Having secured a victory for Medicaid in federal tax cut legislation, the hospital lobby is gearing up for the next round: Medicare reform.
The House and Senate sent to President Bush a 10-year, $350 billion tax cut package that would give $20 billion in aid to cash-strapped states, including $10 billion that would be set aside over the next 15 months to increase federal matching funds to Medicaid programs. Medicaid spending, including both the federal and state shares, amounts to roughly $250 billion annually.
The bill passed the House by a vote of 231-200 and squeaked through the Senate 51-50 with Vice President Cheney casting the tie-breaking vote. President Bush was expected to sign the tax bill after the Memorial Day weekend. The American Hospital Association was pleased with the tax bill's Medicaid provision, but "more needs to be done, specifically in the area of Medicaid disproportionate-share funding," said Rick Pollack, the AHA's executive vice president.
Senate Finance Committee Chairman Charles Grassley (R-Iowa) and other senators had proposed including in the tax bill $25 billion over 10 years to permanently equalize the base payment rate for rural and urban hospitals; more equitably distribute disproportionate-share payments; ease the bed-limit requirement for the critical-access hospital program; provide a 5% add-on payment for rural home health agencies; and target assistance to some low-volume hospitals.
Those provisions met with opposition in the House, where some objected to addressing Medicare issues in a tax bill. Negotiators from the two chambers later agreed to strip the rural Medicare provisions and hold off on payment relief until more sweeping Medicare reform is debated this summer.
In a letter to Grassley, President Bush said he would support increased Medicare funding for rural providers "as part of a bill that implements our shared goal for Medicare reform."
Provider advocates hope that when legislators take up Medicare reform legislation, they also will address provider payment issues as well as the uninsured.