Why the Medicare "cliff" was a cliffhanger. (View on Washington).

By the time you read this, the issue of the Medicare "cliff"--still a legislative "cliffhanger" at the time this was written--will have been resolved. Skilled nursing facilities either will or will not have retained the entire amount of the Medicare funding Congress restored after cutbacks made in 1997. If they don't keep the funding, it won't be because Congress wasn't trying.

Back in August, an unusual commercial began to appear on Washington-area televisions. The ad, sponsored by a coalition led by the American Health Care Association, depicted a gate being chained shut, as an announcer described how more than 1,000 nursing homes had closed in recent years. The text suggested that the closures were a result of low Medicare reimbursement rates and warned viewers that "Incredibly, some congressmen want to lower the rates further on October 1st." It implied that callous legislators were willing to force older Americans out of their nursing homes rather than pay a fair rate for long-term care services. The commercial also implied that there has been a serious debate in Congress about possible overpayment to nursing homes.

Designed to spur action, the commercial overstated the situation. During this spring, at least five bills were introduced in Congress offering reimbursement formulas that would maintain or even increase the money that nursing homes receive from Medicare. A sixth bill would have prohibited Congress from "micromanaging" reimbursement rates by transferring the responsibility to the Secretary of Health and Human Services. No bills were introduced this spring to make further cuts in reimbursement below those already prescribed by the Balanced Budget Act of 1997. In fact, there was general agreement in Congress that nursing homes had been shortchanged by Medicare reimbursement rates and deserved a legislative remedy.

There are two reasons Congress failed to act on this perception in a timely fashion. First, 2002 has been an unusually busy year for the federal legislature. Creation of a Department of Homeland Security, major reform of the Immigration and Naturalization Service, investigations into corporate fraud, "fast track" foreign trade negotiation authority for the President and Medicare prescription drug coverage all competed for attention with the usual agenda of budget appropriations. When legislators were not meeting on this urgent legislation, their attention was distracted by the shaky economy, high-profile congressional ethics investigations, leading to the removal of Rep. James Traficant (D-Ohio) from office and the censure of Sen. Robert Torricelli (D-N.J.), and last but certainly not least, the administration's threatened military assault on Iraq. Add to this mix the need for House members to run for re-election in newly redrawn congressional districts this year, and it is clear that Capitol Hill was overwhe lmed.

The other reason for the failure to pass the Medicare extension was that bills to "fix" the reimbursement rate for nursing homes always included more controversial issues. Congressman Tom Latham (R-Iowa), for example, wrote an increase of the SNF reimbursement rate in H.R. 5246, the Rural Equity Medicare Act of 2002. In effect, Latham proposed to raise nursing home reimbursements if Congress also agreed to increase spending on medically underserved populations in rural America. Latham's bill did not pass.

Another failure was occasioned by legislation alluded to earlier, H.R. 4954, the Medicare Modernization and Prescription Drug Act of 2002. Backed by the House Republican leadership, the legislation combined fair reimbursement for nursing homes with a Medicare prescription drug benefit derided by Democrats as a sop to the managed care and insurance companies. The bill passed the House on party lines but was rejected by the Democratic majority in the Senate.

One of the most straightforward efforts to "fix" the reimbursement rate was offered by Billy Tauzin, the Louisiana Republican who chairs the House Energy and Commerce Committee. In June, Tauzin introduced H.R. 4985, a bill with the dull but accurate title of "To Amend Title XVIII of the Social Security Act to Revitalize the Medicare+Choice Program, Establish a Medicare+Choice Competition Program, and to Improve Payments to Hospitals and...." His legislation tied higher reimbursement rates for nursing homes with higher payments to the managed care organizations that operate the shaky Medicare+Choice system. Tauzin's modest proposal was lost in the noise and fury that surrounded the failed efforts to pass some type of Medicare prescription drug benefit (although, at press time, it still had possibilities).

Earlier this year, Congressman Dave Camp (R-Mich.) addressed the House to promote his own bill to reduce the regulatory burden on nursing homes. He began his speech with a hopeful analysis of how the nursing home industry could benefit from many of the bills that Congress was officially considering. "This session," he said, "legislation has been introduced on numerous important long-term care issues, ranging from criminal background checks for nursing home staff to additional funding for the Medicaid program that provides the lion's share of financing for long-term care. A variety of other financing and regulatory proposals have been introduced or are being discussed. This gives us an important opportunity to discuss a broad range of options intended to improve the quality of care provided to residents in long-term care facilities."

But Camp was wrong. There were too many pieces of legislation, too many important issues related to Medicare and Medicaid, and too many other things happening in Washington this year for Congress to seriously discuss "a broad range of options" for long-term care. The most that could be hoped for at this writing was that Congress would somehow make a last-minute save on Medicare reimbursement.

To comment on this article, please send e-mail to [e-mail]