Healthcare Industry Helps Shape Senate Reform Bill

(MoneyWatch)  While it looks like the Senate Finance Committee will adopt its current reform bill, politics and special-interest pressure are molding the final version.

Much of the media coverage has focused on provisions related to coverage of abortion, exclusion of illegal immigrants, and the penalties for not buying coverage. (On the latter point, the committee has approved amendments that would lower the fines, exempt about 2 million people from the requirement, and limit the amount anyone has to pay for health insurance to 8 percent of their income.) But behind the scenes, hospitals and doctors are trying to make sure their own interests are served.

The American Medical Association, which supports the House overhaul bill, has not yet taken a position on the measure before the Senate Finance Committee. AMA President James J. Rohack boasted that his organization helped defeat an amendment proposing a public option that would tie physician participation in Medicare and the public plan. But the AMA is unhappy that the Senate bill does not permanently rescind planned Medicare pay cuts to doctors, as the House legislation does. And the association is trying to delete a provision that would reduce Medicare reimbursement by 5 percent to doctors who are in the top 10 percent of resource utilization.

While the bill would require the adjustment of utilization data to reflect the relative sickness of patients, the government admits that this "risk adjustment" does not take into account all characteristics of Medicare patients. So some physicians could be unfairly penalized. Considering that the provision doesn't kick in for several years and would affect only a small minority of doctors, however, it appears that the AMA objects to the principle of linking reimbursement to efficiency more than to the impact on its members.

The AMA also strongly opposes another provision that would shift some Medicare money from specialists to primary-care doctors-no surprise, considering the dominance of specialists in the organization. The measure is designed to increase the attractiveness of primary care, which will be desperately needed to handle the influx of newly insured patients.

The American Hospital Association is more supportive of the Senate bill. One reason is that the bill's combination of annual pay cuts and potential reductions in charity care reimbursement do not exceed the $155 billion that the AHA agreed to in negotiations with the White House. However, a fly landed in that ointment when Democrats on the Finance Committee discovered that the Medicare commission that is supposed to recommend future budget cuts to keep the program solvent would be barred from decreasing hospital pay any further. While the hospitals say, "a deal is a deal," it is hard to see how the Medicare commission could be very effective if hospital spending is off the table.

So here's where we are: Much progress has been made toward extending insurance to millions of people-although the legislation would still leave the nation far short of universal coverage. Hospitals and physicians will see a flood of new customers, but they won't have to give up much reimbursement or be paid on a different basis, except in small demonstration projects.

Meanwhile, our wise legislators managed to insert a provision in the bill that would limit the tax deductibility of insurance executives' pay to $500,000 a year. As we used to say in New York, that and $2 will get you a ride on the subway.