White House drops co-pay plan, proposes $7.5B to Medicare

HHBR Washington Correspondent

WASHINGTON – President Clinton unveiled his Medicare reform proposal last week, and it was mostly good news for the home care industry. At week’s end, healthcare advocates were still groping for details of the president’s package, but it was clear that the White House had scrapped its plans for a home health co-pay and planned to restore some of the cuts made by the Balanced Budget Act of 1997 (BBA).

Aggressive efforts by Home Health Services & Staffing Association (Washington) counsel Jim Pyles and others convinced the administration to scrap its plans for a co-pay for home health to help pay for its $118 billion prescription drug benefit. Industry representatives received final assurance from Vice President Al Gore’s office days before the administration’s package was released that the co-pay proposal was removed.

But the home care industry may yet see a proposal for a co-pay introduced by House Ways and Means Health Subcommittee Chairman Bill Thomas (R-CA). A similar proposal was included in the National Bipartisan Commission on the Future of Medicare, jointly chaired by Thomas and Sen. John Breaux (D-LA), and Thomas is expected to introduce a package of healthcare reforms later this year.

The administration’s package would also restore $7.5 billion in Medicare funding over 10 years to offset cuts made by the BBA. The administration told a group of congressional aides last week that exactly where that money will go has yet to be decided, but home health and skilled nursing facilities are widely viewed as the first in line.

Home care advocates are hoping the White House will boost that number, and there is reason to believe that might happen. The number floating around Congress is $10 billion. At a recent Senate Finance Committee hearing, Sens. Bob Kerry (D-NE) and Breaux referred almost casually to $10 billion of BBA cuts likely to be restored. Like the administration’s proposal, they did not specify exactly where that money might be directed and whether there would be any offsets. It is widely believed that home healthcare will be in the front of the queue.

Further fueling that momentum is Medicare Payment Advisory Commission (MedPAC) Chair Gail Wilensky’s recent assertions that the three areas of the Medicare program with structural problems are home health, skilled nursing facilities, and the $1,500 outpatient therapy cap. The administration’s plan also includes hospitals.

Home medical equipment providers were not surprised to find that competitive bidding was a major provision included in the administration’s package. However, the five-page summary focused primarily on Medicare managed care and did not specify the degree to which that authority would be proposed for Part B services. "We don’t like the cryptic language in there about competitive bidding," said. Erin Bush, associate legislative director at the Health Industry Distributors Association (Alexandria, VA). "The 20% co-pay on laboratory services also concerns us, as does indexing the Part B to inflation."

A more detailed outline of the president’s proposal is expected soon.