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Senate Rejects Cut to Doctors’ Medicare Payments

July 9, 2008 at 6:50 PM EDT
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The Senate passed a bill Wednesday blocking a 10.6 percent drop in Medicare payments to doctors treating elderly, troops and veterans. Susan Dentzer discusses the short and long-term implications of the move by Congress, which President Bush will likely veto.

GWEN IFILL: By a veto-proof majority, Congress moved today to roll back a plan to cut Medicare payments to the nation’s doctors. A previous law, if allowed to stand, would have reduced reimbursements by 11 percent, and doctors cried foul.

But the Senate today joined the House in rejecting the rollback, ending what had become a long standoff. Joining us to talk about the implications of today’s vote is Susan Dentzer, the editor-in-chief of the journal Health Affairs, and until recently the NewsHour’s health correspondent.

Welcome back, Susan.

SUSAN DENTZER, editor, Health Affairs: Thanks, Gwen. Great to be back.

GWEN IFILL: What broke through this huge logjam today, finally?

SUSAN DENTZER: Essentially, election-year politics, really. In a very dramatic moment in the Senate, Senator Ted Kennedy — of course, who’s being treated for brain cancer, probably fatal — came back onto the floor of the Senate for the first time in quite a while to cast the 60th vote to cut off debate over the bill in question and that, in fact, broke the logjam.

Sixty votes, of course, meant that nine Republicans then, additional Republicans — nine had already voted for it — nine additional Republicans then realized the game was over, crossed party lines, voted for it, so the vote ended 69-30 in favor of the bill, which, in effect, was the bill that rescinded the payment cuts, at least for now. For 18 months, there will be no payment cuts.

Private plans divide parties

SUSAN DENTZER: However -- and there is always a however in the U.S. Congress -- the doctors in effect were caught in the crosshairs here in a fight between Democrats and Republicans over Medicare private plans. These are private plans that participate in Medicare that by many analyses have been shown to being overpaid relative to the rest of the Medicare program.

GWEN IFILL: Which is why this 11 percent cut was enacted in the first place.

SUSAN DENTZER: Well, in effect, Congress wanted to forestall this cut. The question is, how do you pay for that? Because here we're going to put more money into the doctor part of the program. You've got to get the money from some place, when the Congress is operating under so-called pay-as-you-go rules, so the pot that they picked to raid was a pot that pays these private plans.

And because the Democrats and Republicans had long been at loggerheads...

GWEN IFILL: The Medicare Advantage program.

SUSAN DENTZER: ... over the -- it's known as the Medicare Advantage program, the private plans. And, in essence, that really was what the fight was about.

The essence of the fight was not getting rid of the payment cuts to doctors. The essence of the fight was over whether you were going to do anything to cut back these private plans, which, again, for many Republicans and conservatives, are their bedrock principle for how to reorganize Medicare over the long term.

President Bush likely to veto bill

GWEN IFILL: So that part of the debate remains unresolved, because that's what -- for now, cutting back on those plans is what's going to pay for this, right?

SUSAN DENTZER: It is a part of the financing of this package, that's right.

Now, the president has vowed to veto this, because the president has vowed to defend Medicare Advantage. So even though these bills have been passed by veto-proof majorities in both the Senate and the House, it's quite likely the president will come back and veto them.

And so we'll go back to another dance in the next few weeks, very much along the lines of what happened last year with the State Children's Health Insurance Program.

GWEN IFILL: If there's a veto-proof majority, that means both houses can override that veto. So why bother to veto it?

SUSAN DENTZER: Well, hope springs eternal. The White House can also hope that it will turn more votes its way. And also it just -- this is a bedrock principle for the White House.

Medicare reimbursement costs rise

GWEN IFILL: Let's go to some basics here. A lot of doctors have gotten very exercised about this. And they have said they were going to have to stop taking Medicare payments if this rate cut went into effect. Was that, in fact, happening?

SUSAN DENTZER: Some physicians were certainly saying they would take no new Medicare beneficiaries. They might keep their current patients who are on Medicare, but not open their doors to new patients.

The basic problem is that the formula, which adjusts physician payment under Medicare, is badly flawed and broken, and has been really pretty much since it was enacted in 1997.

Since 2002, the formula has driven these payment cuts. In sort of a "Perils of Pauline" scenario, year by year, Congress rushes in and says, "Oh, no, they can't cut the payments that much," and puts in a temporary fix.

What has to happen is a fundamental restructuring, and everybody seems to agree on it. The problem is agreeing what the new payment formula adjustment mechanism should be. And that's where there's been no progress.

GWEN IFILL: Is there any conversation at all underway about the underlying problem about rising health costs driving up higher Medicare reimbursement costs and what that actually means in the long run?

SUSAN DENTZER: Well, everyone knows that this is the issue. And, in fact, that's part of the reason why many Republicans are fighting so hard to preserve Medicare Advantage.

The long-term liabilities of Medicare are six times the size of the long-term liabilities of Social Security. They're huge and unfunded. And the Republicans say that there has to be a way to control that cost growth over time, and one way might be to have all Medicare beneficiaries enrolled in private plans that you could then fix the payment to year by year, keep costs under control that way.

Modest pay increase is temporary

SUSAN DENTZER: So this really is for them a bedrock principle. It's an equally bedrock principle, though, for Democrats that the private plans, first of all, are being overpaid relative to the rest of Medicare, overpaid to the tune of $1,000 per Medicare beneficiary per year of everybody who's enrolled in one of those private plans versus the rest of Medicare.

And they also just don't like the notion of herding this whole program into what they call a privatized mechanism. So that's what the fight is about.

GWEN IFILL: So, briefly, what they did today, even though it was a victory for the doctors, for the physicians right now, it didn't actually get to the bedrock problem?

SUSAN DENTZER: No. They've bought time now for the doctors for 18 months. There will be a modest increase this year for the doctors' payment. That will be extended, and then the doctors will get a 1.1 percent update next year. Then we go back to fight it all over again. And, of course, we don't even know how the fight this year will play out with respect to the White House veto.

GWEN IFILL: OK, Susan Dentzer, always good to talk to you about this stuff. Thank you.

SUSAN DENTZER: Great to be here, Gwen. Thanks.