House Committees Mark Up
Medicare Legislation
June 21, 2002- The Ways and Means and Energy and Commerce
committees June 18 initiated separate mark-ups of an identical
$350 billion House Republican Medicare package that includes
a prescription drug benefit for seniors, increased provider
reimbursements, and regulatory reform provisions. The committees
used as a basis for their marks H.R.
4954, the "Medicare Modernization and Prescription
Drug Act of 2002," introduced
June 18 by the Chairs of the Ways and Means and Energy and
Commerce Subcommittees on Health, Nancy Johnson (R-Conn.)
and Michael Bilirakis (R-Fla.), respectively. The Ways and
Means Committee passed the legislation, as amended, in the
early morning hours of June 19. The Energy and Commerce Committee
completed consideration of the legislation on June 21. H.R.
4954 contains approximately $30 billion over five years in
increased reimbursements to providers, including hospitals
and physicians.
Key provisions of interest to teaching hospitals include:
- A FY 2003 update of Market Basket (MB) minus 0.25 percent,
with full MB updates in the "out-years" ($1.5
billion over five years);
- Increasing the FY 2003 Indirect Medical Education (IME)
adjustment to 6.0 from 5.5 percent and the FY 2004 adjustment
to 5.9 from 5.5 percent ($700 million over five years);
- Over two years, increasing the standardized rate for rural
and "other urban" hospitals to the rate currently
assigned to urban hospitals ($2.9 billion over five years);
- A freeze in the update for Direct Graduate Medical Education
(DGME) payments for hospitals with per resident amounts
above 140 percent of the geographically adjusted national
average, saving $600 million over five years;
- A reallocation of unused residency slots for DGME payments
($400 million over five years); and
- An equalization of Disproportionate Share Hospital (DSH)
payments for rural and small urban hospitals, increasing
DSH payments by $500 million over five years.
Among the many Democrat amendments offered in the Ways and
Means Committee was "The American Hospital Preservation
Act" (H.R.
1556) by Rep. Richard Neal (D-Mass.), sponsor of the legislation.
With Ways and Means Committee Chairman Bill Thomas (R-Calif.)
discouraging members from supporting the amendment so that
provider payments in the bill could remain "fair and
equitable," the amendment failed 16-23. With the exception
of Thomas' "amendment in the nature of a substitute,"
the sole Republican amendment offered was by Rep. Jim Nussle
(R-Iowa). Accepted by voice vote, the amendment would provide
an additional $200 million over 10 years in "relief to
certain non-teaching hospitals" (primarily rural and
small urban) located in states with aggregate non-teaching
hospital Medicare inpatient margins that are low or negative
with Medicare margins below zero.
Commerce Committee Democrats offered the following hospital-related
amendments that were ultimately defeated:
- An amendment by Reps. Diana DeGette (D-Colo.) and Tom
Barrett (D-Wis.) to restore scheduled cuts to the FY 2003
Medicaid DSH allotments and increase allotments to 3 percent
of Medicaid spending for "low DSH" states;
- An amendment by Rep. Eliot Engel (D-N.Y.) to reinstate
the 150 percent Medicaid upper payment limit (UPL) for
public hospitals; and
- An amendment by Rep. Eliot Engel (D-N.Y.) to eliminate
the freeze on updates for DGME payments for hospitals
with per resident amount above 140 percent;
While the Medicaid DSH and UPL amendments failed to pass
because of budget constraints, Health Subcommittee Chairman
Bilirakis and several other Republicans pledged that a "sincere
effort" would be made to find funding for DSH restorations
and increases. Bilirakis also announced that the Subcommittee
would schedule at least one hearing on the DSH issue.
The physician-related provisions of H.R. 4954 include short-term
resolution of the problematic update for physician services.
The bill sets the CY 2003 update at 2 percent and modifies
the calculation of updates for CYs 2004 and 2005 so that it
would subsequently produce a 2 percent increase each year.
Such provisions were scored at $20 billion over five years.
While the bill does not address the flawed sustainable growth
rate (SGR) methodology beyond 2005, Committee members are
committed to developing a long-term solution before 2006.
Commerce Committee Ranking Minority Member John Dingell (D-Mich.)
indeed offered an amendment calling for a "permanent
adjustment" to the update formula. While the amendment
was defeated, Commerce Committee Chairman Billy Tauzin (R-La.)
reiterated the majority's commitment to developing a long-term
solution before the fix expired.
The base bill also directs the GAO to evaluate whether physician
specialty, premium increases, and premium variations by state
are adequately reflected in the malpractice component of the
physician fee schedule. In another report, the GAO must also
to assess the validity of geographic adjustment factors used
to calculate the physician fee schedule. Despite the report,
Rep. Heather Wilson (R-N.M.) offered an amendment-- which
passed-- that provides for greater regional equity among physician
payments by increasing the "floor" for the geographic cost-of-practice
index value.
Much of both committees' discussions and amendments, which
divided along party lies, surrounded the structure and scope
of the bill's prescription drug benefit. While Republicans
called the Democrats' prescription drug amendment fiscally
"irresponsible," the Democrats suggested that a
more comprehensive benefit could have been funded if Republicans
hadn't passed tax cuts and recently repealed $500 billion
in "death taxes."
While there was partisan disagreement over the drug benefit
provisions, several members on both sides of the aisle in
both committees commended the bill's provisions addressing
the immediate needs of physicians, hospitals, and rural providers.
For example, several members, including Reps. John Dingell
(D-Mich.), Charles Norwood (R-Ga.), and John Shadegg (R-Ariz.),
felt the legislation could have gone even farther in addressing
scheduled cuts for physicians and teaching hospitals. They
reiterated concerns that the physician payment legislation
was a short-term "fix" and still required a long-term
solution. Similarly, they expressed concern that the House
Medicare package delayed, but did not prevent IME cuts.
In a letter to the committees' leaders, the AAMC called the
legislation a "workable beginning" and reiterated
the "belief that maintaining the IME adjustment at current
levels is critical to ensuring Medicare beneficiaries' access
to highly specialized, regional and key community services
provided by teaching hospitals." The AAMC will continue
to request that the Senate provide full inflation updates,
maintain the IME at 6.5 percent and secure a longer-term solution
for physician payments.
As the bills contain some differences, such provisions will
likely be reconciled and merged via the rules process before
the House considers H.R. 4954 for a vote prior to the July
4 recess.
The bill's regulatory reform provisions are duplicative
of the regulatory reform legislation passed by the House on
Dec. 4, 2001 [see Washington
Highlights, Dec. 7, 2001].
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Office of Governmental Relations
ldavisboyle@aamc.org
(202) 828-0526
Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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