By Amy Goldstein
Washington Post Staff Writer
Monday, May 10, 1999; Page A1

At a time when the federal government is worried about how to keep Medicare from going broke, virtually every segment of the health care industry is begging Congress to retreat on the few steps it has already taken to save the program money.

The feverish lobbying campaigns this spring are directed at softening a federal budget agreement adopted less than two years ago, which tried to rein in the nation's health insurance program for the elderly by placing new limits on how much the government pays for many kinds of care.

It is too early in the legislative season to know whether the aggrieved providers of health services -- ranging from the largest teaching hospitals to nursing homes to tiny home health companies -- will prove successful. But in the year since various parts of the law began to be phased in, the spending limits have proved painful to some elderly beneficiaries, and there are distinct indications that some of the lobbying efforts are finding a sympathetic response on Capitol Hill.

In recent weeks, several members of Congress have drafted bills that would, for example, direct more money to rural hospitals, allow bigger Medicare payments for patients who need rehabilitation therapy and permit greater subsidies to hospitals that train future doctors. Meanwhile, the chairmen of the Senate Finance Committee and the House Ways and Means health subcommittee have signaled that they are open to some legislative relief this year.

Such receptivity to health providers' complaints is striking, coming as leading members of Congress and the White House are wrestling with difficult choices about how to keep Medicare from running out of money after the large baby boom generation begins to retire in slightly more than a decade.

When the balanced budget agreement was enacted in the summer of 1997, its authors portrayed the cuts in Medicare payments, expected to reach $116 billion over five years, as a modest first step that was far more palatable politically than what might lie ahead: raising taxes, giving older Americans less care or substantially redesigning one of the government's largest and most popular programs.

Instead, the payment cuts are becoming an object lesson in how difficult it is for the federal government to impose any kind of change in the program that offers a medical lifeline for some 39 million elderly Americans and a financial lifeline to the nation's large, influential cadre of health care institutions and professionals.

The howls from health care providers also highlight how difficult it is for the federal government to predict the effect of legislative change and to measure those effects quickly once they begin to occur. Government figures show that Medicare has spent even less money than anyone expected when the budget agreement was passed. Remarkably, the program actually spent $3 billion less during the first seven months of this fiscal year than during the same period a year ago, according to the Congressional Budget Office.

Many health lobbyists have seized on those low expenditures to suggest that the 1997 law should be changed because its authors inadvertently made cuts deeper than they had intended. But neither government experts nor the affected health care organizations can say for sure yet how much of that unexpected pattern is a direct result of the budget cuts -- and how much has been caused by other factors, such as efforts to crack down on Medicare fraud.

Without a more complete picture of how those cuts are altering hospital and nursing home budgets and patients' ability to get care, the Clinton administration and at least some in Congress are urging caution in weakening Medicare's fragile financial props.

"The simplistic demand for more resources . . . [is] throwing more gasoline on a fire," said Sen. Bill Frist (R-Tenn.), a physician and leader on health care issues.

But advocates disagree. "The harm is deep, and we've been making the case something has got to stop the harm now," said Ralph W. Muller, president of the University of Chicago Hospitals and Health System, who has started making weekly trips to Washington as chairman of a "special action committee" that is lobbying for the nation's teaching hospitals.

Whether members will heed the wishes of the health lobbyists inevitably hinges, in part, on broader partisan concerns. At the moment, the White House and Congress's Republican leadership are locked in a tug of war over how to use future budget surpluses, with the GOP advocating a tax cut and the administration saying that 15 percent of those surpluses should be used to shore up Medicare. In that climate, it remains unclear where either party would find the money to repeal any of the 1997 cuts.

In the meantime, the evidence of how much harm those cuts have created is contradictory. The nursing home industry, which depends on Medicare for about 10 percent of its income, points out that a few of its largest chains are on the verge of bankruptcy.

Similarly, according to the National Association for Home Care, a Visiting Nurses Association branch in Illinois, which happens to be in the district of House Speaker J. Dennis Hastert (R), found that Medicare payments are now so low that it made the painful decision to abandon 25 patients who needed the most expensive care, rather than face the possibility of having to go out of business in a few months and strand some 300 patients. "We're not out there trying to say [Medicare] should be a welfare program for providers of services," said William Dombi, the association's vice president for law. "But if you destabilize the delivery system and then try to move toward reform, it seems a little bit backward."

Such perspectives, however, are at odds with a series of recent analyses by the General Accounting Office, which has concluded that the payment cuts have had little effect on Medicare patients' ability to find home care or get oxygen equipment at home, for example.

While many health care organizations acknowledge that they cannot pinpoint how much the law has hurt them, they insist that Congress should act this year, particularly because the cuts are to be phased in for another three years.

"If we wait . . . we are going to have a lot of areas in this country where rural hospitals will close," said Darin Johnson, director of government affairs for the National Rural Health Association. So this year, the association began a campaign called "You Can Make a Difference," teaching its members to write letters to their legislators and invite them for visits so they understand why parts of the budget agreement need to be revised.

The American Hospital Association, meanwhile, already has spent several hundred thousand dollars on newspaper advertisements and hired a consultant to develop a sophisticated economic model that will allow individual hospitals to measure -- and tell their representatives -- how much they are being hurt. The association is fostering particularly intense grass-roots lobbying in New Hampshire and Iowa, sites of the earliest presidential contests next year.

Such advocacy is catching legislators' notice. Last week, Sen. William V. Roth Jr. (R-Del.), chairman of the Finance Committee, assembled a group of government experts to advise him by early June on whether the 1997 budget measures went too far, according to a Senate staff member. For his part, Rep. Bill Thomas (R-Calif.), head of the Ways and Means health subcommittee, said he is still exploring complaints health care providers have lodged with him but believes that some combination of administrative and legislative remedies would be needed this year.

"They're all expressing real pain," Thomas said in an interview last week.

The impression such lobbying has left on lawmakers was evident when Health and Human Services Secretary Donna E. Shalala appeared last month before the Senate Budget Committee. The session was intended as a broad discussion of Medicare's financial future, but the secretary was grilled almost exclusively about the demands for help from teaching hospitals, home health agencies, rural hospitals and health maintenance organizations.

Nursing homes were on the mind of the committee chairman, Sen. Pete V. Domenici (R-N.M.). "Why in the world would we sit around and watch an industry go bankrupt?" he asked, clearly displeased when Shalala said her department would not have reliable data showing the effects on nursing homes until next year. "We need some help now," Domenici said.