A day before the House passed its version of patient-protection legislation with key yes votes from several New Jersey lawmakers, the Centers for Medicare and Medicaid Services published a set of Medicare regulations that will give an additional $44 million to a select group of New Jersey hospitals.
The New Jersey Hospital Association had pushed for the regulatory change, which will benefit hospitals nationwide but was so beneficial to 41 of New Jersey's 81 hospitals that the NJHA issued a news release proclaiming a "big win." It was not clear how many hospitals nationwide would benefit or how much money would be redistributed.
Specifically, the regulations keep hospitals' labor-cost reimbursements from dropping when nearby hospitals are "reclassified" into urban areas with higher labor-cost reimbursements.
A CMS official said the House vote on patient protection and the regulatory change weren't related and that the payment changes were planned long before the vote on patients' rights. The wage-index regulations were part of a larger set of inpatient prospective payment system regulations for fiscal 2002.
Five of New Jersey's six Republican representatives voted for legislation largely supported by Democrats the last time a managed-care reform measure faced a vote in the full House, in 1999. The sixth representative, Mike Ferguson, took office only this year. Those Republicans who voted with the Democrats were considered key swing votes in the patients' rights battle this year.
In July, the New Jersey Republicans rejected a Bush administration deal whereby they would vote for Republican managed-care reforms in return for an increase in Medicare disproportionate share payments for New Jersey hospitals.
Three of the five representatives who initially supported Democrat-backed legislation-Reps. Rodney Frelinghuysen, Frank LoBiondo and Jim Saxton-recently crossed back over party lines to support the White House-backed version of the patients' bill of rights.
Those proved to be especially crucial votes. That version won by a razor-thin 218-213 vote, which would have been a tie vote without the representatives' support. (The final vote was 226-203. See story on p. 6.)
None of the five returned telephone calls seeking comment.
Meanwhile, under the same regulations, published in the Aug. 1 Federal Register, Medicare will increase its payment rates for inpatient hospital care by 2.75% effective Oct. 1.
The formula for the increase-a 3.3% hospital marketbasket inflation rate minus 0.55%-was set in Medicare payment legislation enacted in 2000.
The final PPS regulations for fiscal 2002 also establish a process by which all hospitals in a state may apply to eliminate the urban/rural variation in calculating wage rates and be treated as a single geographic area, beginning in fiscal 2003.
In another change, average wages over a three-year period, instead of a one-year period, will be used to evaluate hospitals' requests to be reclassified into a different geographic area.
The CMS did not define how new medical services and technologies would be incorporated into the inpatient PPS in the final regulations but said it would issue a separate regulation on this issue by Oct. 1.
Meanwhile, Medicare's proposed physician fees for the coming calendar year will have a modest impact on doctors' pay, according to the CMS, which published the schedule in the Aug. 2 Federal Register. The specialties of general surgery and pathology are expected to show increases of 4% and 3%, respectively, and ophthalmology will see a decrease of 1%.
The proposed regulations include reimbursement for preventive services such as pelvic examinations and glaucoma screening. Concluding a four-year phase-in, the proposed 2002 fee schedule will pay physicians for their practice expenses using a resource-based system, such as the one used to reimburse doctors for professional services. The CMS will accept comments on the regulations until Oct. 1.