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Roadmap: Grassley Spars With Hospital Association

It’s been three weeks since the last major dust-up in the House-Senate Medicare prescription drug talks, but Senate Finance Chairman Chuck Grassley (R-Iowa) is rocking the boat again with an offensive not just on his old

nemesis — House Ways and Means Chairman Bill Thomas (R-Calif.) — but also on a key hospital lobbying association.

As usual, the conflict comes at just the right time to gum up the works of this week’s conference committee negotiations over hospital provider payments.

How appropriate that that’s exactly the issue Grassley is fired up about.

Indeed, the “Prairie Pragmatist” has the Federation of American Hospitals in his crosshairs for what he says is an apathetic attitude toward the nearly $12 billion in Medicare cuts that hospitals would have to absorb under Thomas’ version of the prescription drug bill.

In a Friday e-mail to Iowa hospital administrators that was obtained by Roll Call, Grassley recounts a closed-door meeting in which FAH lobbyists said that beating back Thomas’ attempt to reduce inpatient Medicare reimbursement rates to hospitals “was not the highest priority for their membership.”

Noting that he was “shocked” by FAH’s revelation, Grassley reminded his home state hospitals that they could see “approximately $160 million in lost revenue” if Thomas’ provision was not defeated in conference.

“Members of Congress, and especially the Medicare Conference Committee, need to hear from you and your colleagues around the country about these cuts,” wrote Grassley. “We in Congress have only a few short weeks, and if folks don’t speak up, I fear Members of Congress will not oppose these cuts as strongly as they should.”

FAH President Chip Kahn said his association does not necessarily want to see the cuts passed into law, but that FAH’s top priorities are seeing payment parity between rural and urban hospitals and closing a loophole that allows doctors to refer patients to specialty hospitals in which the physician has an ownership stake. (Both of those provisions are included in Grassley’s version of the bill.)

But one hospital industry lobbyist noted that the FAH’s mistake was really in trying to walk the highly volatile line between Thomas and Grassley.

“There’s a lot of sympathy for Grassley’s position,” said the lobbyist. “But you can’t necessarily win on everything in a conference, and you don’t want to get yourself on the wrong side of powerful chairmen.”

It’s a good case study in the pitfalls of trying to play both sides when the “powerful chairmen” have so little on which they actually agree. So it looks like FAH will have to face the consequences of giving Thomas some ammunition against Grassley’s quest to keep the cuts out of the conference agreement.

As a result, it’s a pretty safe bet that Thomas will not take kindly to Grassley’s back-door attempt to undermine that portion of his bill. Thomas might be especially peeved that Grassley scheduled the meeting of hospital lobbyists for last Thursday, when the House chairman was in Cancun, Mexico, for high-level international trade talks.

Grassley’s call to arms on the hospital payment issue is just the latest in what’s shaping up to be a series of attempts to undercut Thomas in the Medicare negotiations, particularly when the issues affect rural hospitals.

Grassley decided three weeks ago to pull his aides out of staff-level negotiations because he suspected that Thomas was purposely delaying talks on the rural hospital parity issue.

While Grassley has gotten in hot water with Senate GOP leaders for that move, it appears he has yet to heed their renewed calls to focus more on the overall prescription drug proposal rather than on side issues.

“The provider issue is less important than having a good drug benefit and a good delivery system,” said one senior Senate GOP aide of the leadership’s thinking.

Given the Senate Republican leadership’s inability to rein in Grassley, it’s not surprising that the White House is poised to send Vice President Cheney and his staff to sit in on negotiations as early as this week.

One Medicare lobbyist described Cheney’s potential entry in the talks as a “pre-emptive strike” to head off what most people see as the inevitable clash of the titans.

Indeed, the buzz on Capitol Hill is that Thomas and Grassley have only a few weeks to get their act together on a compromise version of the prescription drug bill.

“It’ll be part of a broader push from the leadership to pick up the pace a little bit,” said the Senate GOP aide. “It’s clear they need a little pushing along.”

And the big fights over how much private competition to allow as well as how much the federal government should subsidize low-income Medicare recipients haven’t even gotten really juicy yet.

Though Thomas continues to insist that he can’t pass a bill through the House without satisfying conservative demands that private drug benefit companies be allowed to compete with Medicare services, a number of lobbyists are shopping compromises to conservative Blue Dog Democrats and others in an attempt to create a new coalition of supporters. (Remember the bill passed the House by only one vote after a Herculean arm-twisting effort by the House GOP leadership.)

Thomas may be thankful in the end that lobbyists are trying to expand his range for him, because conservatives only appear to be digging in their heels in opposition to any plan that creates what they consider a major expansion of federal entitlements.

“The way it comes back to the House will be a difficult calculus” for conservatives, said one House Republican who has been following the conference talks.

This House Republican added of the potential political repercussions, “Democrats smell blood.”

Meanwhile, Grassley is trying desperately to keep Senate Democrats at the conference table, despite Thomas’ desire to have the deals worked out only among Republicans and to rely on GOP votes in the Senate.

But given a potential revolt by their own conservatives, Senate Republicans appear convinced that the bill will only pass both chambers if the conference report simultaneously appeals to conservative Democrats, such as Senate Finance ranking member Max Baucus (D-Mont.) and Sen. John Breaux (D-La.), while alienating liberal-lion Sen. Edward Kennedy (D-Mass.)

Kennedy supported the original Senate version — a position that enraged some Democrats. But Republicans in both chambers say his support also could be the kiss of death in the House, where conservatives will assume his endorsement means the bill leans too far to the left.

“I definitely don’t think the bill should be written with Kennedy in mind,” said one senior Senate Republican staffer.