Medical Device Daily Washington Editor

WASHINGTON – Healthcare is, in policy terms, the elephant in the room. But while nobody is ignoring the pachyderm, it’s clear that nobody knows what to do about it.

The second day of the 2008 National Health Policy Conference featured a look ahead by a number of congressional staffers – who spoke only on the condition that their remarks were not for attribution to them by name – and the consensus is that there is little consensus.

Panel moderator Joseph Antos, the Wilson Taylor scholar at the American Enterprise Institute (AEI; Washington), said, “this is a peculiar year,” given the lame duck presidency and that nobody running for office has been in the White House.

“There are some small issues,” in healthcare on the national agenda, Antos quipped, including “the business of fixing physician payments again,” a reference to Medicare Part B doctor fees, and the Children’s Health Insurance Plan.

“There’s a lot of talk about healthcare reform,” Antos said, but he added that this topic will not go far this year other than rhetorically.

One of the staffers for a Democratic member of Congress said there is “one good word about the president’s budget” in “that the $5 billion [the White House proposed last year to add to CHIP over five years] became $20 billion.”

The staffer did not endorse the amount, but said that any increase in CHIP monies is “a step toward covering all children in this country.”

The staffer indicated that the majority party is interested in boosting funding for several federal health programs in anticipation of a possible recession. “With this economic slowdown, states are going to be in trouble, which can boost demand for Medicaid services.

In response, he said, “I could foresee a bill at some point ... that we’re going to have to do something to shore up the FMAP,” the federal medical assistance percentages, a mechanism used to adjust the federal contribution to Medicaid. The staffer said that the last FMAP increase was passed two years after the 2001 recession, hinting that Congress should not wait for a recession to appear.

“I think there’s going to be a lot of pressure on Congress to act on a bill ... that would say that when a state enters financial difficulty, we’re going to bump up FMAP” to cover it. “I think Republican governors might be a little more active” in this situation than they have in the past.

The staffer also described the Bush budget proposal as a cut for the National Institutes of Health, inasmuch as the flat funding constitutes a cut after adjusting for inflation, but adding that “FDA doesn’t nearly get enough money it should to do its job properly.”

“I think it’s a total dereliction of duty that this administration has not proposed something in the physician payment” for Medicare Part B. “The administration has been sorely lacking in even putting constructive ideas on the table.”

A staffer for the GOP said that in legislative terms, “this year ... is an explicit continuation of last year” because of the lack of action on SCHIP and other matters. He said that some of the Senate Republican leadership was frustrated at the lack of activity in the Senate Finance Committee on several matters under that committee’s purview, presumably a reference to CHIP and Medicare. “That means we have a very aggressive timeline this year” to get a bill through to address these issues.

The GOP leadership’s priorities are the same as last year, the staffer said, “a very good rural package” for Medicare doctors, which he said was based on the difficulty of recruiting providers.

Regarding value-based purchasing (alternately known as pay-for-performance), the staffer said, “we have to figure out a way to realign incentives in the payment structures,” mostly in reference to hospitals. “We’re working with AHA and Premier,” but he offered no details on a potential package.

Specialty hospitals are a bipartisan concern, but the solution to the dilemmas they present do not enjoy “the kind of broad bipartisan agreement” needed to act on them. “Physician-owned hospitals really turn upside-down the incentive structure” due to self-interest, the staffer said, referring to “a lot of evidence on that” phenomenon.

In support of market solutions to federal healthcare responsibilities, the GOP staffer said that Medicare Part D has been a success. “If you compare how much its costing now compared to the original cost estimate, it’s $244 billion less than was originally scored” for the current fiscal year, which “shows that competition is working.”

As for the White House’s proposed cuts to Medicare, the GOP staffer said “those Medicare proposals, if all enacted, amount to 7.4% of total Medicare spending,” adding that the Balanced Budget Amendment of 1997 reduced Medicare spending by 12%. “As big as the president’s cuts are, they are small compared to BBA.

Antos asked the panel members from the majority “is there any hope” for a change in the budget process for Part B doctor fees. A Democratic staffer said, “the big enchilada that Congress is facing is whether we’re going to keep our promises to the elderly or whether we’re going to extend the Bush tax cuts.”

He said that the White House’s budget proposal cuts “almost a trillion ... from Medicare and Medicaid over the next 10 years,” which he said is how “this administration [intends] to finance its tax cuts for the wealthy.”

A Republican staffer noted that “the biggest challenge is the $250 billion or more that is needed to deal with SGR cuts.” He said that any new effort to influence physician behavior will be “one in a long string of congressional attempts” to do this, adding that rationing Part B income just spurs doctors to find ways to work around it. These include “the use of ancillary services,” such as imaging. He noted “a rapid increase in those” behaviors seen in previous attempts to trim Part B doctor spending.

“We’re going to have to come up with $250 billion to get rid of the current system,” the GOP staffer said, not sounding hopeful.