Improves Seniors’ Access to Medicare by Refining Balanced Budget Act

Washington, D.C. — Congressman John Thune today announced his co-sponsorship of the Medicare Balanced Budget Refinement Act, which provides $15 billion in relief to rural hospitals, home health care facilities, nursing homes and other health care programs.

The package also outlines steps the Administration can take to adjust the Medicare payment structure so that it fits the structure envisioned by Congress when it passed the Balanced Budget Act of 1997.

"During my 36 county tour in August, I met with administrators from rural hospitals and health care facilities. They are very concerned that people are being denied care because of over-zealous cuts in Medicare reimbursements implemented by the Health Care Financing Administration (HCFA). This legislation corrects that problem and addresses the needs of our hospitals and health-care facilities, especially rural facilities, so that they have the flexibility to provide the care that residents in rural areas need."

Under the Balanced Budget Act of 1997, Congress instructed HCFA to examine the regulations and reimbursement schedule governing Medicare to cut down on fraud and waste. HCFA did initiate a series of rules, but recent reports indicate that the agency was overly austere in its interpretation of the law. The Congressional Budget Office estimates that the reductions in reimbursements would be almost $90 billion more than that called for by Congress.

Thune joined others in introducing the bill today in Washington. The House is moving rapidly to pass the bill into law. The Subcommittee on Health is expected to consider the bill on Friday. From there it will move to the full committee.

Strengthen Rural Hospitals – The refinement package increases flexibility in determining payment status and flexibility of rural hospital bed use; extends the Medicare Dependent Hospital program for rural areas; provides financial relief to some sole-community hospitals; modifies the existing Rural Hospital Flexibility Grant Program to permit rural hospitals to obtain computer software and staff training to accommodate changes to new payment systems.

Critical Access Hospitals – The plan adopts a new average 96-hour length-of-stay for patients in rural areas; allows hospitals that closed or downsized within the last 10 years to convert to a critical access hospital, which provides intense outpatient medical care; eliminates co-payments by beneficiaries for lab services.

Offer Beneficiaries More Flexibility Through Medicare +Choice – The plan will offer incentives for health-care providers entering counties that do not currently offer managed care plans; allows plans to offer seniors more choices by varying benefit packages; allows Medicare+Choice beneficiaries an open enrollment period when they learn that their plan is ending its contract.

Improve Outpatient Rehabilitation Services – Provides for separate $1,500 caps for physical and speech therapy services and exempts one percent of high-acuity patients for 2 years.

Maintain the vitality of teaching hospitals – Permits rural hospitals to increase their Medicare resident numbers to better serve rural beneficiaries.

Preserve Hospitals’ Ability to Better Coordinate Care – The plan requires HCFA to preserve hospitals’ ability to coordinate care for patients and improve the accuracy in calculating Medicare payments to hospitals with a disproportionate share of beneficiaries (DSH).

Ensure Smooth Transition for Outpatient Hospitals Switching to New Payment System – Creates an "outlier" adjustment for high-acuity patients; adjusts payments for innovative medical devices, drugs and biologicals, including orphan and cancer drugs; and provides targeted incentives to increase hospital efficiency.

Ensure Availability of Home Health Care – Beneficiaries will receive increased access to home health care services through delaying 15 percent payment reductions to home health agencies until one year after implementation of the prospective payment system (PPS). The plan also assists agencies with added paperwork and record-keeping costs. The plan also calls on HCFA to waive interest on repayments to Medicare made by home health agencies.

Increase Care for Medically Complex SNF Patients – Skilled nursing facilities (SNFs) caring for medically complex patients will receive adjustments in their payments. In addition, the plan increases the Federal per diem rate for SNF "market baskets."

Increase Ability to Offer Prostheses, Cancer Fighting Drugs and Ambulance Services -- Allows separate billing by skilled nursing facilities for certain prosthetic devices, chemotherapy drugs, and ambulance and emergency services.

Improving Graduate Medical Education (GME) – Freezes the Indirect Medical Education (IME) program for one year and adopts a more equitable structure for direct GME payments to teaching hospitals nationwide.

Provide payment updates for renal dialysis, and durable medical equipment – The plan improves beneficiaries’ access to renal dialysis treatments and durable medical equipment such as wheelchairs.

Helping Long-Term and Psychiatric Hospitals – Adjusts the payment system for existing long-term and psychiatric hospitals through increased continuous improvement and bonus payments through FY 2002. The plan also requires the Secretary to develop and implement a payment system based on discharge of patients.

Maintain Risk Adjuster Payment Demonstration Project for Frail Elderly – The plan calls on the Administration and HCFA to continue a demonstration project that will help those special needs seniors.

Update Payments for Physicians Caring for Beneficiaries – The plan modifies the way doctors are paid for treating patients, based on a sustainable growth rate (SGR) that stabilizes Medicare payments to physicians.

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