Late Wednesday, Senator Max Baucus (D-MT), chairman of the Senate Committee on Finance, announced the committee would not mark-up Medicare legislation and will instead begin direct negotiations with House Democrats on the package.  The legislation aims to prevent a 10 percent reimbursment cut to physicians that goes into effect January 1st. 

On Monday, Health and Human Services Secretary Michael Leavitt threatened that the Administration would veto the legislation if it included cuts to Medicare Advantage plans.  An article from Inside Health Policy cited that its unclear where negotiators stand on a number of key issues expected to be included in the Medicare package, however, information about the Senate package includes the following potential reforms:

Medicare Advantage - Finance members had not settled on a final number, but cuts were expected to range from $10 billion to $15 billion, achieved by lowering the county benchmark rates to 130 percent of fee-for-service county rates. Negotiators were pushing to reauthorize all special needs plans and eliminate the deeming authority for private fee-for-service (PFFS). Plans would also see the elimination of independent medical education (IME) payments.

It's unclear where negotiators stand on a controversial provision that would give states authority to investigate plan marketing as well as impose new reporting and regulatory requirements for PFFS plans.

Dialysis -- The Senate package does not address payments to home health agencies, but would extend the Medicare secondary payer provision for dialysis patients from 30 months to 36 months and bundle payments for erythropoietin stimulating agents (ESAs) into the composite rate beginning in 2010. This would result in a 2 percent cut in payment, but would not cut the average sales price for large dialysis providers to ASP plus 2 percent, which House lawmakers favor.

Specialty Hospitals -- The Senate plan would prospectively eliminate the hospital exemption, but allow bed expansion for existing specialty hospitals and increase current thresholds for physician ownership provisions under the Stark laws.

E-prescribing -- Finance lawmakers want to mandate e-prescribing as a requirement for Medicare participation.

LTCHs -- Finance negotiators were considering adopting all of the long term care hospital (LTCH) provisions in the House-passed Children's Health and Medicare Protection (CHAMP) Act including: certain mandates for specific patient and facility criteria; a four-year moratorium on new facilities or satellite offices; elimination of the 25 percent rule for standing LTCHs, while rolling back and freezing to 50 percent the rule as applied to hospitals-within-hospitals and to 75 percent for rural and/or metropolitan statistical area-dominant hospitals; freezing for five years the agency's ability to impose a one-time budget neutrality correction to the base rate; and offering some kind of relief from CMS changes to short-stay outlier payments.

Oxygen -- Instead of a rental cap increase to 36 months beginning in 2008, which the House favors, the Senate package would reduce monthly reimbursements to stationary equipment by $77, a savings of $1.4 billion. That cap would not apply to new technology or competitive bid contracts. The Senate would also repeal transfer limits.

IRFs -- The Senate package would freeze the market basket, permanently freeze the 75 percent rule at 65 percent, and allow for a comorbidity extension while not imposing cuts to hip and knee patient reimbursements.

SNFs -- The Senate would either freeze or reduce the market basket.

Imaging -- Finance lawmakers would require mandatory accreditation, but with broader exceptions than were included in CHAMP, and preempt CMS by imposing a contiguous body part cut to 50 percent. CMS has a 25 percent reduction in place, but had planned to implement a 50 percent cut.

Wheelchairs -- Finance is considering adopting the House provision to eliminate the "first month purchase" option for wheelchairs and impose a 13-month rental cap before requiring a title transfer to the beneficiary.

Therapy Caps -- Senate lawmakers would extend the medical exceptions process for outpatient therapy caps until the end of 2009.

Hospice -- Senate negotiators are toying with a provision that would impose targeted cap-relief for small and rural hospice providers.

Low Income Subsidy -- Finance would impose a modest expansion to the program.