Congress closes with a pork-filled flourish

Times Staff Writers

Christmas arrived Wednesday for the kidney dialysis industry.

That's when President Bush signed into law the last major piece of legislation approved by the outgoing Congress. It was a lavish hodgepodge that included a $100 million-a-year boost in the Medicare reimbursement rates for dialysis providers who proved to be generous contributors to important legislators, notably House Ways and Means Chairman Bill Thomas of Bakersfield.

The dialysis folks were among many special interests benefiting from a piece of legislation that was designed to simply extend existing tax cuts and credits -- but ended up freighted with billions of dollars in new spending earmarks for the coal industry, Brooks Brothers and various other interests.

There have been more outrageous end-of-session bills, but following this election -- when corruption and fiscal incompetence were campaign themes -- some lawmakers found the latest package particularly offensive.

Senate Budget Committee Chairman Judd Gregg (R-N.H.) termed the legislative spectacle "embarrassing." He offered a scathing review of the final bill on the Senate floor, citing its myriad earmarks and other expenditures that had never been reviewed by a congressional committee or subjected to debate.

His statement covered the big-ticket items: a budgetary sleight of hand that blocked a planned 5% reduction in Medicare fees to doctors, a top priority of the powerful American Medical Assn.; the insertion of a rum excise tax shift that benefits Puerto Rico; and the addition of a $35-million earmark to fund a healthcare program in Tennessee.

Gregg reserved special scorn for a $4.9-billion item requested by coal-state senators for health and mine-safety spending. The lawmakers said such spending was necessary because some coal companies had not fulfilled healthcare responsibilities to miners and because abandoned mines remained a serious problem in coal country.

Even Brooks Brothers, an upscale clothing purveyor, walked away a winner. The company was part of a coalition that won about $32 million in refunds of tariffs that it said had penalized the declining domestic shirt-manufacturing industry. The measure also aids domestic cotton growers, many of which are in California.

A Brooks Brothers vice president, Joe Dixon, said the company sought the tariff relief to "save clothing manufacturing jobs in Pennsylvania and North Carolina." The refunds, he said, would make it possible for Brooks Brothers and other U.S. shirt-makers to better modernize plants and compete with foreign manufacturers.

The watchdog group Taxpayers for Common Sense called the cotton measure "another example of special interests grabbing on to the last train leaving the station.... Obviously Congress didn't think enough of this proposal to pass it on its own during the past two years."

The dialysis earmark, like other nuggets in the bill, had not been authorized by a congressional committee, and its addition to the tax bill was made final in a secret middle-of-the-night meeting in the waning hours of the session on Dec. 7.

Dialysis scored "not because dialysis patients have the most meritorious case," said Sara Rosenbaum, professor of health law and policy at George Washington University, but because the industry is "effective on Capitol Hill."

One example: House Ways and Means Committee Chairman Thomas got $84,250 in donations during the last campaign cycle from DaVita Inc., a leading dialysis company. Thomas was among the negotiators at the late-night meeting who agreed on the dialysis earmark.

Thomas' former chief of staff, Cathy Abernathy, lobbies on DaVita's behalf.

After decades of working for Thomas, Abernathy has built a multimillion-dollar lobbying business focused on healthcare clients, including a coalition of dialysis providers, patients and manufacturers.

DaVita paid Abernathy fees of $20,000, part of the $1.14 million the company reported spending on federal lobbying in the first half of this year. Until recently, Abernathy was also a registered lobbyist for Kidney Care Partners, a nonprofit group representing patients, manufacturers and providers that has been chaired by DaVita's chief executive.

Tucked away in a Senate conference room with House Speaker J. Dennis Hastert (R-Ill.), Sens. Charles E. Grassley (R-Iowa) and Max Baucus (D-Mont.), and other leaders, Thomas led the charge for the dialysis coalition's proposals, according to a staffer who attended. Thomas recommended not only raising Medicare reimbursements for the dialysis industry but also including an automatic inflation adjustment. He also pushed for incentive bonuses for good healthcare results.

In the end, the negotiators agreed only to a one-time 1.6% increase in the Medicare reimbursement rate for dialysis, which will cost taxpayers $400 million over five years, according to the Congressional Budget Office.

Thomas' staff and DaVita officials said the campaign contributions and the congressman's ties to Abernathy played no role in his championing of the dialysis cause.

"Bill Thomas makes policy decisions based on the merits of policy, not on campaign contributions," said Rob Vanden Heuvel, spokesman for the ways and means committee.

LeAnne Zumwalt, a DaVita vice president, said effective lobbying was important for the dialysis coalition.

"Dialysis is the only Medicare program without an annual update for inflation," Zumwalt said, noting that increased funding had earned support across both parties and houses of Congress.

DaVita executives called the final decision "a step in the right direction."

The company had also sent contributions to other lawmakers who participated in the secret conference, including the only Democratic lawmaker in the room, Baucus, who received $22,000 from DaVita this cycle, according to the Center for Responsive Politics.

A Baucus aide said the Montana senator supported a rate hike because of his concerns about the financial stability of dialysis facilities in his home state. Baucus and other lawmakers also noted that an outside bipartisan advisory panel had recommended increasing the rate by twice the congressionally approved amount.

However, Rosenbaum said that the Medicare payment advisory panel made "tons of recommendations all the time" and that other worthy providers -- such as community clinics serving the poor -- were often overlooked.

Other factors, such as lobbying and the nature of last-minute legislation, explain more powerfully the willingness of Congress to legislate a rate increase for one group of healthcare providers, she said.

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tom.hamburger@latimes.com

wally.roche@latimes.com

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