House Republicans plan to introduce legislation that would set aside some Medicare surplus funds for increases in provider payments, MODERN HEALTHCARE has learned.
The measure will be included in the GOP's plan to add a prescription drug benefit to the Medicare program, sources said last week.
The so-called lockbox provision would earmark for providers the difference between the Congressional Budget Office's Medicare spending projection at the beginning of the year and one due out in July.
The July spending estimates are widely expected to be less than the January estimates--which showed that Medicare overall would spend $1.3 trillion between 2001 and 2005--although by how much isn't clear.
The lockbox provision would make those savings available for Medicare provider payments, rather than be added to the budget surplus, as is now the case.
"To the extent that there is excess savings from one (estimate) to the next, we would rather see it be used in the program and kept in the program," said Richard Pollack, executive vice president of the American Hospital Association.
Hospitals had been resting their hopes for increased Medicare payments on a $40 billion set-aside for Medicare reform and prescription drug coverage over five years called for in the congressional budget blueprint for federal fiscal 2001. The amount would have been funded from the general budget surplus.
But the cost of the GOP drug proposal now is estimated at $40 billion over five years, leaving nothing left for increases in provider payments.
The prescription drug legislation is expected to be voted on by the House Ways and Means Committee early this week and faces a vote in the full House later this week or next.
The lockbox language wasn't included in the legislative text released last week by Rep. William Thomas (R-Calif.), chairman of the Ways and Means Committee. Sources said sponsors have assured them that the lockbox provision would be included in a final version of the House bill.
It was omitted from the Thomas bill facing a Ways and Means Committee vote this week because its inclusion might require that it be referred to other committees, slowing its progress to a full House vote. It is expected to be worked into the final legislation when the bill passes through the House Rules Committee, which sets the terms of debate for every bill sent to the full House.
Hospitals have been seeking some $25 billion in Medicare payment increases over the next five years to offset restraints imposed under the Balanced Budget Act of 1997.
Their chief objective is to obtain updates in Medicare inpatient payments equal to a healthcare inflation index called the "marketbasket," a provision worth $9.5 billion over five years. Under the balanced-budget law, Medicare inpatient updates are set at 1.1 percentage points fewer than the marketbasket in fiscal 2001 and 2002.
That law aimed to save $112 billion between 1998 and 2002, although hospitals and other providers say it has squeezed far more from the program.
Last year, providers received some $16.1 billion in increased Medicare, Medicaid and State Children's Health Insurance Program payments over five years under legislation called the Balanced Budget Refinement Act.
Hospitals expressed happiness at the lockbox provision, but the drug proposal was subject to partisan sniping last week.
Despite the fact that the bill has two Democratic sponsors, President Clinton and the Democratic congressional leadership were quick to criticize it as being inadequate. At the same time, however, they supported the concept of earmarking Medicare savings to strengthen the program.