By Lisa Seachrist

Washington Editor

WASHINGTON - Recognizing that nothing but bipartisan legislation has any chance of passing in the final 50 legislative workdays of this election year, Sens. John Breaux (D-La.) and Bill Frist (R-Tenn.) scaled back their comprehensive plan to modernize Medicare to include more modest reforms while retaining a prescription drug benefit.

The senators introduced their new plan, "Breaux-Frist 2000," at a press conference Tuesday and said they would have the initial legislative language ready for the Finance Committee by the Memorial Day recess. They also said they would urge the committee to adopt their new plan, which is basically a revision of the "Medicare Preservation and Improvement Act", or S.1895, introduced last November, as the final Medicare proposal for full Senate consideration.

"It is very clear, in a divided government with only 50 working days left, in order to accomplish anything legislatively, it must be a bipartisan effort," Breaux said. "Six months ago Senator Frist and I introduced a comprehensive plan to reform Medicare. What we have attempted to create is a streamlined version of S.1895."

The senators estimated the cost of their proposal would come in at $40 billion - the amount currently budgeted for Medicare improvements.

Frist noted, first and foremost, the retooled legislation establishes a new, executive branch Medicare agency, similar to the Social Security Administration, with an outside advisory board to administer the competitive aspects of the Medicare program. The agency replaces an Independent Medicare Board that ran afoul of the Constitution in the original bill.

The Breaux-Frist 2000 proposal establishes a voluntary prescription drug benefit available to all Medicare beneficiaries. Beneficiaries using the Medicare+Choice plan - also known as Medicare HMOs - will receive the outpatient prescription drug benefit through those plans. Beneficiaries in the fee-for-service Medicare program will be able to select a drug benefit offered by private sector insurance.

The drug benefit provision would give the private insurance entities wide latitude to establish premiums and co-pays for drugs while also guaranteeing a minimum value for the benefit. Like most proposals from Democrats, this plan provides for a universal premium subsidy. For beneficiaries with incomes up to 135 percent of the poverty rate, the plan provides full premium support to purchase policies from a number of competing private entities. Beneficiaries between 135 percent and 150 percent of poverty would receive premium supports on a sliding scale. The plan offers all other beneficiaries a 25 percent premium support.

The senators chose the 25 percent premium support provision, rather than the 50 percent premium support in the Clinton administration's plan, to ensure companies that provide prescription drug benefits to their retirees will continue to do so. The plan also sets aside an as-yet-determined amount of money for a reinsurance pool to subsidize plans for their highest-cost cases. Finally, similar to the Clinton plan, the Breaux-Frist proposal would establish a reserve fund to help seniors pay for catastrophic drug costs beginning in 2006.

In addition to the prescription drug benefit, the senators seek to stabilize the Medicare HMO system by giving each of the private plans the flexibility to manage cost-sharing and benefits. The Medicare HMO plans would be overseen by the newly created Medicare agency. The senators' plan also grants the Health Care Financing Administration the flexibility to employ private sector tools, such as preferred provider networks and disease management programs, when administering the fee-for-service program. Finally, the plan scales back its wholesale restructuring of the Medicare program in favor of creating a new measure for establishing the solvency of the program.

"We've not only added the prescription drug benefit the American people want, we've taken the initial steps of Medicare reform," Frist said. "We are standing here saying if we can't do everything let's at least do part of it while we have this window of opportunity. If we get [this legislation] on the Senate floor, it stands a good chance of passing."

The Breaux-Frist plan is by no means the only plan on the table. In fact, Breaux noted the Democratic leadership in the Senate intended to introduce its plan Wednesday. In addition, Sen. Jim Jeffords (R-Vt.) has a proposal to reform the Medigap program; Sen. Edward Kennedy (D-Mass.) and Rep. Pete Stark (D-Calif.) have introduced interim drug coverage provisions, as has the Republican leadership in the House and Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.) in the Senate.

The sheer number of proposals indicates the issue of a prescription drug benefit for seniors could be a hot election year issue. If it is, it's unlikely any measure will make it to the president's desk before Congress adjourns.

The Biotechnology Industry Organization (BIO) has developed a set of principles to guide the development of a prescription drug benefit and Medicare reform. BIO supports measures that rely on the private sector to provide a drug benefit and a stop-loss measure to help seniors who have extraordinarily high costs for their medicines.