Conferees Agree to Support Senate's SCHIP Bill

House and Senate conferees have agreed to not include a Medicare physician payment increase as part of a bill to reauthorize the State Children's Health Insurance Program, or SCHIP.

"The issue of physician payment under Medicare will be taken care of -- it will just be later in the year," said Kevin Burke, director of the AAFP Division of Government Relations. "We had hoped to get this resolved sooner because physicians need some level of certainty for next year."

In August, the House and Senate passed bills to reauthorize SCHIP for the next five years. The House bill contained several provisions beyond SCHIP reauthorization, including a measure to provide a 0.5 percent increase in physician payments in 2008 and 2009.

The Senate, meanwhile, approved an SCHIP bill that does not contain any provisions other than reauthorization of the program. Unlike the House bill, the Senate legislation passed by a veto-proof margin, giving the bill an edge as conferees work to reconcile the two measures.

President Bush has threatened to veto both the House and Senate bills, saying that both are too expensive and represent a move toward a single-payer health care system.

Key House and Senate leaders are committed to a multiyear physician payment increase, not a single-year increase, according to Burke. But it is not clear how Congress will pay for the increase. The Senate SCHIP bill primarily relies on a 61 cent hike in the tobacco tax for financing, making it unlikely Congress will further increase the tobacco tax to pay for a physician payment increase.

"The issue will not be resolving (physician payment), but paying for it," Burke explained. "We need to find out what the House and Senate have in mind."

The AAFP and other physician-led organizations saw the SCHIP legislation as the most expedient way of addressing the Medicare payment issue. During the past two weeks, the AAFP has targeted the Senate with its advocacy efforts, asking senators to support the payment provisions in the House bill.

If Bush vetoes the SCHIP bill, Congress will have another opportunity to include a Medicare payment provision in a revised SCHIP bill, Burke speculated. Under this scenario, Congress could pass a two-year SCHIP reauthorization bill that would be much less expensive than the five-year bill currently being considered, leaving enough money to fund a two-year physician update without many additional offsets.

In the meantime, the Senate Finance Committee expects to introduce a bill later this year that would provide a slight increase in Medicare physician payment rates for the next two years, AAFP News Now has learned.

"The committee is collecting information and is going to introduce a separate bill," said Jerry Connolly, AAFP's senior government relations representative.

Connolly met with Senate Finance Committee Chairman Max Baucus, D-Mont., on Sept. 6, and said Baucus told him that the committee wants to introduce a bill to provide a "modest" two-year increase in physician payments under Medicare. Committee members plan to introduce a two-year update because they do not want to address the physician payment issue next year, Connolly said. It is not clear how much of an increase the legislation would provide.

The committee is not expected to introduce its physician payment legislation until after the Columbus Day break. Because Congress is scheduled to adjourn in early November, there will be little time to debate a separate Medicare measure, which means the bill could end up as part of a large catch-all appropriations bill passed just before adjournment.