Savings Uncertainty Holds Up GOP Medicare Reform : Legislation: ‘The big unknown’ is how many people will choose managed care. Providers, beneficiaries will have to pick up the difference.

Republican plans to revamp the Medicare system are bogged down in confusion and uncertainty over the potential savings from moving millions of beneficiaries into health maintenance organizations and other forms of managed care.

“The big unknown” is how much in prospective savings from managed care will be counted by the Congressional Budget Office, Sen. Bill Frist (R-Tenn.), a heart transplant surgeon and one of the key GOP health policy-makers, said Wednesday. The CBO analysis is part of a complex puzzle to determine how much of the Republican target of $270 billion in future savings over seven years will come from three choices: moving beneficiaries into managed care, making beneficiaries pay more or reducing reimbursements to hospitals and doctors.

The House Republicans are particularly optimistic about managed care, hoping that it can provide them with $80 billion or $90 billion in savings. If the CBO, the arbiter of legislation, does not agree that savings of that magnitude can be reached under their plan, the lawmakers would have to impose a much higher financial burden on beneficiaries and providers. It is not known when the CBO will finish its analysis.

House and Senate Republicans will meet today to discuss Medicare, without having a complete, detailed plan among either group even though deadlines are nearing. The Senate Finance Committee plans to have its bill completed Sept. 22, with the House Ways and Means Committee expecting to finish by Sept. 29.

Hoping to sustain a sense of urgency over the issue, House Speaker Newt Gingrich (R-Ga.) will promote the GOP call for reform at a televised national town hall meeting on Friday, which will be broadcast by the U.S. Chamber of Commerce through satellite links to thousands of sites across the United States. He will be joined by billionaire businessman and former presidential candidate Ross Perot in a format that will allow viewers to call in questions.

The general approach in the House seems to require savings of approximately $110 billion or $120 billion from reduced payments to doctors and hospitals, $60 billion or $70 billion by requiring Medicare beneficiaries to pay more for their monthly insurance premiums and $80 billion or $90 billion in savings from the movement of millions of persons into HMOs. The last category is the most difficult because just 9% of the 37 million beneficiaries now belong to HMOs. The vast majority are free to choose any doctor or hospital they want.

Republicans hope that extra inducements from HMOs--which may offer prescription drug coverage, eyeglasses and other items not covered by Medicare--will cause a voluntary shift to HMOs.

Rep. John A. Boehner (R-Ohio), head of the House GOP conference, said that the unusual meeting today will mark the end of “phase one” of the Republican drive to overhaul Medicare. That phase was largely a public relations effort--getting the message out to the public that the program needs to be restructured to ensure its long-term solvency. The next phase, he said, will focus on specific solutions.

Medicare has been growing at a rate of 10% a year and the GOP wants to slow the spending to an increase of 6.5% annually. The proposed savings of $270 billion are a key component in the GOP plan to balance the budget in seven years.

In the House, 195 of the 201 Democrats have endorsed a resolution introduced by Rep. John D. Dingell (D-Mich.) requiring four weeks of “full disclosure” and public hearings before Congress votes on any plan to overhaul Medicare. Democrats do not expect the resolution to pass, but hope it will serve as a vehicle to get out their message.