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BENEFIT PROVISIONS LIKELY IN 1997 BUDGET BILL

Posted On: May. 25, 1997 12:00 AM CST

WASHINGTON-Employee benefit plans are not likely to escape unscathed when the 1997 budget reconciliation bill is unveiled next month.

Possible benefit-related provisions in the bill could range from mandating coverage of certain treatments to reinstating a version of the controversial Medicare data bank. The scope of the Medicare-related provisions in a budget reconciliation bill are expected to be huge as legislators try to achieve the roughly $115 billion in Medicare savings over the five-year period the budget resolution projects.

The House last week passed a resolution to balance the federal budget by 2002, and the Senate was nearing passage of its measure. The resolution lacks the weight of law, buts its passage means legislators now will move into the next stage of the budget process, crafting a reconciliation bill that will contain specific proposals to meet the objectives set in the budget resolution.

For more than a decade, budget reconciliation bills have become a magnet for proposals that have had a significant impact on benefit plans, including COBRA's health care continuation provisions back in 1986 as well as a 1993 law that cut back on the amount of employee compensation employers could consider when calculating employees' pension benefits.

Benefit related provisions that could be in the measure-or tucked in later as the measure works its way through congressional committees include:

Federal benefit mandates that would require employer-provided health care plans to offer certain types of benefits. High on the list of potential mandates are proposals requiring group health care plans to offer hospital coverage after a woman undergoes a mastectomy and perhaps other types of treatment for cancer.

"The list of potential mandates grows as a markup nears," said Paul Dennett, vp for health care policy at the Assn. of Private Pension & Welfare Plans in Washington.

So-called anti-managed care proposals including one that would require health care plans to cover the cost of treatments in emergency rooms.

Shifting part of the cost of the Medicare program from government to employers. Lobbyists, for example, expect proposals that would give the federal government a virtually unlimited time to file suit against employers and others to recover the cost of medical claims group health care plans-not Medicare-should have paid.

Such a proposal, which the Clinton administration earlier said it would back, would overturn a 1994 federal appeals court decision that placed tight time limits on when the government could file to recover Medicare overpayments in situations in which a beneficiary, such as an older worker or a provider, had not filed a claim within a health care plan's or an insurer's deadline.

A resurrection in some form of a federal data bank that would require insurance companies, and possibly employers, to supply certain health care coverage enrollment information to the federal government.

The Medicare data bank proposal has been shrouded in mystery ever since the Clinton administration earlier said it would prepare legislation that would require health insurers and administrators to provide basic information, such as birthdates, on employees and dependents enrolled in their plans.

The purpose of this proposal would be to give the Health Care Financing Administration more health care plan information up front to reduce the likelihood of the agency, which administers Medicare, paying claims for which employer plans are responsible.

The APPWP's Mr. Dennett says, though, that if such a proposal is presented there would be heavy congressional opposition, adding that a somewhat similar health care data bank measure-enacted in 1993-was repealed last year amid strong employer objections.

In addition, while the Senate last week defeated an effort by Sens. Edward Kennedy, D-Mass., and Orrin Hatch, R-Utah, to attach their so-called "KidCare" legislation to the budget resolution measure, benefit experts say congressional interest in the legislation is so high that the proposal could find its way as part of budget reconciliation legislation or another measure with wide support.

In its current form, the KidCare legislation would have only minimal impact on group health care plans. Among other things, the legislation would subsidize lower-income employees' health insurance premium contributions for family coverage.

But some benefit experts worry that if the KidCare bill begins to move through Congress, changes could be made-such as locking in the current level of employer contributions to their health care plans-that would crimp employers' flexibility to alter their programs.

"Prudence dictates watching this bill," said Frank McArdle, a consultant with Hewitt Associates L.L.C. in Washington.

The KidCare legislation suffered a blow-though perhaps only a temporary one-when the Senate defeated an effort to attach it to the budget resolution measure. Sen. Kennedy, a co-sponsor, earlier said he will continue to work to get the bill passed, which would substantially increase the federal excise tax on tobacco to raise revenue needed to provide health insurance coverage to 5 million children who are members of lower-income families.

Under one provision in the legislation, states would pay the share of the health insurance premium employers charge for dependent coverage for lower-income employees.

But observers worry that the measure later could be changed so that employers could be locked in to the level of contributions they pay to prevent them from shifting employee premium costs ultimately to the government.

"The legislation could be refined to prevent any manipulation by employers," said Henry Saveth, a principal with A. Foster Higgins & Co. Inc. in New York.

If legislators add new benefit mandates to the budget reconciliation bill, it would come on the heels of last year's congressional benefit mandate action. At the tail end of the last session, legislators tacked on amendments to an appropriations bill that, effective next year, will require group health care plans to offer limited mental health care benefits parity as well as at least 48 hours of inpatient coverage after a normal delivery and 96 hours of coverage after a Caesarean section.