Increasing the threshold to qualify for Medicare outlier payments "could have a devastating impact on hospitals across America," Sens. Olympia Snowe (R-Maine) and Jeff Bingaman (D-N.M.) said in a July 25 letter to CMS Administrator Tom Scully. Outlier payments help compensate hospitals for patients who cost more to treat than the standard DRG rate; for 2004 the CMS has proposed paying outliers when the cost of a case exceeds the standard DRG rate by $50,645, up from the $33,560 threshold in place now. Snowe and Bingaman support a threshold of $25,000 to $30,000, they said in the letter. Final inpatient regulations, including the outlier rule for 2004, are due out later this week.
Separately, the Senate's rural caucus urged the conferees negotiating a final Medicare reform bill to include relief to rural hospitals. The Senate's Medicare bill would spend some $25 billion equalizing the base payment rate to rural and urban hospitals and making other program changes helpful to rural providers. Led by Sens. Craig Thomas (R-Wyo.) and Tom Harkin (D-Iowa), the rural caucus also urged Medicare conferees not to pay for the rural increases by giving all hospitals a pay increase in 2004 that does not reflect their increasing costs. The House Medicare bill would increase Medicare payments next year by 0.4 percentage points less than inflation.
In other Washington news, the House unanimously passed bipartisan legislation late last week extending the availability of unused State Children's Health Insurance Program funds. Under the legislation, states will have until 2004 to use $1.2 billion in unspent SCHIP funds allocated originally for fiscal 1998 and 1999 that had gone unused. The availability of an additional $1.5 billion in SCHIP funds allocated for fiscal 2000 and 2001 that have not been used by states have been extended to 2004 and 2005 respectively. Half of the unused funds from 2000 and 2001 will be available to those states that have not used their entire allotment. The rest will be pooled and distributed to states that have spent all their allotments. The Senate is expected to approve an identical bill next week. -- by Jeff Tieman and Tony Fong