View from Washington – In Session: What’s on the horizon for the Congressional Ship-of-State.

Every year begins with instilled optimism. President Bush and the Republican party majorities envisioned great policy accomplishments for 2005. But this vision faded during 2005 when the nation suffered two devastating hurricanes coupled with the ongoing extremity of the Iraq war. The president and lawmakers face a similar reality as they set their sights for 2006.

In healthcare, the new Medicare prescription drug plan will be watched as the program goes into the implementation phase Ñ and it already looks like it’s off to a bumpy start. Calls for Medicaid reform will continue, as Congress was unable to reach consensus on many provisions raised during the budget-cutting discussion in late 2005. Assuming the FY’06 budget reconciliation does pass, it appears likely that a demonstration project will be implemented for gainsharing arrangements between physicians and hospitals. Home health agencies and hospitals will have to abide to certain pay-for-performance provisions. A long-term measure may also be implemented dealing with physician-owned specialty hospitals.

Since Congress was unable to finish the budget reconciliation in December, it will be the first order of business when the House of Representatives returns. In December, the Deficit Reduction Act of 2005 was passed by both chambers. Although the Senate-approved legislation is substantially similar to that passed by the House, Senate Democrats and some Republicans used procedural tactics to strip it of minor, non-deficit-reduction provisions. Consequently, the bill must be returned to the House for further consideration. If passed and enacted in its current form, the following will be highlights of the budget package related to the Medicare and Medicaid programs.

Medicare Program

  • Ensures payment rates for ambulatory surgery centers (ASCs) do not exceed payment rates for the same services provided in hospital outpatient departments. This provision is effective for services furnished after Jan. 1, 2007 and before implementation of the new ASC payment system.
  • Increases payments to insurers that cover sicker patients and lowers payments to insurers covering healthier patients.
  • Reduces payments for imaging services.

Medicaid Program

  • Reduces payments for prescription drugs.
  • Tightens the rules of asset transferring for the elderly in an effort to qualify for benefits.
  • Permits states to charge premiums and higher co-payments for benefits, including prescription drugs, doctors’ services and hospital care.

This is a Congressional election year. If the schedule runs close to historical patterns, Congress is going to want to be in Washington only until late summer. President Bush will shortly be referred to as a ‘lame-duck.’ Members anxious for re-election will not be as beholden to the President and the GOP leadership if they renew unpopular initiatives and do not quickly deal with some of the mess left over from 2005. Likely, the Congress will want to see quick action on the 2005 budget reconciliation bill. If issues, including many related to healthcare, Medicare, and Medicaid become too contentious, look to see these jettisoned as the Congressional ship-of-state quickly maneuvers back into calmer and politically favorable waters.

About the Author

Robert Betz Ph.D.
Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit