President Clinton has signed legislation that will pump some $35 billion more into providers' pockets from federal healthcare coffers between now and 2005, but many providers won't see fatter checks for months.
That's because Congress didn't pass the legislation rolling back Medicare and Medicaid payment-growth restraints under the Balanced Budget Act of 1997 until well after the start of the 2001 federal fiscal year, which began on Oct. 1, 2000.
As a result, much of the relief providers sought won't take effect until April 1, or in some cases, July 1.
"The updates are better late than never," said Lawrence Goldberg, director of national healthcare affairs at consulting firm Deloitte & Touche, Washington.
Clinton signed the bill on Dec. 21, six days after Congress passed the legislation in the last day of its 2000 session.
The legislation provides an estimated $35 billion in spending increases between now and 2005 for Medicare, Medicaid and the State Children's Health Insurance Programs, known collectively as SCHIP. The bill is officially called the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000.
It was passed as part of a two-page consolidated budget package, along with eight other budget bills.
Providers had lobbied for the increases, saying the Medicare and Medicaid spending restraints imposed by the budget law were far greater than expected. In 1999, providers successfully lobbied for a package of payment relief worth $16.1 billion, and then went back for more last year.
But the second round of relief will come slowly. For example, hospitals succeeded in persuading lawmakers to increase their Medicare inpatient payment rates by 3.4% for fiscal 2001 rather than by the 2.3% prescribed by the budget act.
But because the fiscal year had already begun, the BBA's lesser increase took effect on Oct. 1, 2000. To make up for missing the start of the fiscal year, the federal government will give hospitals an extra 1.1% increase in their payment rates from April 1 to Sept. 30, meaning they will get a 4.5% raise during that period.
Outpatient payments also will increase on April 1 instead of Jan. 1 and be in effect through Dec. 31. Likewise, nursing homes and home-health agencies won't see relief until April 1. Payments for Medicare HMOs will rise March 1.
Hospitals appear to be the biggest winners. According to congressional summaries of the legislation, hospitals will receive about $12 billion more during the next five years, compared with $11 billion for managed-care plans.
The Congressional Budget Office has yet to release a final estimate of the legislation's costs.
The White House, meanwhile, announced that the surplus in the Medicare Hospital Insurance Trust Fund is projected to be $532 billion between 2002 and 2011. That's part of an overall budget surplus for the same period of $2.4 trillion, which includes Medicare and Social Security tax collections.