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S. 1024. A bill amend title XVIII of the Social Security Act to carve out from payments to Medicare+Choice organizations amounts attributable to disproportionate share hospital payments and pay such amounts directly to those disproportionate share hospitals in which their enrollees receive care; to the Committee on Finance.
[Page: S5166] GPO's PDF
MANAGED CARE FAIR PAYMENT ACT OF 1999
By Mr. MOYNIHAN (for himself, Mr. BREAUX, Mr. DASCHLE, Mr. SANTORUM, Mr. DURBIN, Mr. SCHUMER, Mr. KERRY, Mr. SPECTER, Mr. CONRAD, Mr. BAUCUS, Mr. CHAFEE, Mr. KERREY, and Mr. CLELAND):
S. 1025. A bill to amend title XVIII of the Social Security Act to ensure the proper payment of approved nursing and allied health education programs under the medicare program; to the Committee on Finance.
NURSING AND ALLIED HEALTH PAYMENT IMPROVEMENT ACT OF 1999
Mr. MOYNIHAN. Mr. President, today I am introducing three bills that will provide much needed financial support for America's 144 accredited medical schools and 1,250 graduate medical education (GME) teaching institutions. These institutions are national treasures; they are the very best in the world. Yet today they find themselves in a precarious financial situation as market forces reshape the health care delivery system in the United States.
The growth of managed for-profit care combined with GME payment reductions under the Balanced Budget Act of 1997 (BBA) have put these hospitals in dire financial straits. Hospitals are losing money--millions of dollars every year. And these losses are projected to increase, as additional scheduled Medicare payment reductions are phased in. Many of the teaching hospitals that we know and depend on today may not survive--including those in my state of New York--if these additional GME payment reductions are not repealed.
To ensure that this precious public resource is maintained and the United States continues to lead the world in the quality of its health care system, the three bills I am introducing today --the Graduate Medical Education Payment Restoration Act of 1999, the Managed Care Fair Payment Act of 1999, and the Nursing and Allied Health Payment Improvement Act of 1999--will provide critically required funding for teaching hospitals.
Everyone in America benefits from the research and medical education conducted in our medical schools and affiliated teaching hospitals. They are what economists call public goods --something that benefits everyone but which is not provided for by market forces alone. Think of an army. Or a dam.
The Medicare program is the nation's largest explicit financier of GME, with annual payments of about $7 billion. In the past, other payers of health care have also contributed to the costs of GME. However, in an increasingly competitive managed care health care system, these payments are being squeezed out.
Earlier this year, I reintroduced the Medical Education Trust Fund Act of 1999. This legislation requires the public sector, through the Medicare and Medicaid programs, and the private sector, through an assessment on health insurance premiums, to contribute broad-based and equitable financial support for graduate medical education. I hope that one day Congress will see the wisdom of enacting such a measure. However, our teaching hospitals need help now.
We are in the midst of a great era of discovery in medical science. It is certainly no time to close medical schools. This great era of medical discovery is occurring right here in the United States, not in Europe like past ages of scientific discovery. And it is centered in New York City.
It started in the late 1930s. Before then, the average patient was probably as well off, perhaps better, out of a hospital as in one. Progress since that point sixty years ago has been remarkable. The last few decades have brought us images of the inside of the human body based on the magnetic resonance of bodily tissues; laser surgery; micro surgery for reattaching limbs; and organ transplantation, among other wonders. Physicians are now working on a gene therapy that might eventually replace bypass surgery. One can hardly imagine what might be next--but we do know that much of it will be discovered in the course of ongoing research activities in our teaching hospitals and medical schools. That is a process which is of necessity unplanned, even random--but which regularly produces medical breakthroughs. To cite just a few examples:
At Memorial Sloan-Kettering Cancer Center, the world renowned teaching hospital in New York City, researchers in 1998 discovered among many other things a surgical biopsy technique that can predict whether breast cancer has spread to surrounding lymph node tissue. This technique will spare 60,000 to 80,000 patients each year from having to undergo surgical removal of their lymph nodes.
In 1997, at Mount Sinai-NYU Medical Center, it was discovered that malignant brain tumors in young children can be eradicated through the use of high-dose chemotherapy and stem-cell transplants.
And in May of last year, a doctor at Children's Hospital in Boston created a global media sensation with his discovery that a combination of the drugs endostatin and angiostatin appeared to cure cancer in mice by cutting off the supply of blood to tumors. Although the efficacy of this therapy in humans is not yet known, the research holds great promise that a cure for cancer may actually be within reach. And it was discovered in a teaching hospital.
The Graduate Medical Education Payment Restoration Act, with a total of 15 cosponsors, will freeze the current schedule of BBA reductions to the indirect portion of GME funding. Congressman RANGEL today is introducing a similar bill in the House. Under the BBA, the indirect payment adjustor is scheduled to be reduced from 7.7 percent to 5.5 percent by FY 2001. This bill will maintain the current payment adjustor at its current level of 6.5 percent, thereby rolling back about half of the indirect GME funding cuts in the BBA. In total, this provision restores about $3 billion over 5 years and $8 billion over 10 years in indirect GME funding for teaching hospitals.
The Managed Care Fair Payment Act, with nine cosponsors, will redirect more than $2.5 billion over 5 years of Medicare Disproportionate Share Hospital (DSH) funds from the Medicare managed care payment rates to the more than 1,900 hospitals that qualify for DSH funding. Congressman RANGEL introduced a similar bill in the House this past March. More than two-thirds of teaching hospitals also qualify for DSH funds. Under the current payment method, payments to managed care plans include these DSH funds, but unfortunately, these funds are not necessarily passed-on to DSH hospitals. Managed care plans often do not contract with DSH hospitals, and when they do the negotiated payment rates often do not include these DSH payments. Like GME funding under current law, this bill would carve out DSH funds from the managed care rates and require the Health Care Financing Administration to pass them on directly to qualifying hospitals.
The third bill I am introducing today, which has 13 cosponsors, is the Nursing and Allied Health Payment Improvement Act. This bill was introduced by Congressmen CRANE and BENTSEN on April 20 of this year. While Congress in the BBA of 1997 recognized the need to carve-out GME funding from managed care rates, it unintentionally did not carve out the funding for the training of nurses and allied health professionals. Like DSH funds, without the carve-out, funding for these education programs is unlikely to reach the more than 700 hospitals that provide training to these vitally important health professionals. This bill seeks to correct this problem by carving out the funding for the training of nurses and other allied health professionals and directing them to the hospitals that provide these training programs.
Combined, these three bills will strengthen our nation's teaching hospitals and ensure that the United States will continue to be in the forefront of developing new cures, new medical technology, and training of the worlds finest medical professionals. Without these bills, the state of our nation's teaching hospitals and the delivery of health care will remain in jeopardy.
I ask that the text of the bills, along with two articles from the New York Times, be included in the RECORD.
The material follows:
Be it enacted by the Senate and House of Representa tives of the United States of America in Congress assembled,
[Page: S5167] GPO's PDF
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Graduate Medical Education Payment Restoration Act of 1999''.
SEC. 2. TERMINATION OF MULTIYEAR REDUCTION OF INDIRECT GRADUATE MEDICAL EDUCATION PAYMENTS.
Section 1886(d)(5)(B)(ii) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--
(1) by adding ``and'' at the end of subclause (II); and
(2) by striking subclauses (III), (IV), and (V) and inserting the following:
``(III) on or after October 1, 1998, `c' is equal to 1.6.''.
--
Be it enacted by the Senate and House of Representa tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Managed Care Fair Payment Act of 1999''.
SEC. 2. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE AMOUNTS DIRECTLY TO DSH HOSPITALS ENROLLING MEDICARE+CHOICE ENROLLEES.
(a) IN GENERAL.--Section 1853(c)(3) of the Social Security Act (42 U.S.C. 1395w-23(c)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)'' and inserting ``subparagraphs (B) and (D)'';
(2) by redesignating subparagraph (D) as subparagraph (E); and
(3) by inserting after subparagraph (C) the following:
``(D) REMOVAL OF PAYMENTS ATTRIBUTABLE TO DISPROPORTIONATE SHARE PAYMENTS FROM CALCULATION OF ADJUSTED AVERAGE PER CAPITA COST.--
``(i) IN GENERAL.--In determining the area-specific Medicare+Choice capitation rate under subparagraph (A) for a year (beginning with 2001), the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) shall be adjusted, subject to clause (ii), to exclude from the rate the additional payments that the Secretary estimates were made during 1997 for additional payments described in section 1886(d)(5)(F).
``(ii) TREATMENT OF PAYMENTS COVERED UNDER STATE HOSPITAL REIMBURSEMENT SYSTEM.--To the extent that the Secretary estimates that an annual per capita rate of payment for 1997 described in clause (i) reflects payments to hospitals reimbursed under section 1814(b)(3), the Secretary shall estimate a payment adjustment that is comparable to the payment adjustment that would have been made under clause (i) if the hospitals had not been reimbursed under such section.''.
(b) ADDITIONAL PAYMENTS FOR MANAGED CARE ENROLLEES.--Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended--
(1) in clause (ii), by striking ``clause (ix)'' and inserting ``clauses (ix) and (x)''; and
(2) by adding at the end the following:
``(x)(I) For portions of cost reporting periods occurring on or after January 1, 2001, the Secretary shall provide for an additional payment amount for each applicable discharge of any subsection (d) hospital that is a disproportionate share hospital (as described in clause (i)).
``(II) For purposes of this clause, the term `applicable discharge' means the discharge of any individual who is enrolled with a Medicare+Choice organization under part C.
``(III) The amount of the payment under this clause with respect to any applicable discharge shall be equal to the estimated average per discharge amount (as determined by the Secretary) that would otherwise have been paid under this subparagraph if the individual had not been enrolled as described in subclause (II).
``(IV) The Secretary shall establish rules for an additional payment amount for any hospital reimbursed under a reimbursement system authorized under section 1814(b)(3) if such hospital would qualify as a disproportionate share hospital under clause (i) were it not so reimbursed. Such payment shall be determined in the same manner as the amount of payment is determined under this clause for disproportionate share hospitals.''.
--
Be it enacted by the Senate and House of Representa tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Nursing and Allied Health Payment Improvement Act of 1999''.
SEC. 2. EXCLUSION OF NURSING AND ALLIED HEALTH EDUCATION COSTS IN CALCULATING MEDICARE+CHOICE PAYMENT RATE.
(a) EXCLUDING COSTS IN CALCULATING PAYMENT RATE.--
(1) IN GENERAL.--Section 1853(c)(3)(C)(i) of the Social Security Act (42 U.S.C. 1395w-23(c)(3)(C)(i)) is amended--
(A) by striking ``and'' at the end of subclause (I);
(B) by striking the period at the end of subclause (II) and inserting ``, and''; and
(C) by adding at the end the following new subclause:
``(III) for costs attributable to approved nursing and allied health education programs under section 1861(v).''.
(2) EFFECTIVE DATE.--The amendments made by paragraph (1) apply in determining the annual per capita rate of payment for years beginning with 2001.
(b) PAYMENT TO HOSPITALS OF NURSING AND ALLIED HEALTH EDUCATION PROGRAM COSTS FOR MEDICARE+CHOICE ENROLLEES.--Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following new subparagraph:
``(V) In determining the amount of payment to a hospital for portions of cost reporting periods occurring on or after January 1, 2001, with respect to the reasonable costs for approved nursing and allied health education programs, individuals who are enrolled with a Medicare+Choice organization under part C shall be treated as if they were not so enrolled.''.
--
Teaching Hospitals Battling Cutbacks in Medicare Money
BOSTON, May 5--Normally, the great teaching hospitals of this medical Mecca carry an air of whitecoated, best-in-the-world arrogance, the kind of arrogance that comes of collecting Nobels, of snaring more Federal money for medical research than hospitals anywhere else, of attracting patients from the four corners of the earth.
But not lately. Lately, their chief executives carry an air of pleading and alarm. They tend to cross the edges of their palms in an X that symbolizes the crossing of rising costs and dropping payments, especially Medicare payments. And to say they simply cannot go on losing money this way and remain the academic cream of American medicine.
Dr. Mitchell T. Rabkin, chief executive emeritus of Beth Israel Hospital, says, ``Everyone's in deep yogurt.''
The teaching hospitals here and elsewhere have never been immune from the turbulent change sweeping American health care--from the expansion of managed care to spiraling drug prices to the fierce fights for survival and shotgun marriages between hospitals with empty beds and flabby management.
But they are contending that suddenly, in recent weeks, a Federal cutback in Medicare spending has begun putting such a financial squeeze on them that it threatens their ability to fulfill their special missions: to handle the sickest patients, to act as incubators for new cures, to treat poor people and to train budding doctors.
The budget hemorrhaging has hit at scattered teaching hospitals across the country, from San Francisco to Philadelphia. New York's clusters of teaching hospitals are among the biggest and hardest hit, the Greater New York Hospital Association says. It predicts that Medicare cuts will cost the state's hospitals $5 billion through 2002 and force the closing of money-losing departments and whole hospitals.
Dr. Samuel O. Thier, president of the group that owns Massachusetts General Hospital, says, ``We've got a problem, and you've got to nip it in the bud, or else you're going to kill off some of the premier institutions in the country.''
Here in Boston, with its unusual concentration of academic medicine and its teaching hospitals affiliated with the medical schools of Harvard, Tufts and Boston Universities, the cuts are already taking a toll in hundreds of eliminated jobs and pockets of miserable morale.
Five of Boston's top eight private employers are teaching hospitals, Mayor Thomas M. Menino notes. And if five-year Medicare cuts totaling an estimated $1.7 billion for Massachusetts hospitals continue, Mayor Menino says, ``We'll have to lay off thousands of people, and that's a big hit on the city of Boston.''
Often, analysts say, hospital cut-backs, closings and mergers make good economic sense, and some dislocation and pain are only to be expected, for all the hospitals' tendency to moan about them. Some critics say the hospitals are partly to fault, that for all their glittery research and credentials, they have not always been efficiently managed.
``A lot of teaching hospitals have engaged in what might be called self-sanctification--`We're the greatest hospitals in the world and no one can do it better or for less'--and that may or may not be true,'' said Alan Sager, a health-care finance expert at the Boston University School of Public Health.
But the hospital chiefs argue that they have virtually no fat left to cut, and warn that their financial problems may mean that the smartest edge of American medicine will get dumbed down.
With that message, they have been lobbying Congress in recent weeks to reconsider the cuts that they say have turned their financial straits from tough to intolerable.
``Five years from now, the American people will wake up and find their clinical research is second rate because the big teaching hospitals are reeling financially,'' said Dr. David G. Nathan, president of the Dana-Farber Cancer Institute here.
In a half-dozen interviews, around the Boston medical- industrial complex known as the Longwood Medical Center and Academic Area and elsewhere, hospital executives who normally compete and squabble all espoused one central idea: teaching hospitals are special, and that specialness costs money.
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