Congress Passes BBA Relief

Hospitals and health systems will realize $11.55 billion over five years in Balanced Budget Act (BBA) relief under the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA). The package passed on Dec. 15, 2000, as part of a larger funding bill, and the president indicated he will sign it into law. Here's how the final package breaks down over five years:

• Medicare inpatient payments will rise by 3.4% in fiscal 2001, up from 2.3% under the BBA. Based on current estimates, payments in FY02 will rise by 3.05%, up from an estimated 2.5% under the BBA. Restored: $3.7 billion.
  
  
• Medicare outpatient payments will rise by 4.4% in calendar year 2001, up from 2.4% under the BBA. Restored: $900 million.
  
  
• Freeze in the level of adjustment for indirect medical education payments at 6.5% in FY01, 6.5% in FY02. Restored: $700 million.
  
  
• Elimination of additional 1% cut in Medicare DSH payments in FY01 and FY02. Restored: $100 million.
  
  
• Increase, from 55% to 70%, Medicare payments for bad debt -- uncollectable beneficiary deductibles and coinsurance. Restored: $700 million.
  
  
• Increase in floor for direct graduate medical education payments to 85 percent of the national average. Restored: $300 million.
  
  
• Elimination of BBA's FY01 and FY02 Medicaid DSH cut, and an increase in allotments for low-DSH states. Restored: $1.25 billion.
  
  
• Removal of the 2% payment reduction for rehabilitation hospitals for FY01; rehabilitation hospitals can move immediately to PPS. Restored: $200 million.
  
  
• Equalization of eligibility for Medicare DSH payments between rural and urban hospitals. Restored: $1.35 billion.
  
  
• Skilled nursing service payments will rise by 3.2% in FY01, plus additional payments for nursing costs. Restored (for hospital SNFs): $350 million.
  
  
• Change in rules for provider-based status by grandfathering existing provider-based entities for two years, and adding geographic market area option. Restored: $200 million.
  
  
• Improvements for rural hospitals, including making the Medicare-dependent hospital program more equitable; updating the target amounts for all sole community hospitals; increasing payments to critical access hospitals, and improved rural ambulance payments. Restored: $625 million.
  
  
• Increase in long-term care hospital payments. Restored: $300 million.
  
  
• Increase of 5% in 2001 hospice payments. Restored (for hospital-based hospice): $125 million.
  
  
• One-year delay of 15% reduction for home health; full market basket in FY01. Restored (for hospital home health agencies): $525 million.
  
  
• Increase of 10% for payments to rural home health agencies: Restored (for rural hospital agencies): $150 million.
  
  
• Increased incentives for psychiatric hospitals and units. Restored: $25 million.
  
  
• Increased renal dialysis composite rate. Restored: $50 million.

The package also includes $500 million to improve welfare-to-work transition under Medicaid for another year, and $500 million to allow additional entities, such as schools, to be qualified to enroll children in SCHIP and Medicaid.