Current DGME Proposals
Eliminating Updates for Some DGME Payments
Section 711 of the ''Medicare Prescription Drug, Improvement
and Modernization Act of 2003,'' which was signed into law
on December 9, 2003, freezes in FYs 2004-2012 the Per Resident
Amounts (PRAs) for those teaching hospitals with per resident
limits above 140 percent of the locality-adjusted national
average at the FY 2003 level. This provision is estimated
to save $1.3 billion over 10 years.
Under current law, PRAs for hospitals above the 140 percent
ceiling amount were frozen at FY 2001 levels for FYs 2001
and 2002. In FYs 2003-2005, the per resident amount was to
be updated by the CPI increase minus two percentage points.
Beginning FY 2001, a new methodology for determining DGME
payments has applied, centering around a "locality-adjusted"
national average per resident amount (PRA), and the calculation
of a "floor" and a "ceiling" PRA. The
floor payment amount is 85 percent of the national average
PRA, updated annually by the Consumer Price Index (CPI) increase.
The ceiling amount is 140 percent of the national average
PRA. Hospitals with PRAs between the floor and ceiling amounts
were unaffected by this methodology.
Raising the Floor Used to Calculate DGME Payments
Senator Dianne Feinstein's (D-Calif.) S.
135, introduced on January 22, 2002 would increase the
per resident payment floor from 85 percent of the locality
adjusted national average in FY 2002 to 90 percent in FYs
2003 and 2004; 95 percent in FY 2005, and 100 percent in FY
2006.
Representative Clay Shaw's (R-Fla.) H.R.
1517, introduced on April 25, 2002 would increase the
per resident payment floor from 70 percent of the locality
adjusted national average in FY 2001 to 100 percent of the
locality adjusted national average in FY 2002. Neither bill
addresses those hospitals with per resident amounts above
the national average.
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