MedPAC Backlash Shows Power of Special Interests

(MoneyWatch)  Like a delayed fuse on a bomb, President Obama's proposal to turn the Medicare Payment Advisory Commission (MedPAC) into a policymaking body has finally ignited an explosion, two months after he advanced the idea. And the reaction is showing the true colors of Congress and the power of the 3,300 healthcare lobbyists who are pulling out the stops to block real healthcare reform.

Under the Obama proposal, MedPAC, currently a Congressional advisory panel, would be transformed into an executive branch agency that would decide how much Medicare would pay healthcare providers. Congress would have the ability to override the new agency's decisions, but would have to do so in an up-and-down vote each year. In that sense, the proposed agency would be like a base closing commission, making the hard decisions that Congress cannot grapple with.

But despite Congress's manifest inability to rein in Medicare spending, many legislators do not want to give up that much control to the executive branch. "In a letter to Speaker Nancy Pelosi last week, 75 House members from both parties and all parts of the country criticized Mr. Obama's proposal and similar bills, saying they could threaten the ability of patients to get access to the care they need," the New York Times reported this morning. The Times article also quoted a representative of a Medicare rights group as saying that she feared Medicare patients might be shortchanged if a federal agency that was not accountable to the voters were given so much power. But others quoted in the piece said that the officials of the new agency, who would be appointed by the President and confirmed by the Senate, would still be subject to political pressure.

Meanwhile, physicians and hospitals are also trying to block Obama's plan, because they fear that their own payments will be cut. And some Congressmen don't want to surrender the ability to steer goodies in Medicare appropriation bills to their own districts.

The Congressional Budget Office has estimated that creation of the new agency would save only about $2 billion over the next 10 years. But that seems like a narrow estimate, considering some of MedPAC's recommendations in the past. MedPAC has advised Congress to redistribute some Medicare payments from specialists to primary care doctors, to make a portion of payments contingent on the quality of the services provided, to cut excessive spending on imaging tests, and to fund unbiased comparative effectiveness research. Congress has approved the latter two proposals; but the long-range fiscal impact of implementing the first pair is unknown at this point.

Without some kind of protection from lobbyists, the new agency would have a difficult time resisting political pressures. But what the current pushback reveals is how far the recipients of government largesse will go to stop any effort that would limit their effort to influence those who control the purse strings. Unless Congress is willing to stand up to these special interests, any reform it passes will be ineffective.