Medical Industry Wins Big as Congress Winds Down

During the hectic windup of the 106th Congress, the medical industry proved extraordinarily successful in persuading lawmakers to pay for new high-tech equipment, garnering tens of millions more research dollars and staving off cuts in Medicare payments.

With the Senate almost deserted and most senators already heading home, Majority Leader Trent Lott (R-Miss.), for example, pushed through a bill creating a National Institute of Biomedical Imaging and Engineering to fund radiological research and raise significantly the profile of the radiology community. Lott acted partly at the urging of a hometown Mississippi friend and neighbor despite the opposition of Health and Human Services Secretary Donna Shalala and some key House Republicans.

The success illustrates the difficulty of containing federal health outlays in an era of budget surpluses. Members of Congress find it hard to resist the lobbying pressure of medical groups and the lure of new devices that promise health care advances, at higher costs to Medicare.

“The companies and medical professions that make up a big component of our economy are just like the other big players” with an interest in the budget, said Urban Institute President Robert Reischauer, a former director of the Congressional Budget Office. “We shouldn’t be naive and expect them to behave any differently.”

Buried in the foot-tall spending bill that was rushed through Congress in the waning hours and signed by President Clinton on Thursday were favors for clinical oncologists and pharmaceutical companies, General Electric Corp.’s medical systems division and a California company that converts mammogram film to digital images. Congressional analysts say the provisions will add hundreds of millions of dollars to Medicare costs in the next few years.

This year, opportunities for medical interest groups improved after the White House and GOP congressional leaders got behind legislation to increase Medicare and Medicaid payments to large-scale providers such as hospitals, nursing homes and health maintenance organizations to ease the impact of cuts ordered in 1997. A bill passed by the House already contained more than $30 billion in increased Medicare payments to hospitals, health plans, doctors and other providers when Congress adjourned for the Nov. 7 election. Postelection bargaining brought the price tag of easing the impact of the 1997 cuts to $35 billion over five years.

One “rifle shot,” or provision that affects one company or group, effectively doubles the Medicare reimbursement rate for cancer-detecting mammograms performed with new digital technology--made only by GE’s medical systems division.

Pushed by Rep. E. Clay Shaw Jr. (R-Fla.), a senior member of the House Ways and Means Committee, the increase will make it easier for buyers of GE’s new digital Senographe 2000D machine to recoup their investment. Currently, neither the government nor private insurers pay more for mammograms made on digital machines, which are several times more expensive than conventional film equipment.

GE’s political action committee has contributed $5,000 to Shaw’s campaign since 1997, but he said he was motivated by a belief in the technology’s superiority after seeing it demonstrated at a GE event here last spring. “The bottom line is, for my wife and two daughters, I want this technology available, period,” he said.

Charles Young, a spokesman for GE Medical Systems, said his firm didn’t initiate the idea for the rate increase, but did provide Shaw’s staff with financial information for “reimbursement models.” Though the digital machine hasn’t been proved yet to be better than film at detecting cancer, Young said it increases productivity at imaging centers.

In a related move, Rep. Anna G. Eshoo (D-Atherton), sponsored a provision affecting R2 Technology Inc., which is located in her San Francisco-area district. R2’s ImageChecker, which converts mammogram film to digital images, costs about $200,000. The amendment increases Medicare reimbursements for each use of the ImageChecker by $15.

Together, the measures will cost Medicare an extra $500 million over five years, according to congressional estimates.

The American College of Radiologists, representing physicians who read mammograms, opposed the digital provisions because they want an increase in the basic reimbursement rate for all mammograms. Its chairman, Harvey L. Neiman, likened the GE and R2 language to “worrying about dessert before worrying about the main meal.”

Another provision tucked away in the same sprawling Medicare bill is language that blocks for at least nine months any decreases in the reimbursement rates paid to oncologists for the chemotherapy drugs they administer to cancer patients.

After the Clinton administration threatened to make sharp cuts earlier this year, lobbyists for the oncologists and patient advocacy groups set up the Alliance to Save Cancer Care Access, which organized the submission of more than 100,000 letters to members of Congress and to Shalala. The letters warned that the cuts in reimbursements could result in oncologists turning away cancer patients.

Oncology groups acknowledge that the Medicare reimbursement rates for many anti-cancer drugs are pegged higher in some cases than what it costs to buy the drugs from manufacturers. Those reimbursements are based on a controversial “average wholesale price” index derived from information provided by pharmaceutical companies.

But the oncology groups contend that Medicare pays them so little for their services to cancer victims that they need the high drug reimbursements to support their practices.

“Right now, patients are getting good cancer care and we don’t want to jeopardize that without extremely careful thought,” said Larry Norton, president-elect of the American Society of Clinical Oncologists.

In September, the Clinton administration called off a plan to use a new drug price index for 17 cancer and hemophilia drugs, to “assure that beneficiaries have access to the covered drugs.” But the Medicare legislation goes considerably further, blocking decreases in reimbursements until Congress, through the General Accounting Office, has finished a study that could take as long as nine months. A last-minute change will, however, allow the Department of Health and Human Services to increase the payments.

The final product brought an indignant blast from Rep. Pete Stark (D-Hayward), ranking Democrat on the Ways and Means health subcommittee. He called the provision a “$200-million gift to the drug industry--undoubtedly a payoff for the industry’s massive $80-million contribution to the Republicans and Gov. [George W.] Bush.”

Lobbying for the provision on behalf of the oncologists were two former staffers from the House Commerce Committee, which oversees Medicare payments to doctors.

For a while, it appeared that the legislation creating the new institute of health--the 19th--also would be added to the $35-billion Medicare legislation.

The legislation cleared the House on a voice vote in September, despite an objection from Shalala that it would require an “expensive new administrative structure.” It was a high priority for the radiological community, whose political action committee, Radpac, raised more than $200,000 for congressional candidates this year.

Earlier in the year, officials of the Academy of Radiological Research pushed for the legislation in a meeting with Lott. In attendance was radiologist Paul Moore, a longtime friend of Lott’s and neighbor in Pascagoula, Miss. Lott had appointed him in 1996 to the National Gaming Commission investigating online and other gambling.

Lott promised to “do his darndest” to get it passed, Moore said.

Lott’s repeated attempts to shoehorn the legislation into the Medicare package during the tense, final 24 hours of negotiations on the budget sparked a minor rebellion by House conferees. Several Democrats said they would refuse to sign the spending bill if it included the authorization, and the maneuver also was opposed by Rep. John Edward Porter (R-Ill.), the top House GOP advocate for the National Institutes of Health.

Rebuffed there, Lott used his power as majority leader to bring up the bill and pass it by “unanimous consent”--without a formal vote--as the year’s final Senate session came to an end Dec. 15. The bill went to the White House, and Clinton aides said it was still uncertain whether he would sign it.

“I don’t see why the president would veto it,” Moore said. “It’s needed and we’re going to get it--I think.”