[Mb-civic] Closed-Door Deal Makes $22 Billion Difference - Washington Post

[William Swiggard]

Closed-Door Deal Makes $22 Billion Difference
GOP Negotiators Criticized for Change In Measure on HMOs

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, January 24, 2006; A01

House and Senate GOP negotiators, meeting behind closed doors last month 
to complete a major budget-cutting bill, agreed on a change to 
Senate-passed Medicare legislation that would save the health insurance 
industry $22 billion over the next decade, according to the nonpartisan 
Congressional Budget Office.

The Senate version would have targeted private HMOs participating in 
Medicare by changing the formula that governs their reimbursement, 
lowering payments $26 billion over the next decade. But after lobbying 
by the health insurance industry, the final version made a critical 
change that had the effect of eliminating all but $4 billion of the 
projected savings, according to CBO and other health policy experts.

That change was made in mid-December during private negotiations 
involving House Ways and Means Chairman Bill Thomas (R-Calif.), Senate 
Finance Committee Chairman Charles E. Grassley (R-Iowa) and the staffs 
of those committees as well as the House Energy and Commerce Committee. 
House and Senate Democrats were excluded from the meeting. The Senate 
gave final approval to the budget-cutting measure on Dec. 21, but the 
House must give it final consideration early next month.

The change in the Medicare provision underscores a practice that growing 
numbers of lawmakers from both parties want addressed. More than ever, 
Republican congressional lawmakers and leaders are making vital 
decisions, involving far-reaching policies and billions of dollars, 
without the public -- or even congressional Democrats -- present.

The corruption scandal involving Republican former lobbyist Jack 
Abramoff and the bribery plea of former congressman Randy "Duke" 
Cunningham (R-Calif.) have prompted calls for a restructuring of 
lobbying rules and congressional practices that make lobbying easier.

A prime target for changes are the closed-door negotiations known as 
conference committees, where members of the House and Senate hash out 
their differences over competing versions of legislation. House and 
Senate Democrats last week proposed that all such conference committees 
meet in the open and that any changes be made by a vote of all conferees.

"It happens in the dead of night when lobbyists get a [Republican 
lawmaker] in the corner and say, 'We've got to have this,' " said Rep. 
Fortney "Pete" Stark (Calif.), the Democrats' point man on Medicare 
issues. "It's a pattern that just goes on and on, and at some point the 
public's going to rise up."

Grassley disputed the CBO's interpretation of the change as 
"ridiculous," dismissing what appears to be a major insurance industry 
victory as merely a mistake in CBO calculations, not a substantive 
policy change. He said he accepted the policy change because he "didn't 
see a big difference from the Senate position and the conference position."

But other lobbyists and aides said too much important work is being done 
in these closed-door conclaves. That is especially true with the 
budget-cutting bill containing the change in the Medicare reimbursement 
formula that is nearing final passage.

"I have worked many [budget] bills, and this was the most closed that 
I've ever seen," said one prominent Republican health care lobbyist, who 
spoke on the condition of anonymity for fear of jeopardizing his access 
to Congress.

Another health care lobbyist, not involved with the issue, said the 
result was a major victory for health insurers: "That's a $22 billion 
difference; $22 billion is a lot of money."

If no one can say which lawmakers made the change, there is no doubt who 
instigated it. Last month, as House and Senate negotiators sat down to 
finalize the budget-cutting bill, the insurance industry moved to thwart 
the Senate's "risk adjustment" provision.

"It is our understanding that CBO is scoring significant savings from 
this new adjustment," officials from America's Health Insurance Plans 
(AHIP) wrote in urgent talking points sent to Capitol Hill. "The savings 
. . . are best viewed as a new and unanticipated payment reduction."

Since managed-care companies first began working through Medicare in the 
1990s, the government has recognized an issue in the way the companies 
are paid for their participation. Private insurers attract healthier 
seniors than the traditional government-run Medicare system, so their 
payment rates -- based on the elderly population as a whole -- exceed 
the actual cost of treatment.

In 2003, the government began lowering payments to Medicare HMOs to 
account for their healthier population of beneficiaries. But to keep 
those HMOs from fleeing the system, the Bush administration added a 
"hold harmless" payment that negated that cut.

The White House intended to phase out that payment through 2010, a plan 
written into law by the version of the budget-cutting bill that passed 
the Senate in November. But to secure those savings, the Senate also 
required yearly audits to account for "coding creep" or "upcoding" that 
health policy experts say physicians and hospitals working for the HMOs 
have used that, wittingly or unwittingly, make their patients appear 
sicker than they are.

The insurance industry lobby has denied such a problem exists, saying 
that the huge savings that CBO and other health care analysts have 
projected would never materialize. Even so, the industry fought the 
changes tooth and nail, said health care aides in the House and Senate.

Karen Ignani, chief executive of AHIP, said the industry would have 
liked the yearly audit provision to be removed. Instead, it got what the 
CBO sees as a strict time limit. According to the final bill language, 
the results of a risk adjustment analysis are to be "incorporated into 
the risk scores only for 2008, 2009 and 2010."

The original Senate measure was supposed to reduce payments to Medicare 
HMOs by $2.9 billion in 2010, $3.3 billion in 2012 and $4.5 billion in 
2015. Now, CBO scorekeepers think savings will peak at $2.9 billion in 
2010. By 2012, the government will be paying the HMOs $100 million more 
than now scheduled, and $900 million more by 2014.

Republican aides involved in the change dismiss its significance, saying 
the CBO is reading too much into it. The Bush administration had planned 
to phase out "hold harmless" payments through 2010, and negotiators 
wanted to make the audit adjustments coincide with that time frame, the 
aides said.

Grassley agreed: "If CBO continues to say there needs to be a 
legislative requirement to conduct the analyses past 2010, then I look 
forward to passing legislation continuing the reports and achieving even 
bigger budget savings."

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/23/AR2006012301700.html?referrer=email
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.islandlists.com/pipermail/mb-civic/attachments/20060124/ce8813d9/attachment-0001.htm