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Conference Report on Medicare, Medicaid, SCHIP Legislation Released


Date: 10/26/2000
News: The House passed a bill today by a vote of 237-174 which includes the House and Senate negotiated bill on Medicare, Medicaid, and SCHIP. The legislation is available at: via the Internet. Reports indicate that the bill would cost approximately $31 billion over 5 years.

The bill is included in the conference report for H.R. 2614, The
Certified Development Company Improvements Program of 2000. Issues in the bill unrelated to health care include an increase in the minimum wage and tax credits for small business. The legislation is currently part of the end of session wrangling that has taken place both in the House and Senate.

Although the Congressional leadership thought they had an agreement with the Administration yesterday (October 25), the President sent a letter to the leadership this afternoon indicating that he would veto the bill. He cited his disagreement with a number of provisions, including funding for Medicare+Choice plans “without accountability,” tax incentives for the purchase of individual health insurance plans, and a lack of funding for tax credits for those family members providing long-term care services, among many other things.

Another potential sticking point is in the Senate. There is a provision
in the conference report which would overturn the Oregon law allowing physician assisted suicide. Senator Ron Wyden (D-OR) has said that he will filibuster any legislation which includes such a provision.Considering the fact that conference reports cannot be amended on the floor, it remains unclear whether the legislation will pass the Senate. If it does, it is somewhat unlikely at this point that the President would sign the legislation into law.

Below are highlights of the legislation:

• Additional preventive benefits would be added to the Medicare program, including glaucoma screening, colonoscopy screening for all Medicare beneficiaries, better payment for mammography services, and coverage of nutrition therapy for beneficiaries with diabetes or a renal disease.

• Out-of-pocket hospital outpatient costs would be lowered be
accelerating the phase-in of the cost reduction language included in the Balanced Budget Refinement Act (BBRA) of 1999.

• All hospitals would receive the full market basket index (MBI) for
FY2001 for inpatient services. They would receive MBI minus 1.1 percent on or after October 1, 2000 through April 1, 2001, and MBI plus 1.1 percent on or after April 1, 2001 through September 30, 2001. They would receive the MBI minus .55 percent for FY2002 and FY2003, and the full MBI for FY2004 and beyond.

• PPS payments for hospital outpatient department services would be increased by the MBI in FY2001. In FY2002, the update would be the MBI minus one percent.

• Teaching hospitals would receive an average 6.5 percent indirect
graduate medical education (IME) payment adjustment for FY2001.
Discharges occurring on or after October 1, 2001 and before
April 1, 2001 would receive an IME adjustment of 6.25 percent.
The IME adjustment would increase to 6.75 percent for discharges on or after April 1, 2001 and before October 1, 2001.

• Direct GME payments would be at least 85 percent of the locality
adjusted national average per resident amount in FY2002.

• Disproportionate Share Hospital (DSH) payments would be reduced by 2 percent in FY2001, 3 percent in FY2002, and 0 percent in FY2003 and subsequent years. Implementation of the provision would be a 3 percent reduction for discharges occurring on or after October 1, 2000 and before April 1, 2001, and a 1 percent reduction for discharges occurring on or after April 1, 2001 and before October 1, 2001. If this provision were not enacted, DSH payment be reduced by 3 percent in FY2001 and by 4 percent in FY2002.

• Medicare would increase the percentage of bad debt payment for
hospitals to 70 percent beginning in FY2001.

• Medicaid DSH payments for FY2001 would be set at each State’s DSH allotment for FY2000 increased by the percentage change in the consumer price index for that year, subject to a ceiling increase of 12 percent. In FY2002, DSH payments would be increased in a manner similar to FY2001.

• The Medicaid DSH transition rule would be modified so that the 175 percent hospital-specific limit, formerly applied only to certain public hospitals in California, would be applied to qualifying hospitals in all States. Qualifying hospitals would be those owned or operated by a State and meet the minimum federal requirements for DSH hospitals. The limit would apply for two State fiscal years beginning on the first day of the State fiscal year that begins after September 30, 2002 and ends on the last day of the succeeding State fiscal year.

• The Medicaid Upper Payment Limit (UPL) would be modified. The Secretary of HHS would be required to issue final regulations no later the December 31, 2000. Included in that final rule would be a requirement for the establishment of a separate UPL for non-State-owned or operated government facilities. This third set of rules would govern the transition period for those States with an approved UPL plan in effect on or before October 1, 1992, or under which claims for federal matching were paid on or before that date, and for which such payments exceed the UPLs established under the final regulation. For those States (which include Pennsylvania, Illinois, New York, California, and two other States) a 6-year transition would apply, beginning with the first State fiscal year that begins after September 30, 2002. Applicable States would be required to reduce excess payments by 15 percent per year, with full compliance by October 1, 2008.

• Hospital outpatient PPS pass-through payments would be modified by changing the procedures and standards by which certain medical devices are categorized and determined eligible for pass-through payments. The Secretary of Health and Human Services (HHS) would be required to promulgate rules “that would encompass each of the individual devices that the Secretary had designated as qualifying for the pass-through payments to date.” Devices not designated for pass-through payments because they were payable under Medicare prior to December 31, 1996 would also be included in initial categories. The Secretary would also be required to create additional new categories to accommodate new technologies meeting the “not insignificant cost” test included in the BBRA.

• The rule regarding provider-based status would be grandfathered for those facilities who currently have provider-based status until October 1, 2002. If a facility requests approval for provider-based status from October 1, 2000 through September 31, 2002, it could not be treated as if it did not have such status during the time in which the determination is pending. HCFA would be directed to treat applicants for provider-based status as satisfying the standards for geographic location if the facility in question is located within 35 miles from the main campus of the hospital. In addition, applicants for provider-based status would be treated as satisfying all requirements if it is owned or operated by a unit of State of local government or is a public or private nonprofit corporation that is formally granted governmental powers by a unit of State or local government, or is a private hospital that serves certain low income households under contract or has a certain disproportionate share adjustment.

• Children’s hospitals would receive the same treatment as cancer
hospitals under the outpatient PPS.

• Skilled nursing facilities (SNFs) would receive the full MBI in FY2001 and the MBI minus .5 percent in FY2002 and FY2003. From October 1, 2000 through March 31, 2001, the rate will be paid at MBI minus 1 percent and paid at MBI plus 1 percent from April 1, 2001 through September 30, 2001. Temporary increases in the federal per diem rates provided by the BBRA would be in addition to the other provisions for SNFs in this legislation.

• The SNF consolidated billing requirement would apply only to services and items furnished to SNF residents in a Medicare part A covered stay and to therapy services furnished in part A and part B covered stays.

• The General Accounting Office would be required to conduct a study on the appropriateness of furnishing specialist services in physician’s offices which are ordinarily furnished in outpatient departments.

• Home health payments would not be subject to the 15 percent reduction in FY2001 and would be delayed until October 1, 2002. In addition, payments for home health services would be paid with a full MBI increase in FY2001. They would receive MBI minus 2.2 percent on or after October 1, 2000 through April 1, 2001, and MBI plus 2.2 percent on or after April 1, 2001 through September 30, 2001. Payments for home health services for the second year of the PPS (FY2002) would be equal to the MBI increase minus 1.1 percent.

• A temporary extension of home health periodic interim payments would be provided for two months.

• Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) would be placed under a new PPS beginning in FY2001. Existing FQHCs and RHCs would be paid per visit payments equal to 100 percent of the reasonable costs incurred using an average of the rates paid in FY1999 and FY2000.

Source: Debra Hardy Havens and Matt Williams