Shoring up the Medicare Fee For Service program has always been an important priority for Democrats. The Medicare Rx Benefit and Discount Act includes all of the provider payment increases from the House Republican bill (including those provisions passed in Ways and Means and Energy and Commerce Committee markups), and in some areas provides additional relief for providers. The Democratic bill also provides the same increased assistance to Medicare+Choice plans as under the House Republican bill, but without the harmful privatization provisions.

Rural Health Care Improvements. The Democratic bill includes all of the provisions from the House Republican bill pertaining to rural providers except it accelerates the phase-in of the Medicare disproportionate share hospital payments for rural and small urban areas from five years under the Republican bill to three years.

Medicare Part A. The Democratic bill includes all of the provisions from the House Republican bill pertaining to Part A with the following enhancements:

• retains the 16.66% add-on payment for skilled nursing facilities for five years;
• maintains indirect medical education levels at 6.5% for five years;
• direct graduate medical education: raises hospitals below the national average to 100% for five years and does not include the freeze on payments to hospitals above 140% of the national average.

Medicare Part B. The Democratic bill includes all of the provisions from the House Republican bill pertaining to Part B with the following enhancements:

• maintains the positive increases in physician payments from the Republican bill for an additional year;
• delays therapy caps until 2007;
• delays competitive bidding demonstration until 2008; requires a MedPAC study on the effect of the current demonstration on beneficiary access;
• eliminates the home health co-payment.

Medicare+Choice. The Democratic bill includes all of the provisions from the Republican bill except the following harmful provisions relating to private insurance plans: Medicare privatization and "competition demonstrations" that force beneficiaries to pay more to stay in traditional Medicare; permanent extension of MSAs; and exemption for Medicare+Choice plans from state insurance oversight.

The Democratic bill also adds important protections for beneficiaries in Medicare+Choice plans including: elimination of the beneficiary "lock-in"; protection for beneficiaries to return to Medigap if their Medicare+Choice plan changes coverage or drops their provider from the network; and protection against higher cost-sharing in Medicare+Choice than is allowed under fee for service.

Medicaid Disproportionate Share Hospital Payments. The Democratic bill provides a permanent fix to the payment reductions facing Medicaid disproportionate share hospitals (DSH). It fully eliminates the pending cuts and allows allotments to grow by inflation (as under the Whitfield-DeGette bill) and increases the floor for "low-DSH" states from 1% to 3%.

Protections for Low-Income Medicare Beneficiaries. The Democratic bill extends the program that provides assistance with the Medicare Part B premium for Medicare beneficiaries with incomes between 120% and 135% of poverty for one year. This extension is not included in the House Republican bill.