The Senate late last week narrowly passed a 10-year, $350 billion tax cut bill that would also increase payments to rural hospitals and provide $10 billion in federal money to assist battered Medicaid programs.
The future of the provider measures, however, is far from certain, even if the tax package itself survives. Earlier this month the House passed its own tax cut of $550 billion over 10 years, with no allocations for Medicare or Medicaid. The two divergent bills now face a House-Senate conference committee that has yet to be convened but is expected to present a unified proposal to President Bush by Memorial Day.
Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, through a spokeswoman declined to comment on the Senate provisions but has voiced support for more conservative recommendations by the Medicare Payment Advisory Commission. Thomas would rather see Medicare legislation taken up separately from the tax debate, the spokeswoman said.
"This is a tax bill ... I don't think there's going to be any healthcare provisions in the bill at the end of the day," a senior House aide told Modern Healthcare after the Senate's 51-49 approval of the tax cut.
Lobbyists and congressional sources said that Senate Finance Committee Chairman Charles Grassley (R-Iowa) is prepared to fight hard for provisions he sponsored in the Senate bill that would allocate $25 billion over 10 years to permanently bring payments for rural hospitals up to the levels of urban hospitals; more equitably distribute disproportionate-share payments among rural and urban hospitals; ease the bed limits required to qualify for the critical-access hospital program; implement a 5% add-on payment for rural home health agencies; revise the labor portion of the hospital wage index; and provide other targeted assistance to low-volume hospitals.
"These provisions would go a long way toward helping these hospitals that, because of their small size, modest assets and higher percentage of Medicare patients, face great pressures as government payments decline," said Richard Pollack, executive vice president at the American Hospital Association, in a May 15 letter to Grassley.
To offset the cost of the provisions supported by the AHA and many other provider groups, the federal government would freeze payment increases for 10 years for durable medical equipment and prosthetics and orthotics, establish deductibles for clinical laboratory services and limit reimbursement for Medicare-covered drugs.