Medicare bill a study in D.C. spoils system Part 2

[Guest guest]

Medicare bill a study in D.C. spoils system

 

October 5, 2004

 

Page 4 of 9 -- Triad, based in Plano, Texas, for example, is the

second-largest source of contributions to California Republican Bill

Thomas, the powerful chairman of the House Ways and Means Committee

and a key author of the Medicare bill. Triad has funneled $17,000 into

Thomas's campaign fund in the 2003-2004 election cycle, most of it at

a Dallas fund-raiser in March 2003, according to Federal Election

Commission disclosures. Five Triad executives at the fund-raiser

contributed $1,000 each, and the company gave Thomas another $10,000

from its political action committee.

 

 

Among Triad executives who wrote a check was James D. Shelton, Triad's

chairman and CEO. Triad and Shelton declined to comment. But Shelton

gave an unusually blunt assessment of the motives behind his political

campaign contributions during a conference call with Triad's stock

analysts on Feb. 24, two months after Bush signed the Medicare bill.

 

Asked by an analyst how the industry planned to fend off calls to cut

back some of the Medicare increases for hospitals, Shelton said he

planned to open his checkbook again.

 

" First of all, I set a fund-raiser this last week for Blanche Lincoln

in Arkansas, " Shelton said during the conference call, referring to a

Democratic member of the Senate Finance Committee. " We're continuing

to be proactive in terms of a lot of the congressional delegations

around the country. "

 

A spokeswoman for Thomas, Christin Tinsworth, said the contributions

Triad and other health-care companies made had no bearing on the

Medicare bill.

 

Connections

 

Another cosponsor of the Dallas fund-raiser for Representative Thomas

was the Federation of American Hospitals, the lobbying arm of the

nation's for-profit hospital chains. The federation's president,

Charles N. " Chip " Kahn III, who contributed $2,000 to Thomas's

campaign, is a former top member of Thomas's staff and one of dozens

of Washington lobbyists who used to work for presidential

administrations or Congress.

 

The Federation of American Hospitals spent $2.78 million lobbying

Congress in 2003, according to the Globe analysis. With Kahn's

connections, the hospitals can make that money work more effectively.

It's the type of " revolving-door " relationship that tilts the Capitol

Hill equation in industry's favor, said Celia Wexler, vice president

for advocacy at Common Cause, a national nonprofit lobbying group that

focuses on government ethics.

 

" He certainly has relationships on Capitol Hill and a level of

expertise that would be very useful to the American Federation of

Hospitals, " she said. " We're not talking a level playing field here.

The average member of the public does not have that kind of

representation. "

 

Kahn also volunteers as a top fund-raiser for Bush's reelection

campaign. He has " Ranger " status, which means he has rounded up more

than $100,000 in " bundled " campaign contributions from individual

political supporters for the president. He is one of 25 major Bush

fund-raisers from the health-care sector, according to Public Citizen.

 

Page 5 of 9 -- In an interview, Kahn dismissed the suggestion that his

former relationship with Thomas helped America's for-profit hospitals

win more Medicare money.

 

 

" He listens to me, " Kahn said of Thomas, " but he listens to a lot of

other people, too. "

 

Thomas's spokeswoman, Tinsworth, said Kahn's former relationship with

the chairman does not affect policy.

 

Securing bigger Medicare reimbursements under the banner of rural

hospitals was not a tough sell, Kahn said. " Some of the members cared

more about the rural hospital provisions than any other part of the

bill, " he said.

 

A crucial supporter, Kahn said, was the chairman of the Senate Finance

Committee, Charles Grassley, an Iowa Republican whose state was among

the beneficiaries with about $151 million in rural hospital funding

alone, according to data from the American Hospital Association. By

merit of his powerful position, Grassley has received heavy campaign

support from the health-care sector. He has collected $353,000 from

insurance companies and executives, $333,000 from doctors and other

health professionals, and $241,000 from the pharmaceutical and health

products industries, according to disclosure reports compiled by the

non-profit Center for Responsive Politics.

 

In response to questions from the Globe, Grassley defended the

inclusion of expensive hospital provisions in the drug benefit. The

" rural package, " Grassley said in an e-mail message, was paid for with

savings squeezed from other areas of the Medicare program.

 

" The rural provisions were crucial for improving beneficiaries' access

to physician and hospital services, " he said, " because if seniors

can't see the doctor, then a prescription drug benefit is of little

value. "

 

Leverage

 

Some of the most intense infighting focused on $900 million that was

dropped into the bill in the final weeks of debate for hospitals that

claim they are disadvantaged by regional wage differences -- the

provision that helped the University of Vermont's hospital. Hospital

executives in lower-paying areas wanted more money from Medicare,

saying they needed the money to retain staff by paying better hourly

wages.

 

The Bush administration used the broadly worded congressional

guidelines accompanying the $900 million to write a complex set of

specifications for hospitals to win a higher wage classification,

using geography, population, and income data. When the dust settled

and an obscure board in the Department of Health and Human Services

issued the list of 121 recipients, many were hospitals in states and

districts represented by key Republicans.

 

Among them were two hospitals in the Texas district of Republican

Majority Leader Tom DeLay, a member of the conference committee on the

Medicare bill. Ten hospitals in Connecticut, home of US Representative

Nancy Johnson, another Republican member of the conference committee,

also benefited. Pennsylvania, represented by Arlen Specter, a moderate

Republican who had crusaded for health care money, had 13 institutions

in the victory column.

 

Page 6 of 9 -- Charles Robbins, a Specter spokesman, said Specter " is

always interested in improving hospitals. " Johnson's office and

DeLay's office did not respond to requests for comment.

 

 

Also represented were hospitals in a handful of states represented by

key Senate Democrats, including Max Baucus of Montana, ranking member

on the Finance Committee, and Kent Conrad of North Dakota. Their

support, along with that of Vermont's Jeffords, was key to the

Medicare bill's passage. Nine Democrats and Jeffords gave the Medicare

bill its 54 to 44 margin.

 

In New England, the regulations resulted in about $7.8 million a year

for three years for the University of Vermont's Fletcher Allen Health

Care medical center, in Burlington -- money the hospital says it can

use to pay its workers better, a hospital spokesman said. To squeeze

UVM under the umbrella for the benefits, Jeffords, the lone Senate

independent and a key supporter of the Medicare legislation, fought to

get Burlington, Vt. in the same wage district as Boston and Worcester,

according to his staff. It was a renewal of an earlier Medicare

provision that benefited the Burlington hospital but was due to

expire, the staff said.

 

Jeffords, in a statement responding to the Globe's questions, said he

worked to put Fletcher Allen and other hospitals like it " on a level

playing field with their urban counterparts. "

 

" I voted for this bill knowing it was not a perfect bill, but after so

many years, we could no longer afford to keep talking about a perfect

bill while letting a good bill slip from our grasp, " he said.

 

About 150 hospitals thought they qualified for the higher

reimbursements but were frozen out when the money was distributed by

the administration. McGinty, the Maine hospital official, thought

Maine's hospitals would get $70 million over three years but learned

otherwise just before the list was released.

 

" We really don't understand what happened, " McGinty said. " We are

mystified. "

 

Conrad, the North Dakota senator, confirmed in a telephone interview

that he and other Senate Democrats negotiated details with the Bush

administration on how the hospital wage money would be distributed.

 

He said he was personally given assurances that hospitals in North

Dakota would benefit in a telephone call with the Health and Human

Services Secretary Tommy Thompson, who was contacting members of

Congress to build support for the bill. There was no specific

quid-pro-quo in exchange for his vote, Conrad said. But Thompson's

assurance, he said, " was certainly a factor " in his support of the

bill. In all, nine North Dakota hospitals appeared on the list of 121

hospitals across the country.

 

A spokesman for Thompson, Bill Pierce, said the department did

negotiate with members of Congress to set up the detailed

specifications for which hospitals would qualify. He said Thompson or

other Health and Human Services officials did not get involved with

the work of the independent board that awarded the money, called the

Medicare Geographic Classification Review Board.

 

Medicare bill a study in D.C. spoils system

 

October 5, 2004

 

Page 7 of 9 -- " We didn't know those decisions until they were

released, " Pierce said.

 

Some people said the process looked like it favored certain institutions.

 

" When you look at the distribution of the money, it looks like the

regulations were set up to favor some hospitals, " said John Thorpe, a

Texas health-care consultant who hopped a jet to the Baltimore offices

of the Medicare administration to hand-deliver a successful

application for a hospital in Wichita Falls, in the district of

Republican US Representative Mac Thornberry. The hospital will get

$2.2 million over three years.

 

" It's gotten so political it's hard to tell who's on first, " Thorpe said.

 

The losers win, anyway

 

Even senators who ended up opposing the Medicare bill worked to

include money for their districts. Prominent among them were

Massachusetts Senators John F. Kerry and Edward M. Kennedy, who

lobbyists said were instrumental in giving a financial lift to

Boston's prestigious teaching hospitals.

 

Nationally, teaching hospitals secured $400 million in bigger medical

education payments over five years to help train young doctors. Of the

total increase, Massachusetts hospitals will receive $22.5 million.

 

To help secure the Massachusetts share, the Coalition of Boston

Teaching Hospitals paid $260,000 to a team of lobbyists that included

Christopher R. O'Neill, the son of the late House Speaker Thomas P.

" Tip " O'Neill Jr. The Boston hospitals worked closely with the

Association of American Medical Colleges, which reported $580,000 in

lobbying expenses.

 

Kennedy and Kerry defended the provision as critical to the future of

medical education. " Considering the overall size of the bill, there

was broad, bipartisan support for helping academic health centers, "

said Andy Davis, a Kerry spokesman.

 

Getting that bipartisan support took some work. A big hurdle,

according to lobbyists who worked on the issue, was to convince

Representative Thomas, the Republican House Ways and Means chairman,

to support the measure.

 

Many of the nation's teaching hospitals are situated in Democratic

strongholds like Massachusetts, New York, and Illinois. For them, they

key was to identify the few major teaching hospitals in Republican

states, such as Texas, that also would benefit from the higher

reimbursement rates and get their CEOs to pressure their lawmakers.

 

The Methodist Hospital in Houston and the University of Texas Medical

Branch in Galveston were among the Texas hospitals that contacted the

office of GOP Texas Senator Kay Bailey Hutchison, who in turn went to

bat for the institutions in a Senate floor speech, Hutchison's office

confirmed.

 

The teaching hospitals also had to convince the Bush administration to

give them the additional money. Dr. Peter Slavin, CEO of Massachusetts

General Hospital, and Ellen Zane, now the chief executive of Tufts-New

England Medical Center, who at the time was president of Partners

Community Healthcare Inc., the physician's network associated with MGH

and Brigham & Women's, visited the White House in July 2003 and met

with Bush's health-care adviser, Douglas Badger. Continued...