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Medicare Service Costs Would Increase Under Proposed Senate GOP Plans

By Robert A. Rosenblatt and Edwin Chen
Los Angeles Times
WASHINGTON

Senate Republicans, in a sharp disagreement with House leaders that could complicate Medicare reform efforts, are preparing a plan to charge seniors significantly more for Medicare services, government and industry sources said Monday.

The preliminary plan, under consideration by the Senate Finance Committee, would raise the annual deductible for doctors' service to $150 from the current level of $100, sources said Monday. The plan also could require Medicare patients to make co-payments for the first time for home health care services and laboratory fees.

Both House and Senate Medicare planners agree that monthly payments by beneficiaries for doctor services, now $46.10, should go to $90 by 2002. But the House leaders do not want to impose any more burdens on beneficiaries, projecting that the government can gain as much as $90 billion in savings as people move into managed care plans in increasing numbers.

The mood in the Senate is much less optimistic about savings from managed care. Senate health planners estimate that the government can save $30 billion to $50 billion.

On both sides of Capitol Hill, Republicans are searching for a combination of savings that meets the GOP target for Medicare of $270 billion over seven years.

If managed care savings are less than expected, the money must be made up elsewhere, either from higher payments by the 37 million Medicare beneficiaries, or from reduced government reimbursements to the HMOs and to doctors, hospitals and other health providers.

Also under consideration are provisions requiring Medicare patients to make substantial new co-payments, possibly as high as 20 percent, for home health care, laboratory fees and - for those recovering from serious illnesses - the first 20 days of care in skilled nursing facilities.

There are no co-payments for these services under the current Medicare system.

And to control managed care spending, the Senate Finance blueprint would limit HMOs to 5 percent annual increases in the amounts they charge the government for providing health care for Medicare enrollees. This provision is likely to be opposed by the HMO industry as an arbitrary government effort to restrain the private market.

The proposal to require Medicare beneficiaries to pay an additional $50 a year for doctors' fees - and perhaps to impose the 20 percent co-payment on other services - has irked House Republicans. House Speaker Newt Gingrich (R-Ga.), has been privately urging GOP senators to abandon that requirement.

The potential revenue from the move might be as much as $50 billion over seven years. Such a sum would be "a significant step in the right direction" toward the GOP goal of $270 billion in savings, Gingrich said.