Although Congress late last week was poised to end a three-week government shutdown, Medicare payments were still in jeopardy because HCFA would not pay intermediaries' administrative expenses under the temporary spending measure.
Meanwhile, the targeted spending bill headed to a vote on the House floor at week's end would relieve essential healthcare employees at Department of Veterans Affairs facilities who have been working without pay. The bill would provide funding to pay those employees through Jan. 26.
Veterans groups and VA officials, however, said the government shutdown may have ramifications that last long after an agreement is reached if VA personnel, soured by the situation, leave the VA system for private practice.
In a letter sent last week to Medicare intermediaries, which administer the Medicare program and pay providers on behalf of Medicare, HCFA said it would no longer reimburse the intermediaries for the expenses they incur in performing administrative, audit, claims processing, beneficiary service and other functions.
In fiscal 1995, HCFA paid Medicare contractors $1.6 billion.
Providers are still being reimbursed for Medicare services rendered.
Pam Drellow, a spokeswoman for the Blue Cross and Blue Shield Association, which represents plans that administer about 90% of Medicare Part A claims and nearly 70% of Part B claims, said the Blues' plans were continuing to pay claims and were funding the other intermediary functions.
"(The plans) are paying out of their own money, but we are eventually going to reach a point where they have cash-flow problems. Obviously, the longer (the government shutdown) prolongs, (the plans) are at some point going to have to rethink this," Drellow said.
HCFA has promised intermediaries they will get retroactive payments once the budget is approved, but no interest or payments to cover additional costs incurred by the plans will be paid.
HHS Secretary Donna Shalala said that Medicare was entering a "danger zone" regarding payments to all contractors including the intermediaries, but she added that she could not "give the exact dates when providers won't be reimbursed anymore."
Essential VA healthcare employees were still at work last week, nearly three weeks after the VA's interim funding expired. President Clinton has vetoed a bill that includes a fiscal 1996 appropriation of $16.6 billion for VA medical care because he objected to other provisions in the measure.
The last paycheck for VA physicians, nurses and other healthcare employees, which normally would cover a two-week period, only included wages for seven days. But full two-week deductions for benefits were taken out of those checks, reducing take-home pay.
VA officials and veterans groups warned that the budget impasse was endangering the long-term stability and quality of the 172-hospital healthcare system.
"It's not going to be good for VA in the future," said Richard Schultz, national legislative director for Disabled American Veterans. "(Employees) who can will get out."
"If this protracted budget debate continues, I think we will see (employees) leaving the VA system," said Jim Christian, director of the 340-bed Asheville, N.C., VA hospital. "They feel they are the victims."
All the talk by congressional leaders that employees will be paid soon "doesn't help them meet their payments and put food on the table," Christian said.
Officials at the VA's Washington headquarters and administrators at field hospitals said veterans were still receiving quality care, although they added that employees were growing frustrated and angry at the continuing budget impasse.
Numerous VA nurses reportedly called congressional offices demanding an end to the stalemate. VA hospital personnel who are members of the American Federation of Government Employees--which last week sought but failed to win an injunction against forcing federal employees to work without pay - held informational pickets in front of some hospitals and distributed letters to send to members of Congress.
"Morale is terrible," said Samuel Spagnola, M.D., president of the National Association of VA Physicians and Dentists and a physician at the 580-bed Washington VA hospital. "There's not a sense of happiness. Whether that affects patient care, I don't know, but it can't be good."