Medicare, Medicaid spending packages reveal deep divide

Healthcare Financial Management, Dec, 2005

The federal budget process inched forward at the end of October as congressional committees with jurisdiction over Medicaid and Medicare spending completed FY06 budget reconciliation packages. On Nov. 3, the Senate passed a reconciliation package that would save $10 billion over five years, splitting the savings between Medicaid and Medicare. The House was expected to take up its package mid-November. The Senate's provisions affecting Medicare include:

* A physician payment increase of 1 percent in 2006

* A ban on physician referrals of Medicare or Medicaid patients to limited-service hospitals in which the physicians have an ownership or investment interest

* Modification of the "75 percent" rule for inpatient rehabilitation facilities to a 50 percent level through June 30, 2007

* Reduction of Medicare's skilled nursing facility bad debt payments from 100 percent to 70 percent of allowable costs

* Implementation of value-based, or pay-for-performance, purchasing for most Medicare providers, including a funding pool to reward providers that meet quality thresholds [mouse] 10-28-05

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