Picture Clears as Congress Nears Action on Budget Issues

As this column goes to press the week of October 21, key committees in the Senate and House are preparing to take action on budget reconciliation, the process by which Congress specifies how it will reach spending targets set by the 2006 budget. After weeks of struggling, the outlines of spending cuts (and new spending) are becoming much clearer.

Chair Charles Grassley (R-Iowa) announced that the Senate Finance Committee will begin working on the budget package on October 24. The Finance package offers good news for APA members because it

The package achieves most of its net Medicare and Medicaid savings of $10 billion through restrictions on asset transfers for nursing-home eligibility, changes in drug pricing and pharmacy payments, and repeal of a Medicare fund for special payments to Medicare Advantage plans.

Notably, the Finance Committee markup includes a phase-in of pay for performance for physicians. We are analyzing the proposal and will provide detailed information later. “Value-based” payments to physicians submitting required quality data would begin in 2009; quality-improvement data measures would be developed in consultation with impacted practitioners.

The picture in the House is less clear; the GOP leadership has deferred action pending resolution of disagreements over how to achieve the net savings target of $50 billion, up from the $35 billion called for in the budget. What's likely is that key committees in the House will start work in late October on a package of savings within their jurisdiction. The major committees charged with the heavy lifting are Ways and Means, Energy and Commerce, Education and Workforce, and Agriculture. Programs on the table for cuts include Medicare (elimination of or cut in the Medicare stabilization fund), Medicaid (where cuts reportedly will mirror much of the Finance package), along with pension fund premiums, cuts in student loan programs, and savings from farm and other payments.

Earlier this month, the House appeared to be ready to consider an across-the-board 2 percent cut in domestic discretionary spending, but support has waned.

As of press time, the House leadership was still attempting to find the votes to pass a package that would increase savings from mandatory programs to $50 billion from the $35 billion originally called for in the 2006 budget. The GOP leadership postponed action late October, when spending reductions will be achieved in key House committees.

Programs on the table for cuts include Medicare (where Ways and Means may cut the Medicare stabilization fund designed to bolster drug and health coverage), Medicaid (where cuts include changes to pharmacy payments, new copayments for enrollees, and restrictions on asset transfers for nursing-home care), along with pension fund premiums, cuts in student loan programs, and savings from farm and other payments.

APA and other health and mental health advocates have strongly objected to mandated cuts that target health programs for the poor and elderly. APA joined with other members of the Campaign for Mental Health Reform in strongly opposing reconciliation efforts to cut vital Medicaid programs such as targeted case management and rehabilitative services and expressing concern about copayments for Medicaid enrollees.

APA has also joined with 250 medical, health, mental health, and other organizations in urging the speaker of the House and the Senate majority leader to acknowledge the immediate and long-term mental health needs of Americans impacted by Hurricane Katrina by passing a comprehensive mental health parity law in 2005.

APA is separately urging Congress to act on APA-supported legislation to end Medicare's historic, discriminatory 50 percent coinsurance requirement for outpatient psychiatric services, to restore benzodiazepines to the list of medications that must be covered under the new Medicare Part D prescription drug program, and to clarify Part D coverage rules impacting medications used in the treatment of addictions.