2003-11-12 - House GOP Offers to Delay Direct Completion

"It would occur if there's no discipline shown. This is something
there for emergencies, a shotgun behind the door. If you need it, it's
there. Out West, the shotgun is the insurance policy." Bill Thomas (R,
Calif), who presides over the conference committee.



New York Times, November 12, 2003

House Republicans Offer Compromise on Competing Medicare Drug Benefits

By ROBERT PEAR

ASHINGTON, Nov. 11 - House Republicans floated a compromise on Tuesday
that they said could delay direct competition between private health
plans and traditional Medicare, the most contentious issue in a bill
to help millions of elderly people buy prescription drugs.

Conservative House Republicans insist on such competition, in the
belief that it would save money in the long run. But the idea is
anathema to many Democrats, who say they fear that price competition
would undermine traditional Medicare and increase costs for older
beneficiaries who remain in the original program.

House and Senate negotiators held a four-hour meeting on Tuesday in
what they described as a final push for agreement on the drug bill,
which would authorize the biggest expansion of Medicare in its 38-year
history. Much of the discussion focused on a provision of the House
bill that would require traditional Medicare to compete directly with
private plans in providing overall coverage starting in 2010.

Representative Bill Thomas, the California Republican who is presiding
over the negotiations, said competition might be held in reserve, as
"a shotgun behind the door," to be used only if Medicare costs
exceeded some benchmark set by Congress.

Such an arrangement would displease House conservatives. But
Republicans said it might make the bill more palatable to some
Democrats in both houses of Congress.

Senator John B. Breaux, Democrat of Louisiana, said on Tuesday night
that the negotiators had narrowed their differences over competition.

Republicans are eager to win the support of Senator Edward M. Kennedy,
Democrat of Massachusetts. But it is unclear whether they have made
enough concessions to do so.

James P. Manley, a spokesman for Mr. Kennedy, said the senator opposed
the type of competition envisioned in earlier versions of Mr. Thomas's
proposal.

Though many Democrats abhor the prospect of direct competition between
traditional Medicare and private plans, Mr. Thomas said it was "an
absolutely necessary provision," because it would impose fiscal
discipline on Medicare.

Under the proposal floated by Mr. Thomas, direct competition would
start only if the cost of Medicare drug benefits exceeded projections
made by the Congressional Budget Office. The budget office puts the
cost at $400 billion over 10 years.

Asked about the competition proposal, Mr. Thomas said: "If there's a
way to show discipline in the costs of the program, it need not occur.
It would occur if there's no discipline shown. This is something there
for emergencies, a shotgun behind the door. If you need it, it's
there. Out West, the shotgun is the insurance policy."

The negotiators said they had tentatively resolved another thorny
issue, a proposal that would prohibit doctors from referring Medicare
patients to new specialty hospitals in which the doctors have
financial interests. Such hospitals provide limited ranges of services
like cardiac care or orthopedic surgery.

The agreement would, in effect, bar the building or expansion of
doctor-owned specialty hospitals for a specific period, perhaps 18
months, lawmakers said. An existing specialty hospital could continue
doing business but could not expand or offer new services.

An independent federal panel like the Medicare Payment Advisory
Commission would study the role of specialty hospitals and make
recommendations to Congress in 12 to 15 months.

Specialty hospitals are a small but growing segment of the health care
industry. Critics like Mr. Breaux say a potential conflict of interest
arises when doctors refer patients to hospitals in which they have
substantial financial interests. Moreover, the critics say, these
"boutique hospitals" siphon revenue from general community hospitals
by performing some of the most profitable procedures on the
best-insured patients.

Defenders of such hospitals say they often provide superior care
because they specialize in particular services performed by some of
the best-trained doctors.

In a recent report, the General Accounting Office, an investigative
arm of Congress, said specialty hospitals, as a group, were "much less
likely to have emergency departments." For example, it said, "45
percent of specialty hospitals, but 92 percent of general hospitals,
had emergency departments."

Many Democrats doubted that they could support the bill taking shape
in House-Senate negotiations.