While President Clinton's Medicare reform plan proposes financing a prescription drug benefit through provider payment reductions, it includes some good news for hospitals struggling with payment policies enacted in 1997.
Clinton plans to earmark $7.5 billion over 10 years for relief from spending-growth curbs mandated by the Balanced Budget Act of 1997. He also hopes to use HCFA's regulatory authority to delay and suspend other budget act policies.
The moves are a good start, provider groups say. But the $7.5 billion "quality assurance fund" falls short of easing the pressures of budget act payment policies, the groups add.
Congress may make use of about $11 billion over five years to boost provider payments. That amount could be available because of a recent Congressional Budget Office recalculation that projects $11 billion less in Medicare spending over five years than the CBO projected in March.
By comparison, Clinton's quality assurance fund would provide only $4 billion in relief over the five-year period.
Congressional action on Medicare payments isn't expected until September.
Negotiations between Congress and the White House would determine which providers would receive higher payments from the quality assurance fund.
The plan separately lists proposals not requiring congressional intervention that would relieve providers from budget cuts.
Among those proposals:
* A three-year transition for the hospital outpatient-care prospective payment system and a suspension of volume caps under the PPS.
* A delayed expansion of the policy that reduces inpatient payments for patients in 10 DRGs who are discharged to post-acute settings.
* An extension from one year to three of the period that home-care agencies have to reimburse Medicare overpayments under the interim payment system without paying interest.
Richard Pollack, executive vice president and director of government and public affairs for the American Hospital Association, said the White House has not made clear whether those specific changes will be financed from the quality assurance fund.
He also said the relief fund is cold comfort when the Clinton plan also proposes $39 billion in provider payment reductions over 10 years. Much of that will be accomplished by keeping hospital payment updates at 1.1 percentage points below the hospital inflation rate from 2003 to 2009.
Meanwhile, the hospital industry expanded its campaign to roll back budget act payment reductions by starting a $2 million radio and newspaper advertising drive in 25 states.
The campaign, a joint effort between the AHA, the Federation of American Health Systems and state hospital associations, urges voters to press members of Congress to reverse Medicare payment policies. This relief would be separate from Clinton's proposals.
Although they do not target specific members of Congress, ads are being run in the homes states of some key Republicans: California, home of Rep. William Thomas, chairman of the House Ways and Means health subcommittee; Delaware, home of Senate Finance Committee Chairman William Roth; and Mississippi, home of Senate Majority Leader Trent Lott.