House Passes Medicare Legislation
June 28, 2002- On the early morning of June 28, the
House passed 221-208 the "Medicare Modernization and
Prescription Drug Act of 2002" (H.R.
4954), a blended version of the Medicare packages passed
last week by the Ways and Means and Energy and Commerce Committees.
House Ways and Means and Energy and Commerce Health Subcommittee
Chairs Nancy Johnson (R-Conn.) and Michael Bilirakis (R-Fla.)
offered an amendment in the nature of the substitute that
includes increases in Medicare payments for hospital and physicians,
as well as new Medicaid Disproportionate Share Hospital provisions.
Under the rule that governs the floor debate, Democrats were
not allowed to offer any amendments or alternative legislation.
The Johnson-Bilirakis substitute passed 221-208, with eight
Democrats voting in support of the legislation and eight Republicans
voting against the legislation.
The substitute includes the following key teaching hospital
provisions:
- 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 Medicare Disproportionate Share Hospital
(DSH) payments for rural and small urban hospitals, increasing
DSH payments by $500 million over five years.
The substitute also includes increases in physician provisions
[see Washington Highlights,
June 21]. The language sets the CY 2003 physician update
at 2 percent and modifies the calculation of updates for CYs
2004 and 2005, subsequently generating a 2 percent increase
each year (scored at $20 billion over five years).
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].
The substitute's Medicaid DSH provisions would prevent state
FY 2003 DSH allotments from reverting to the Balanced Budget
Act 1997 (BBA) FY 2002 allotment levels, adjusted by inflation.
Instead, under the substitute, states' FY 2003 allotments
would amount to the BBA FY 2001 levels (which are either the
same or higher than the BBA's 2002 levels), adjusted by inflation.
In subsequent years, the state allotments would be increased
1.7 percent from the previous year, until allotments reach
the FY 2002 level set forth in the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act (BIPA) of 2000.
At that point, DSH allotments would then increase annually
by inflation. The provision, while adding about $2 billion
over ten years, still cuts Medicaid DSH payments, but not
as much as current law.
During the June 27 Rules Committee session, the committee
voted 9-4 for adoption of a restrictive floor debate procedure.
The panel rejected all Democratic amendments on party-line
votes.
Had they been allowed, Democrats would have offered H.R.
5019, The Medicare Rx Drug Benefit and Discount Act, introduced
June 25. At the press conference announcing the bill, Rep.
Sherrod Brown (D-Ohio) indicated that the bill's provider
provisions are "as much or more" than the provider
provisions in the House Republican bill. Key additions in
H.R. 5019 of interest to teaching hospitals and physician
include:
- Freezing IME payments at 6.5 percent for five years through
FY 2007;
- Adding another year to the physician payment fix, for
a total of four years;
- Preventing the state Medicaid DSH reductions in FY2003
(under current law, allotments would revert back to levels
established in the BBA);
- Increasing in FY 2003 DSH allotments to 3 percent for
states with DSH programs totaling less than 3 percent of
overall Medicaid spending; and
- Increasing DGME payments for hospitals with per resident
amounts at 85 percent of the national average up to the
national average in FYs 2003-2007.
The bill does not include 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.
The eight Democrats voting in support of final passage were:
Reps. Boswell (Ia.), Condit (CA), Hall (Texas), Israel (N.Y.),
Peterson (Minn.), Lucas (Ky.), Maloney (Conn.), and Matheson
(Utah). The eight Republicans voting against the bill were:
Collins (Ga.), Emerson (Mo.), Flake (Ariz.) Gutnecht (Minn.),
Hostettler (Ind.), Istook (Okla.), Manzullo (Ill.), and Smith
(Mich.).
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Office of Governmental Relations
ldavisboyle@aamc.org
(202) 828-0526
or
Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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