Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
October 01, 1999
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 11400 words
HEADLINE:
TESTIMONY October 01, 1999 MICHAEL HASH DEPUTY ADMINISTRATION US DEPARTMENT OF
HEALTH AND HUMAN SERVICES HOUSE WAYS AND MEANS HEALTH MEDICARE
BALANCED BUDGET ACT REVISIONS
BODY:
Testimony of
Michael Hash, Deputy Administrator Health Care Financing Administration before
the Ways & Means Health Subcommittee on Balanced Budget Act Refinement
October 1, 1999 Chairman Thomas, Congressman Stark, distinguished Subcommittee
members, thank you for inviting us to discuss refinements to the Balanced Budget
Act. The BBA includes important new preventive benefits and payment system
reforms that promote access, efficiency, and prudent use of taxpayer dollars.
These reforms are critical to strengthening and protecting Medicare for the
future. The Medicare Trust Fund, which was projected to be insolvent by 1999
when President Clinton took office, is now projected to be solvent until 2015.
The BBA made substantial changes to the way Medicare reimburses providers in the
fee-for- service program by: - modifying inpatient hospital payment rules; -
establishing a prospective per them payment system for skilled nursing
facilities to encourage facilities to provide care that is both efficient and
appropriate; - refining the physician payment system to more accurately reflect
practice expenses; - initiating development of prospective payment systems for
home health agencies, outpatient hospital care, and rehabilitation hospitals
that will be implemented once the Year 2000 computer challenge has been
addressed; and, - authorizing an important test of whether market competition
can help Medicare and its beneficiaries save money on durable medical equipment
and supplies. And the BBA created the Medicare+Choice program, which allows
private plans to offer beneficiaries a wide range of options, similar to what is
available in the private sector today. It has initiated a new beneficiary
education campaign to inform beneficiaries about these options. It includes
important new protections for patients and providers, as well as statutory
requirements for quality assessment and improvement. And it initiates a
transition to risk adjustment, which will make the payment system fairer and
more accurate. We have fully implemented the majority of the BBA's more than 300
provisions affecting our programs and made substantial progress on the
remainder. While the statute generally prescribes in detail the changes we are
required to make, we are committed to exercising the maximum flexibility within
our limited discretion in the implementation of these provisions. It is clear
that the BBA is succeeding in promoting efficiency, slowing growth of Medicare
expenditures, and extending the life of the Medicare Trust Fund. However,
according to both the HCFA actuaries and the Congressional Budget Office (CBO),
the BBA is only one factor contributing to changes in Medicare spending. We have
made substantial strides in fighting fraud, waste and abuse that have
significantly decreased improper payments. For the first time ever, the hospital
case mix index declined last year due to efforts to stop "upcoding," or billing
for more serious diagnoses than patients actually have. Low inflation from a
strong economy is having an impact on total spending. And slower claims
processing during the transition to new payment systems is contributing to a
temporary slow-down in spending. Backlogged claims are expected to be paid by
fiscal 2000. Change of this magnitude always requires adjustment. It is not
surprising that some market corrections would result from such significant
legislation. We are proactively monitoring the impact of the BBA to ensure that
beneficiary access to covered services is not compromised. We are evaluating
this information to assess the impact of BBA changes on beneficiaries and to
determine what changes may need to be made to ensure continued access to quality
care. It is important to note that the BBA is only one factor contributing to
challenges providers face in the rapidly evolving health care market place.
Efforts to pay correctly and promote efficiency may mean that Medicare no longer
makes up for losses or inefficiencies elsewhere. We are concerned about reports
on the financial conditions of some individual and chain providers. But it is
essential that we try to delineate the BBA's impact from the effects of excess
capacity, discounted rates to other payers, aggressive competition, imprudent
business decisions, and other factors not caused by the BBA. And it is essential
that we focus on the impact on beneficiary access to high quality patient care.
Thus far, our monitoring reveals evidence of isolated but significant problems.
Although our analysis is not yet complete, we are concerned, for example, that
some beneficiaries are not getting necessary care because of the BBA's $1500
caps on certain outpatient rehabilitation therapies. We will continue working
with beneficiaries, providers, Congress, and other interested parties to closely
monitor the situation, evaluate evidence of problems in access to quality care,
and develop appropriate, fiscally responsible solutions. Because of our
concerns, the President's Medicare reform plan sets aside $7.5 billion from
fiscal 2000 to fiscal 2009 to smooth out implementation of BBA payment reforms
that may be adversely affecting beneficiary access to quality care. We want to
work with the Congress to make appropriate adjustments where there is evidence
that adjustments are needed. The President's reform plan also dedicates a
portion of the budget surplus to Medicare. This will help prevent excessive cuts
in provider payment that otherwise would be necessary in the future as Medicare
enrollment doubles over the next 30 years, since increased efficiencies alone
will not be able to cover the increased costs. The President's plan also
includes administrative actions to assure a smooth implementation process, and
we are continuing to explore other actions. Those already underway address
several key areas of concern: Inpatient hospital transfers. The BBA requires the
Secretary to reduce payments to hospitals when they transfer patients to another
hospital or unit, skilled nursing facility or home health agency for care that
is supposed to be included in acute care payment rates for ten diagnoses. It
also authorizes HCFA to extend this "transfer policy" to additional diagnoses
after October 1,2000. To minimize the impact on hospitals, we are delaying
extension of the transfer policy to additional diagnoses for two years. Hospital
outpatient payments. The BBA requires Medicare to begin paying for hospital
outpatient care under a prospective payment system (PPS), similar to what is
used to pay for hospital inpatient care. This new system is schedule to go into
effect in July 2000. To help all hospitals with the transition to outpatient
prospective payment, we are considering delaying a "volume control mechanism"
for the first few years of the new payment system. The law requires Medicare to
develop such a mechanism because prospective payment includes incentives that
can lead to unnecessary increases in the volume of covered services. The
proposed prospective payment rule presented a variety of options for controlling
volume and solicited comments on these options. Delaying their implementation
would provide an adjustment period for providers as they become accustomed to
the new system. We also are considering implementing a three-year transition to
this new PPS by making budget-neutral adjustments to increase payments to
hospitals that would otherwise receive large payment reductions such as
low-volume rural and urban hospitals, teaching hospitals, and cancer hospitals.
Without these budget-neutral adjustments, these hospitals could experience large
reductions in payment under the outpatient prospective payment system. And, to
help hospitals under the outpatient prospective payment system, we included a
provision in the proposed rule to use the same wage index for calculating rates
that is used to calculate inpatient prospective payment rates. This index would
take into account the effect of hospital reclassifications and redesignations.
For all of these outpatient department reform options, the rulemaking process
precludes any definitive statement on administrative actions until after the
implementing rule is published. Rural hospital reclassification. Hospital
payments are based in part on average wages where the hospital is located. We
are making it easier for rural hospitals whose payments now are based on lower,
rural area average wages to be reclassified and receive payments based on higher
average wages in nearby urban areas and thus get higher reimbursement. Right
now, facilities can get such reclassifications if the wages they pay their
employees are at least 108 percent of average wages in their rural area, and at
least 84 percent of average wages in a nearby urban area. We are changing those
average wage threshold percentages so more hospitals can be reclassified. Home
health agencies. The BBA significantly reformed payment and other rules for home
health agencies. We are taking several new steps to help agencies adapt to these
changes. We are increasing the time for repayment of overpayments related to the
interim payment system from one year to three years, with one year interest
free. Currently, home health agencies are provided one year of interest free
extended repayment schedules. We are postponing the requirement for surety bonds
until October 1, 2000, when we will implement the new home health prospective
payment system. This will help ensure that overpayments related to the interim
payment system will not be an obstacle to agencies obtaining surety bonds. We
also are following the recommendation of the General Accounting Office (GAO) by
requiring all agencies to obtain bonds of only $50,000, not 15 percent of annual
agency Medicare revenues as was proposed earlier. We also have eliminated the
sequential billing rule that some agencies said was adversely affecting cash
flow. And we are phasing-in our instructions implementing the requirement that
home health agencies report their services in 15-minute increments. Monitoring
Access We are proactively monitoring the impact of the BBA to ensure that
beneficiary access to covered services is not compromised. We are systematically
gathering data from several sources to look for objective information and
evidence of the impact of BBA changes on access to quality care. These data
sources include: - beneficiary advocacy groups; - health plans and providers; -
Area Agencies on Aging; - State Health Insurance Assistance Programs; - claims
processing contractors; - State health officials; and - media reports. We also
are examining information from the Securities and Exchange Commission and Wall
Street analysts on leading publicly traded health care corporations. This can
help us understand trends and Medicare's role in net income, revenues and
expenses, as well as provide indicators of liquidity and leverage, occupancy
rates, states-of-operation, continuing lines of business as well as those exited
or sold by the company, and other costs which may be related to discontinued
operations. We are examining Census Bureau data, which allow us to gauge the
importance of Medicare in each health service industry, looking at financial
trends in revenue sources by major service sectors, and tracking margin trends
for tax-exempt providers. We are monitoring the Bureau of Labor Statistics
monthly employment statistics for employment trends in different parts of the
health care industry. Such data show, for example, that the total number of
hours worked by employees of independent home health agencies is at about the
same level as in 1996. That provides a more useful indicator of actual home
health care usage after the BBA than statistics on the number of agency closures
and mergers. The data also show that nursing homes may be slightly reducing the
number of employees and the hours that they work. The HHS Inspector General's
(IG) office has interviewed hospital discharge planners and nursing home
administrators about the BBA's impact on patient care. The IG also has agreed to
interview discharge planners about access to home health care following BBA
payment reforms and the impact of the $1500 caps on outpatient therapy. Specific
BBA Provisions Outpatient Rehabilitation Therapy: The BBA imposed $1500 caps on
the amount of outpatient rehabilitation therapy services that can be reimbursed,
except in hospital outpatient clinics. However, these caps are not based on
severity of illness or care needs, and they appear to be insufficient to cover
necessary care for many beneficiaries. We have several industry-sponsored
analyses from different sources of 1996 claims data indicated that approximately
12 to 13 percent of therapy patients will exceed the caps. Beneficiary groups
are reporting many instances of problems with this cap, and we are very
concerned about their adverse impact, particularly on individuals in nursing
homes. As mentioned above, our IG colleagues have agreed to study this problem.
We are providing data to the Medicare Payment Advisory Commission so it can
analyze patterns of therapy service usage. And we will continue to work with
Congress and others to determine what adjustments to the cap should be made.
Skilled Nursing Facilities: We implemented the new prospective payment system
(PPS) called for in the BBA on July 1, 1998. The old payment system was based on
actual costs, subject to certain limits, and included no incentives to provide
care efficiently. The new system uses average prices adjusted for each patient's
clinical condition and care needs, as well as geographic variation in wages. It
creates incentives to provide care more efficiently by relating payments to
patient need, and enables Medicare to be a more prudent purchaser of these
services. The BBA mandated a per them PPS covering all routine, ancillary, and
capital costs related to covered services provided to beneficiaries under
Medicare Part A. The law requires use of 1995 costs as the base year, and
implementation by July 1, 1998 with a three-year transition blending
facility-specific costs and prospective rates. It did not allow for exceptions
to the transition, carving out of any service, or creation of an outlier policy.
We are carefully reviewing the possibility of making budget neutral
administrative changes to the PPS. We held a town hall meeting earlier this year
to hear a broad range of skilled nursing facility concerns, and we continue to
meet with provider and beneficiary representatives. There are concerns that the
prospective payment system does not adequately reflect the costs of non- therapy
ancillaries such as drugs for high acuity patients. The Inspector General found
in its interviews of hospital discharge planners and nursing home administrators
that less than I percent of nursing home administrators say the prospective
payment system is causing access to care problems. The proportion of
beneficiaries discharged to skilled nursing facilities is unchanged from 1998,
and hospital lengths of stay have not increased. However, about one in five
discharge planners say it takes more time to place Medicare patients in nursing
homes. The IG also found that both nursing home administrators and hospital
discharge planners say nursing facilities are requesting more information before
accepting patients. About half of the nursing home administrators say they are
less likely to accept patients requiring expensive supplies or services such as
ventilators or expensive medications, about half also say they are more likely
to admit patients who require special rehabilitation services such as physical
therapy following joint replacement surgery. We are therefore conducting
research that will serve as the basis for refinements to the resource
utilization groups that we expect to implement next year. We expect to have the
research completed by the end of the year and to then develop refinements that
we will be able to implement next October. Under the statute, we have the
authority to refine these groups and redistribute money across categories in a
budget neutral manner. We do not have discretion under the law to increase the
overall level of payments to skilled nursing facilities. We fully expect that we
will need to periodically evaluate the system to ensure that it appropriately
reflects changes in both care practice and the Medicare population. Home Health
Agencies: The BBA closed loopholes that had invited fraud, waste and abuse. For
example, it stopped the practice of billing for care delivered in low cost,
rural areas from urban offices at high urban-area rates. It tightened
eligibility rules so patients who only need blood drawn no longer qualify for
the entire range of home health services. And it created an interim payment
system to be used while we develop a prospective payment system. We expect to
publish a proposed regulation this fall and to have the prospective payment
system in place by the October 1, 2000 statutory deadline. The interim payment
system is a first step toward giving home health agencies incentives to provide
care efficiently. Before the BBA, reimbursement was based on the costs they
incurred in providing care, subject to a per visit limit, and this encouraged
agencies to provide more visits and to increase costs up to the limits. The
interim system includes a new, aggregate per beneficiary limit designed to
provide incentives for efficiency that will be continued under the episode-based
prospective payment system. Last year Congress increased the cost limits in an
effort to help agencies during the transition to prospective payment. We are
also taking the steps discussed above to help agencies adjust to these changes,
and in March we held a town hall meeting to hear directly from home health
providers about their concerns. To date, evaluations by the GAO and HHS have not
found that BBA changes are causing significant quality or access problems. Our
monitoring of employment data shows that freestanding home health agencies have
made small reductions in their workforce, back to the level seen in 1996.
However, we have heard reports from beneficiary groups, our regional offices,
and others regarding home health agencies that have inappropriately denied or
curtailed care, and incorrectly told beneficiaries that they are not eligible
for services. We are also hearing reports from beneficiary advocates and others
that some high cost patients are having trouble finding home health agencies to
provide the care they need. This may result from a misunderstanding of the new
incentives to provide care efficiently, or from efforts to "cherry pick" low
cost patients and game the system. The CBO attributes some of the lower health
spending to the fact that agencies are incorrectly treating the new aggregate
per beneficiary limit as though it applies to each individual patient. We have
therefore provided home health agencies with guidance on the new incentives and
their obligation to serve all beneficiaries equitably. We have instructed our
claims processing contractors to work with agencies to further help them
understand how the limits work. And, because home health beneficiaries are among
the most vulnerable, we are continuing ongoing detailed monitoring of
beneficiary access and agency closures. Hospitals: We have implemented the bulk
of the inpatient hospital- related changes included in the BBA in updated
regulations. We have implemented substantial refinements to hospital
Graduate Medical Education payments and policy to encourage
training of primary care physicians, promote training in ambulatory and managed
care settings where beneficiaries are receiving more and more services, curtail
increases in the number of residents, and slow the rate of increase in spending.
We have implemented provisions designed to strengthen rural health care systems.
We have carved out graduate medical education payments from
payments to managed care plans and instead are paying them directly to teaching
hospitals (and are proposing in the President's Medicare reform plan to
similarly carve out disproportionate share hospital payments). We expect to
implement the prospective payment system for outpatient care next year. The
outpatient prospective payment system will include a gradual correction to the
old payment system in which beneficiaries were paying their 20 percent copayment
based on hospital charges, rather than on Medicare payment rates. Regrettably,
implementation of the prospective payment system as originally scheduled would
have required numerous complex systems changes that would have substantially
jeopardized our Year 2000 efforts. We are working to implement this system as
quickly as the Year 2000 challenge allows. We issued a Notice of Proposed Rule
Making in September 1998 outlining plans for the new system so that hospitals
and others can begin providing comments and suggestions. We are actively
reviewing all of the comments from the industry and other interested parties
that we received during the comment period, which we extended until July 30. We
are focusing most of our continuing work on rural, inner city, cancer, and
teaching hospitals because our analysis suggests that the outpatient prospective
payment system will have a disproportionate impact on these facilities. And we
are continuing to develop modifications to the system for inclusion in the final
rule. The hospital industry has submitted data projecting significant decreases
in total Medicare margins. Our actuaries believe the methodology used to develop
these projections understates base year total margins by approximately 7
percent. And, according to the Medicare Payment Advisory Commission (MedPAC),
Medicare costs per case have declined for an unprecedented fifth year in a row.
However, MedPAC also notes that while rural hospitals have generally posted
healthy margins, many small rural hospitals appear to be in especially poor
financial condition. We continue to hear reports of financial distress, and we
understand the challenge hospitals are facing in today's changing health care
marketplace. We are reviewing the data as it comes in, and we will continue to
monitor this situation closely. Physicians: As directed by the BBA, we are on
track in implementing the resource-based system for practice expenses under the
physician fee schedule, with a transition to full implementation by 2002 in a
budget-neutral fashion that will raise payment for some physicians and lower it
for others. The methodology we used addresses many concerns raised by physicians
and meets the BBA requirements. We fully expect to update and refine the
practice expense relative value units in our annual regulations revising the
Medicare fee schedule. We included the BBA-mandated resource-based system for
malpractice relative value units in this year's proposed rule. We welcome and
encourage the ongoing contributions of the medical community to this process,
and we will continue to monitor beneficiary access to care and utilization of
services as the new system is fully implemented. The President's fiscal 2000
budget contains a legislative proposal for a budget-neutral technical fix to
ensure the BBA's sustainable growth rate (SGR) for physician payment is stable.
Medicare payments for physician services are annually updated for inflation and
adjusted by comparing actual physician spending to a national target for
physician spending. The BBA replaced the former physician spending target rate
of growth, the Medicare Volume Performance Standard, with the SGR. The SGR takes
into account price changes, fee-for-service enrollment changes, real gross
domestic product per capita, and changes in law or regulation affecting the
baseline. After BBA was enacted, HCFA actuaries discovered that the SGR system
would result in unreasonable year-to-year fluctuations. Also, the SGR target
cannot be revised to account for new data. The President's budget proposal
addresses both of these concerns. Medicare+Choice: Successfully implementing
this program is a high priority for us. Medicare managed care enrollment has
tripled under the Clinton Administration, and there are now 6.48 million
beneficiaries enrolled in Medicare+Choice plans. We meet regularly with
beneficiary advocates, industry representatives, and others to discuss ways to
improve the program. We launched a national education campaign and participated
in more than 1,000 events around the country to help beneficiaries understand
it. And we are establishing a federal advisory committee to help us better
inform beneficiaries. We have taken steps to assist plans and encourage plan
participation in Medicare+Choice. We worked with Congress to give plans two more
months to file the information used to approve benefit and premium structures so
plans were able to use more current experience when designing benefit packages
and setting cost sharing levels. We also published refinements to
Medicare+Choice regulation that improve beneficiary protections and access to
information while making it easier for health plans to offer more options. The
new rule: - clarifies that beneficiaries in a plan that leaves the program are
entitled to enroll in remaining locally available plans; - specifies that
changes in plan rules must be made by October 15 so beneficiaries have
information they need to make an informed choice during the November open
enrollment; - allows plans to choose how to conduct the initial health
assessment; - waives the mandatory health assessment within 90 days of
enrollment for commercial enrollees who choose the same insurer's
Medicare+Choice plan when they turn 65, and for enrollees who keep the same
primary care provider when switching plans; - stipulates that the coordination
of care function can be performed by a range of qualified health care
professionals, and is not limited to primary care providers; - limits the
applicability of provider participation requirements to physicians; and, -
allows plans to terminate specialists with the same process for terminating
other providers. We intend to publish a comprehensive final rule with further
refinements this fall. We have also undertaken a comprehensive beneficiary
education program. We launched the National Medicare Education Program to make
sure beneficiaries receive accurate, unbiased information about their benefits,
rights, and options. The campaign includes: M mailing a Medicare & You
handbook to explain health plan options; M a toll-free "I-800-MEDICARE"
1-800-633-4227 call center with live operators to answer questions, and provide
detailed plan-level information; - a consumer-friendly Internet site,
www.medicare.gov, which includes comparisons of benefits, costs, quality, and
satisfaction ratings for plans available in each zip code; - working with more
than 120 national aging, consumer, provider, employer, union, and other
organizations who help disseminate information to their constituencies; -
beneficiary counseling from State Health Insurance Assistance Programs; - a
national publicity campaign; - a Regional Education About Choices in Healthcare
(REACH) campaign that will conduct State and local outreach activities
nationwide; and, - a comprehensive assessment of these efforts. We tested the
system in five States in 1998 and learned how to improve efforts for this
November's open enrollment period. For example, we have made the Medicare &
You handbook easier to use and improve the accuracy of information about plans
that are withdrawing. We have added new links on our Medicare Compare website at
www.medicaregov to help users find information faster. We are standardizing plan
marketing materials that summarize benefits so beneficiaries can more easily
make apples-to-apples comparisons among plans in this November's open enrollment
period. And we have added information on managed care plan withdrawals to the
Important Notes section of the 1999 plan information on our Medicare Compare
website. To help us continually improve our education efforts, we are
establishing the Citizens' Advisory Panel on Medicare Education, under the
Federal Advisory Committee Act. The panel will help enhance our effectiveness in
informing beneficiaries through use of public-private partnerships, expand
outreach to vulnerable and underserved communities, and assemble an information
base of "best practices" for helping beneficiaries evaluate plan options and
strengthening community assistance infrastructure. Panel members will include
representatives from the general public, older Americans, specific disease and
disability groups, minority communities, health communicators, researchers,
plans, providers, and other groups. The BBA also initiated important payment
reforms that begin to correct for historical overpayment. It established a
competitive pricing demonstration in which plan payment rates will be set
through a bidding process, similar to what most employers and unions use to
decide how much to pay plans. And, starting in January, the BBA mandates that we
"risk adjust" payments to account for the health status of each enrollee.
Studies by the Congressional Budget Office, Physician Payment 9eview Commission,
and many others have shown that we overpay plans in part because Medicare fails
to adjust payments for the health of enrollees. That is why risk adjustment
cannot be budget neutral. The vast majority of beneficiaries enrolled in
Medicare+Choice cost far less than what Medicare pays plans for each enrollee.
Budget neutral risk adjustment would mean Medicare and the taxpayers who fund it
would continue to lose billions of dollars each year on Medicare+Choice. Budget
neutral risk adjustment would cost taxpayers an estimated $11.2 billion over the
five years that we are phasing it in if health plans maintain their current,
mostly healthy beneficiary mix. We are concerned about disruptions to
beneficiaries caused by plan decisions to trim participation in Medicare+Choice.
The GAO reported in April that many factors contribute to such decisions. For
instance, plans may have trouble establishing adequate provider networks,
enrolling enough beneficiaries to support fixed costs, or otherwise competing in
a given market. However, inadequate reimbursement to plans does not fully
explain these plan decisions. Payment is rising in all counties this coming year
by an average of 5 percent. In fact, despite BBA reforms, aggregate payment to
plans continues to be excessive, according to another GAO report released in
June, because of a forecasting error that the BBA locked into the statutory
payment formula. The result is that plans are being paid an additional excess
amount that totaled $1.3 billion in 1998 and will increase each year. BBA
reforms may, however, mean that payments in some counties no longer include
enough excess to cover losses in other areas or to subsidize extra benefits that
fee-for- service Medicare does not currently cover, such as prescription drugs.
Clearly all beneficiaries need a more stable and reliable source of prescription
drug coverage. And, if plans' primary problem is paying for benefits beyond the
Medicare benefit package, the best solution is to improve the benefit package by
providing all beneficiaries with access to an affordable prescription drug
benefit, and paying plans explicitly for providing it. The President's Medicare
reform plan gives all beneficiaries the option to pay a modest premium for a
prescription drug benefit that will cover half of all prescription drug costs up
to $5,000 when fully phased in, with no deductible. Medicare+Choice plans would
be explicitly paid for providing a drug benefit, and would no longer have to
depend on what the rate is in a given area to determine whether they can afford
to do so. The President's plan also will modernize the way Medicare pays managed
care plans. Rates would be set through competition among plans rather than
through a complicated statutory formula. All plans would be paid their full
price through a combination of government and beneficiary payments. The lower
the price, the less beneficiaries pay. And the President's plan also includes
several provisions to preserve beneficiary options and strengthen protections
when plans withdraw from Medicare. CONCLUSION The BBA made important changes to
the Medicare program to strengthen and protect it for the future. These changes,
along with a strong economy and our increased efforts to combat fraud, waste,
and abuse, have extended the life of the Trust Fund until 2015. With changes of
the magnitude encompassed in the BBA, some issues have arisen that may require
adjustment and fine tuning. The President's Medicare reform plan sets aside $7.5
billion to smooth out implementation of BBA reforms. The President's plan also
includes administrative adjustments to help in the transition to new payment
systems. It dedicates a portion of the budget surplus to Medicare, which will
help protect against excessive provider payment reductions in the future as
Medicare enrollment doubles over the next 30 years, and increased efficiencies
alone will not be able to cover the increased costs. It is not surprising that
necessary market corrections would result from such significant legislation. As
always, we remain concerned about the effect of policy changes on beneficiaries'
access to affordable, quality health care. We are proactively monitoring the
impact of the BBA to ensure that beneficiary access to covered services is not
compromised. We welcome the opportunity to look at any new information regarding
beneficiary access to quality care. We are committed to continuing to look at
refinements to the BBA that are within our administrative authority. We also are
committed to working with Congress to enact bipartisan Medicare reform this year
that makes a prescription drug benefit available and affordable for all
beneficiaries, dedicates, it significant portion of the budget surplus to
Medicare, and sets aside funding specifically for smoothing out BBA payment
reforms. I thank you for holding this hearing, and I am happy to answer your
questions.
LOAD-DATE: October 5, 1999
