Just weeks after telling a gathering of hospital executives in Washington that they don't intend to freeze Medicare hospital payment rates, Clinton administration officials are beginning to back away from their promise.
On two occasions last week, Clinton administration officials said they would be willing to consider leaving Medicare payment rates for inpatient hospital care the same in fiscal 1998.
Earlier this year, the Prospective Payment Assessment Commission, which advises Congress on Medicare Part A issues, said that in light of steadily increasing hospital profit margins, Medicare inpatient payment rates should remain flat in 1998.
But HHS Secretary Donna Shalala, speaking to the American Hospital Association convention in Washington in January, said the administration would not propose a freeze in its fiscal 1998 budget. After Shalala's speech, HHS officials immediately began backing off the statement, saying that while the administration wouldn't propose a freeze, it might consider it if Congress suggested one.
In fact, the administration didn't propose a freeze in its fiscal 1998 budget. Instead, it proposed that hospital Medicare payment rates be increased at one percentage point below the HCFA-determined hospital "marketbasket" inflation index.
The index measures the changes in prices that hospitals pay for a common set of goods and services.
ProPAC estimated those prices would rise 2.8% next year, giving hospitals a 1.8% increase in Medicare payment rates under the administration's federal budget plan.
House Ways and Means health subcommittee Chairman William Thomas (R-Calif.) criticized the administration for taking a freeze off the table, and he said he respected ProPAC's analysis more than the White House's.
But now the administration seems to be warming to the idea of freezing hospital Medicare payment rates.
Testifying before the Senate Finance Committee, Shalala said the administration's fiscal 1998 budget was "closed down" before ProPAC made its recommendation.
"We need to go back and review" the White House policy, Shalala said.
Chris Jennings, White House special assistant to the president for health policy, said the White House was "willing to look at those options."
A Republican aide said he was "totally confused by where (the Clinton administration) stands on the ProPAC (proposal)."
Hospital groups say an inpatient payment freeze would unfairly penalize hospitals for implementing the efficiencies Congress has sought.
"We are disappointed that the notion of a freeze is being discussed," said Richard Pollack, the American Hospital Association's executive vice president for federal relations. "But this is extremely early in the ballgame
. . . . There is a long way to go in terms of coming up with policy options."