Providers' campaign to roll back Medicare payment policies imposed by the Balanced Budget Act of 1997 has prodded HCFA to scrutinize the healthcare industry's financial performance. Still, administration officials remain skeptical that providers are suffering.
Responding to pressure from providers and their allies on Capitol Hill, HCFA said it is monitoring reports from providers, beneficiaries, Wall Street analysts and government agencies to determine whether providers' economic condition is eroding.
Testifying recently before the Senate Finance Committee, Robert Berenson, M.D., director of HCFA's center for health plans and providers, said the agency will recommend changes to payment policies only if they interfere with beneficiaries' access to care.
But administration officials said they don't see providers suffering.
"We don't see a significant effect on providers, at least by our measures," said Daniel Mendelson, associate director for health and personnel at the White House Office of Management and Budget.
The American Hospital Association wants to limit hospitals' losses resulting from the imposition of a prospective payment system on outpatient visits. The AHA also is asking for an increase in payments for patients transferred to post-acute settings (June 7, p. 10).
Meanwhile, administration officials said low inflation and the recent crackdown on fraud and abuse have caused Medicare spending growth to fall below projections made when the balanced-budget law was enacted.
They also argue that providers are suffering because of excess capacity, intense competition and discounts they've granted to payers.
Providers said HCFA's monitoring is a good sign, although the AHA said it's disappointed that administration officials were not enthusiastic about the association's report on hospitals' grim fiscal outlook (May 24, p. 6).
"They said, 'Show us the data,' " said Richard Pollack, the AHA's executive vice president and director of government and public affairs. "We showed them the data, and they said they didn't like the data."
However, the AHA has persuaded members of the Senate to sign a letter to HCFA Administrator Nancy-Ann Min DeParle asking for the revocation of part of HCFA's proposed outpatient PPS, which could cause an unintended 5.7% reduction in payments, worth about $850 million per year.
The Congressional Budget Office is predicting its July 1 federal spending estimates may show that Medicare spending will be billions of dollars below current projections for 1999 and 2000. That is likely to drive Congress to increase provider payments this year.
The CBO's current estimates show that Medicare spending through the first eight months of federal fiscal 1999-$138.7 billion-was $3.5 billion less than for the first eight months of fiscal 1998. The CBO said a reduction in home health spending accounts for much of the decline, although CBO officials couldn't quantify the decrease in home health payments.