In Washington
Hospital Medicare margins worsen as trust fund solvency improves… At its March 16th meeting, MEDPAC, the group that advises Congress on Medicare policy, finally acknowledged that hospital margins have declined significantly since enactment of the Balanced Budget Act. According to their data, total margins at major teaching hospitals dropped by 55 percent, from 5.1 percent to 2.3 percent from 1997 to 1998. Meanwhile, the Medicare Board of Trustees announced this week that the Medicare trust fund will remain solvent until 2023, eight years longer than it expected last year.
FY 2001 budget news… In March, the House of Representatives adopted a spending blueprint for fiscal year 2001 that includes a $40 billion “reserve” fund to finance Medicare reform and a prescription drug benefit. The Senate Budget Committee has approved similar language, with the full Senate expected to act soon. Although the consensus on the need for such a fund is useful, the real decisions on whether to create a Medicare prescription drug benefit or provide additional BBA relief will be made later in the year. The House language also expresses the opinion that the 15 percent cut in Medicare payments for home health that is slated to take effect in 2001 should not.
NIH funding… At a hearing in late March, Senate Appropriations Committee Chairman
Ted Stevens (R-AK) restated his commitment to doubling the NIH budget by endorsing a $2.7 billion increase for the agency for FY 2001. During its debate on the FY 2001 budget resolution, the Senate Budget Committee also adopted a non-binding “sense of the Senate” resolution calling for the same $2.7 billion increase. However, Sen. Arlen Specter (R-PA), a strong NIH supporter, warned that during last year’s budget negotiations leaders from both houses argued that too much money was being spent
on NIH. Rep. John Porter (R-IL), one of the strongest supporters of NIH funding in the
House, agreed and urged NIH advocates to be vigilant. While Porter supports a $2.7 billion NIH increase, he is concerned because devoting that much money to NIH could mean cutting other popular programs.
New HMO ads…The managed care industry’s new television ad campaign has sparked a controversy in Washington and cries of foul play from providers. The ads urge Congress to deal with medical errors rather than give patients the right to sue their HMOs and carry the message, “Get patients the care they need instead of getting lawyers the clients they want.”
Worth noting… As promised, Rep. Tom Coburn (R-OK) introduced HR 3980 at the end of March, a bill that would impose strict reporting requirements for researchers working with fetal tissue. Sen. Bob Smith (R-NH) has proposed similar legislation in the Senate… HCFA finally released its outpatient PPS rules today. AHA believes that the rules will give hospitals 10 percent more than would have been the case without last year’s BBA relief bill but has warned HCFA that hospitals don’t have enough time to absorb the 700-page rule before it takes effect on July 1… The Institute of Medicine released a report yesterday detailing the strains in the health care safety net. The growing uninsured population, Medicare cutbacks, and Medicaid managed care are among the culprits.
And on Beacon Hill
The House releases its budget... At the end of March, the House Ways and Means Committee released its version of the FY 2001 budget. Highlights are as follows:
• In a detour from last year’s budget agreement which called for 70 percent of the funds received from the national tobacco settlement to be deposited in a Health Trust Fund and an appropriation of the remaining 30 percent on health-related programs, the Governor’s FY 2001 called for a 50/50 split of these funds. In its budget the House stuck to last year’s agreement and retained the 70/30 split for these funds. The Senate has yet to act.
• In order to reduce acute hospitals’ liability to the uncompensated care pool, outside section 207 would transfer $25 million from the Medical Security Trust Fund to the Uncompensated Care Trust Fund. Outside section 208 would transfer $52 million from the Uncompensated Care Pool for funding the insurance reimbursement program (IRP). This is a $36 million reduction from the Governor’s request and will help ensure that pool remains solvent.
• Like the Governor, the House included $5 million for health center expansion in its budget. However, despite a vigorous lobbying effort by the hospital, health center, nursing home, and home health communities, no funds were included for increasing Medicaid reimbursement rates for health providers, with the exception of $29 million to improve Medicaid payment rates for dental care. Amendments to the budget will be considered the week of April 10. During that week BWH will be actively lobbying in support of amendments that increase rates for hospitals, health centers and physicians.
Jeff Otten testifies at Insurance Committee hearing on HMO oversight bill… On March 30, the Joint Committee on Insurance held a hearing on the Governor’s HMO oversight bill to mandate minimum reserves, establish tighter and enforceable reporting requirements, and prohibit unfair and deceptive practices. BWH President and MHA Chairman Jeff Otten testified in support of the bill and also urged the committee to pass legislation requiring insurers to make prompt payment to providers. Legislation requiring prompt payment and defining a “clean claim,” is currently pending in both the House and Senate.