Legislation to loosen Medicare's purse strings is headed for final congressional approval this week as lawmakers and White House negotiators agreed on a package worth about $12 billion over five years to providers.
Of the amount, acute-care hospitals could see between $2 billion and $3 billion in added payments as a result of the legislation, although final estimates from the Congressional Budget Office were not available at deadline. Most of the relief would go toward outpatient services and indirect graduate medical education payments.
Although hospitals lauded the agreement, they said they will be back for more money next year as they try to reduce payment restraints imposed under the Balanced Budget Act of 1997.
"It's a down payment on further discussions that need to take place next year on the impact of the (budget law)," said Thomas Nickels, senior vice president of federal relations at the American Hospital Association.
The agreement between House, Senate and White House officials is a document that will be attached to unrelated legislation. That legislation, yet to be determined, would be a compromise bill worked out by a House-Senate conference committee and, as such, would not be subject to amendment in either chamber.
Under the agreement, about 16 teaching hospitals in New York state came up short in a battle that could see redistribution of up to $100 million in Medicare payments for graduate medical education over five years.
The legislation that would enact the agreement would limit individual hospitals' reimbursement for the "direct" costs of running a teaching program to 140% of the national average reimbursement for all hospitals.
Direct GME reimbursement has been based on the historical costs of running a teaching program. That has resulted in higher payments primarily for Northeastern hospitals and lower payments for Western hospitals, although winners and losers have been scattered throughout the country.
The direct GME adjustments are part of the same legislation that would temporarily slow scheduled reductions in the "indirect" medical education adjustment, or IME, which is the share attributable to the increased patient-care costs resulting from running a teaching program.
The new indirect GME policies are expected to increase payments by $700 million over five years when compared with current law.
But those policies were not as favorable as delays included in a relief plan passed by the Senate Finance Committee. Those provisions would have frozen scheduled indirect GME reductions at current rates through 2003, resulting in a payment increase of $1.8 billion over five years.
Kenneth Raske, president of the Greater New York Hospital Association, said the battle over the direct graduate medical education reimbursement divided hospitals at a time when they needed to be lobbying with a unified voice on the IME payments.
Congressional and White House negotiators still have not resolved how to eliminate a regulatory adjustment resulting in a loss of $4.5 billion over five years to hospital outpatient department payments. That money would be in addition to what is already included in the legislation.
That cut results from HCFA's interpretation of a provision in the balanced-budget law that aims to reduce beneficiary copayments for outpatient services.
Congress has not sought to eliminate the cut because it would result in increases in the Congressional Budget Office's estimates of spending under the bill. But the White House said HCFA is bound by the language of the budget law.