In Congress, Both Parties Propose Medicare Drug Plan Changes
Democrats and Republicans continue to clash over implementation of the Medicare drug benefit as the 2nd session of the 109th Congress gets underway. Many Democratic lawmakers, and some moderate Republicans, have introduced legislation to change the program by, among other things, extending the May 15 enrollment deadline and reducing the “doughnut hole” gap in coverage. With mid-term elections in November, this is a hot political issue for both parties.

President’s Proposed 2007 Budget Calls for Deep Cuts in Medicare, Medicaid
President Bush submitted his FY 2007 budget proposal to Congress in February. His $2.77 trillion plan would boost defense and homeland security, while cutting allocations in most other areas. Under the proposal, Medicare spendingÊwould be reduced by $35.9 billion over five yearsÊand $105 billion over the next 10, largely through reductions in Medicare payments to hospitals, nursing homes, and other health care providers. The budget proposes no payment update for skilled nursing facilities, home health agencies, or inpatient rehabilitation facilities in 2007, and a 0.4 % decrease for these providers in 2008 and 2009. Hospice payments would be reduced 0.4% from 2007 to 2009. The President’s budget would also cut Medicaid spending by nearly $12 billion over five years through further reductions in Medicaid drug reimbursement rates, among other things.

The spending plan is likely to undergo substantial modifications by Congress. The FY 2006 budget reconciliation bill (S. 1932) cut Medicare and Medicaid by $11.1 billion over the next five years, and the Republican-controlled Congress is uneasy about pushing another round of spending cuts in these programs in an election year.

MedPAC Releases Annual Report to Congress
The Medicare Payment Advisory Commission (MedPAC) on March 1 formally presented Congress with a report recommending no increases in Medicare payment rates for skilled nursing facilities, home health agencies, long-term care hospitals, or inpatient rehabilitation facilities in 2007. “Considering current margins, increased spending and volume, stable access and quality, and good access to capital, these providers can accommodate next year’s cost increases without an increase in base payments,” MedPAC stated in a news release.

In its report, MedPac concluded that payments are not well calibrated to costs in any of the four health care settings; that services overlap among settings; that post-acute care is not well defined; and that assessment instruments are not consistent among settings. These issues make it difficult to get better value for Medicare dollars across the spectrum of post-acute care, according to the agency.

In the report, MedPAC also emphasized the need for quality indicators that allow more accurate appraisal of whether patients benefit from skilled nursing facility care, and that distinguish among facilities. To this end, the Commission recommended that CMS:

• Collect information on activities of daily living at admission and at discharge;
• Develop and use more quality indicators, including process measures, specific to short-stay patients in skilled nursing facilities; and
• Put a high priority on developing appropriate quality measures for pay for performance.

MedPAC’s March 2006 Report to the Congress: Medicare Payment Policy is available at www.medpac.gov.

GAO, Congress Look at Nursing Home Evacuation in Wake of Hurricane Katrina
In the wake of Hurricane Katrina, the Government Accountability Office (GAO) and Congress are examining the vulnerabilities of nursing homes in future disasters. The GAO recently released a preliminary report, after reviewing documents concerning hurricanes and other emergencies, and interviewing federal, state, and local officials, administrators of nursing homes and hospitals, and nursing home and hospital association staff in Florida, Louisiana, and Mississippi.

According to the report, hospital and nursing home administrators evacuate only as a last resort, and facilities’ emergency plans focus primarily on “sheltering in place.” Administrators consider several factors when deciding whether to evacuate or to shelter in place, including the availability of adequate resources to shelter in place, the risks to patients during evacuation, the availability of both transportation to move patients and alternative facilities to accept patients, and threats to the facility’s or community’s infrastructure.

The National Disaster Medical System (NDMS), a federal system, can provide assistance with evacuation of hospital patients. But federal officials reported that the NDMS “was not set up nor is it currently configured to provide assistance evacuating nursing homes,” according to the GAO report.

The GAO expects to issue a final report this summer. For a copy of the preliminary report, visit http://www.gao.gov/docsearch/abstract.php?rptno=GAO-06-443R.
A related report issued by the Senate Health, Education, Labor and Pensions Committee recommends that the government take the following steps to protect seniors in future disasters:

• Develop a coordinated response for the evacuation of the elderly;
• Create a tracking system to locate and identify elderly victims during disasters; and
• Establish a clear delineation of responsibility during times of disaster at the federal, state, local, and institutional levels with regard to evacuation of the elderly.