Congress last week gave providers their first glimpse of possible Medicare payment increases, and the reaction was less than positive.
A Republican congressional leadership document that surfaced last week proposed more than $16 billion in Medicare provider payment relief over the next five years, mostly by giving full inflation updates to fees paid to hospitals, nursing homes and home health agencies in fiscal 2001 (See chart).
MODERN HEALTHCARE obtained a copy of the document last week. At deadline, no bill containing these specific proposals has been introduced.
The growth of those payments was limited under the provisions of the Balanced Budget Act of 1997, which aimed to reduce Medicare spending by $112 billion between 1998 and 2002.
Hospital groups were quick to raise concern that the document proposed increasing Medicare hospital inpatient payments for only one year, instead of for the remaining two years of the law.
"We want to see a two-year fix on the update factor," said Richard Pollack, executive vice president of the American Hospital Association.
The AHA and other hospital groups have asked for an update to Medicare hospital inpatient payments in 2001 and 2002 equal to an inflation index called the marketbasket, which is set at 3.3% for 2001.
Under the terms of the budget act, the update for 2001 and 2002 is set at 1.1 percentage points below the marketbasket index. The AHA's call is projected to cost $9.5 billion over five years. The AHA wants a total $25 billion in increased payments over five years.
The document didn't propose specific relief for rural hospitals, which say they are the biggest victims of payment policies under the budget law. But it did include some increases for teaching hospitals, which often squabble with the rural hospitals over money.
Numerous sources on Capitol Hill were quick to disavow the document, although healthcare industry lobbyists said last week it was to be a beginning point of negotiations between Congress and President Clinton over legislation to further roll back provisions of the budget law.
Republican congressional leaders met with Clinton last week at the White House to set the agenda for the final weeks of the congressional session before Congress adjourns for the Nov. 7 election. Spending, taxes and use of the federal budget surplus, estimated at $232 billion in fiscal 2000 alone, were on the agenda at that meeting.
In June, Clinton reversed his call for $19 billion in further Medicare provider payment restraints and instead endorsed a package of Medicare and Medicaid provider payment increases worth $21 billion over five years (June 26, p. 2).
While GOP congressional leaders on healthcare such as Rep. William Thomas (R-Calif.), chairman of the House Ways and Means Committee's health subcommittee, are keeping mum about specifics of the Medicare package, they are hinting Clinton's proposal may be a good starting point.
"The president's number is a marker for all of us to pay attention to," said one House Republican aide.
As it continued developing this year's Medicare provider payment package, Congress also made an effort to preserve the surplus for Medicare. The Ways and Means Committee passed legislation that would bar Congress from passing spending bills that would create a total budget surplus less than the surplus in the Medicare Hospital Insurance Trust Fund, projected to be $24.4 billion this year.
The Medicare package would follow the $16.1 billion in increased Medicare and Medicaid spending to which Congress and the White House agreed last year.