BALANCED BUDGET ACT CUTS TO MEDICARE -- HON. JOHN ELIAS BALDACCI (Extensions of Remarks - October 13, 1999)

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HON. JOHN ELIAS BALDACCI OF MAINE IN THE HOUSE OF REPRESENTATIVES WEDNESDAY, OCTOBER 13, 1999

Mr. BALDACCI. Mr. Speaker, Maine hospitals, home health agencies, and skilled nursing facilities are in a state of crisis. Congress must address this issue before we recess for the year.

I am proud of the fact that Maine health institutions are efficient and perform above the norm nationwide in regards to quality of care. But now our providers, especially those in rural areas, are suffering disproportionately under the Balanced Budget Act Medicare cuts, and our resources are stretched to the limit. With the BBA Medicare cuts, our hospitals will lose $338 million over 5 years.

Maine has the lowest Medicare inpatient operating margins in the country. In fact, our operating margins are in the negative. Because of these already too-low Medicare reimbursement rates, any cuts to Medicare hurt Maine that much harder. There are no more margins left to cut. Cost shifting will occur and this will hurt all Maine citizens.

One area which particularly concerns me and my constituents is the effect of the interim payment system on home health agencies. The burden home health agencies have been asked to bear is extreme, especially when considering that the losses are spread among only 40 providers in the state. I hope that a fix can be developed for home health providers that includes the elimination of the 15 percent reduction in payments due to begin October 2000. Home health agencies in my district also ask that an outlier payment be added to the Interim Payment System to adequately account for high-need, high-cost patients. A flexible overpayment schedule, interest-free, would be helpful to providers, as well as a gradual raise in the per beneficiary limits for agencies falling under the national median and the extension of Periodic Interim Payments.

I am very concerned about the effects of the outpatient prospective payment system and the severe cuts Maine providers will experience under this reimbursement system. By HCFA's own admission in the May 7 published rule, rural hospitals will take the biggest hit in reimbursements from the outpatient PPS. The total reduction in the first year for all institutions will be $900 million, or a 5.7 percent average reduction per facility. I hope we consider placing a ceiling on the level of cut any hospital would face to their outpatient reimbursements.

Skilled nursing facilities are under particular burdens under the BBA as well. The prospective payment system is reducing payments by 20 percent. Rural facilities, especially, do not have the operating margins to absorb such a drastic cut. There are no accounting methods to increase payments for medically complex cases. On a related front, many providers believe the $1,500 annual cap on therapy services is arbitrary and very hurtful for seniors. Many of these seniors have multiple therapy needs which can run out in a matter of months under this tight cap.

Changes in reimbursement for Graduate Medical Education unintentionally hurt family practice training in districts such as my own. I hope that this body reviews the technical corrections to GME reimbursements contained in my bill, H.R. 1222, which addressed this issue. These corrections are especially important for rural communities, where there are still shortages of family practice physicians.

Finally, I hope we consider as part of BBA corrective legislation the incorporation of provisions of H.R. 1344, the Triple-A Rural Health Improvement Act, developed by the Rural Health Care Coalition of the House. This bill is designed to address further the need for health care access for seniors in rural areas.

We must take the initiative to attack the problem of inadequate provider reimbursements now. I urge my colleagues to support the restoration of some of the most-harmful BBA cuts.
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