Senator Chuck Grassley (R-IA). She characterized Chairman Baucus as seeking
compromise and middle ground between the Graham bill (S. 2625) and the Tripartisan proposal.
Ms. Fowler outlined Chairman Baucus' concerns with a potential compromise that would include only low-income and catastrophic coverage. She reported that Chairman Baucus was unlikely to move toward such a limited proposal before all efforts on more comprehensive approaches were exhausted. Addressing potential provider payment updates expected this year, Ms. Fowler reported Majority staff are working with Majority Leader Daschle (D-SD) to craft a package which uses the House-passed bill (H.R. 4954) as a base but which improves on some areas. She said Chairman Baucus hopes to move such a package through the Committee after August recess.
Mr. Lemieux described PPI's proposal to provide zero-premium,
low-income, and catastrophic Medicare prescription drug coverage. He stated the need to move away from premium-based drug coverage proposals because they will inevitably become too expensive and require too
much government oversight.
An audience member raised a question about risk bearing entities in
the Graham proposal. Ms. Fowler responded that, under the current Graham proposal, the government bears risk for a new prescription drug benefit although pharmaceutical benefit managers (PBMs) bear risk in a
few instances.
She indicated that Senator Graham and others believe the proposal contained sufficient safeguards and cost containment mechanisms to keep benefit costs down. She also stated that, based on her conversations with and visits to PBM facilities, risk bearing requirements do not change the way PBMs fill individual prescriptions or service specific contracts.
Another question addressed provider payment adjustments.
Both Ms. Fowler and Ms. Fishman indicated that bipartisan compromise is reachable on this issue and that any such package would likely move through the Finance Committee before moving to the Senate floor later this year. Ms. Fowler also identified the physician reimbursement "cliff" and indicated that the Senate would hope to "smooth that out" by providing more funding. Additionally, Ms. Fowler stated that CBO budget deficit estimates are expected to worsen by January. Both Ms. Fowler and Mr. Lemieux commented that high deficit estimates would make it much more difficult to approve provider payment adjustments next year.
An attendee raised a question of House-Senate conference committee
complications resulting from possible Senate passage of S. 812, the McCain-Schumer generic drug legislation.
Ms. Fowler replied that it would be very difficult to conference the House-passed prescription drug bill with a Senate-passed generic drug bill. She reported that she was unclear how such a conference could convene or proceed with negotiations.
Mr. Lemieux was asked to compare the PPI proposal with legislation
proposed by Senators Hagel (R-NE) and Ensign (R-NV). (The Hagel-Ensign legislation would combine a prescription drug discount card program with varying levels of catastrophic coverage based on income levels.)
Mr. Lemieux commented that the Hagel-Ensign bill is a means-tested benefit and stated that there was some confusion as to how the government would determine individual seniors' income levels. He stated
the PPI proposal would not means-test seniors for catastrophic coverage and that the benefit is based on total spending, including spending by insurance coverage below the catastrophic cap.
He agreed that the PPI proposal was more expensive based on CBO estimates than the Hagel-Ensign proposal but stated his belief that the PPI proposal would provide better coverage.
Ms. Fowler was asked if the Graham bill represented a step toward
development of a national drug formulary. She responded that Senator Graham does not believe that is the case and stated that the bill leaves the decision to private plans to decide and set formularies.
She did acknowledge that the bill limits formulary coverage to only two drugs per category.
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