The top House and Senate Republicans told negotiators to settle the major issues by week's end, and the Republicans involved in the closed-door compromise talks said they thought they would.
Chief among the unresolved issues is a demand by House GOP conservatives to have traditional Medicare compete directly with new managed-care plans.
Democrats fear that could send premiums for traditional Medicare skyrocketing. Two sources said discussions focused on suggestions to avoid large cost increases for current beneficiaries as well as individuals aged 55 and low-income people.
The Washington Post reported that the lawmaker heading the House-Senate negotiations, Rep. Bill Thomas, R-Calif., had angered Democrats and some Republicans by drafting a five-page proposal that adopted the position taken by House Republicans on all of the unresolved issues.
In talks that ran into the night, negotiators also debated proposed cuts in hospital payments and ratified an earlier agreement on the structure of a prescription drug benefit that would become available to seniors.
For a monthly premium of $35, a beneficiary would pay an annual deductible of $275 for coverage that then picked up 75 percent of costs up to $2,200. After a gap in coverage to $3,700 in out-of-pocket costs, all or nearly all remaining prescription bills would be paid for.
In yet another sign that the pace of talks was quickening, Senate Democrats scheduled a closed-door meeting Thursday to review the discussions, although Sen. Max Baucus of Montana, one of two Democrats in the talks, said it was a "stretch" to believe that all major issues could be resolved by Friday.
The party's leader, Sen. Tom Daschle, D-S.D., was also expected to send President Bush a letter outlining a series of conditions to be met if the administration wants bipartisan support.
Among them was a rejection of "caps or other arbitrary limits" on Medicare spending, according to one official who spoke on condition of anonymity.
Other officials, also speaking on condition of anonymity, said that if the negotiators failed to reach a compromise on major issues by then, it was possible that Speaker J. Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., would step in more forcefully.
Frist said he hoped to have final legislation before the Senate the first or second week of November.
Lawmakers also discussed giving higher federal payments to insurance companies in regions of the country they are unwilling to serve, in an effort to make sure new preferred provider organizations take root. A PPO is a health maintenance organization in which patients can seek outside doctors.
Two sources, speaking on condition of anonymity, said figures ranging from $6 billion to $20 billion were discussed for this so-called stabilization fund, but no agreement was reached.
Both houses of Congress approved different versions of legislation earlier this year with two goals — create a new prescription drug benefit and also overhaul the entire Medicare program to modernize health care for seniors while restraining the rise of government costs.
Lawmakers have discussed numerous other controversial proposals in recent weeks without reaching decisions. These include discouraging companies from dropping existing coverage for their retirees and charging wealthier seniors more for their Medicare out-of-hospital health care.