Senate Finance Leaders Announce
Agreement on Provider Package
September 27, 2002-On Sept. 26, Senate Finance Committee
Chairman Max Baucus (D-Mont.) and Ranking Republican Member
Charles Grassley (R-Iowa) announced they had agreed to a package
that would provide increases in Medicare payments to hospitals,
physicians, skilled nursing facilities and home health agencies.
The agreement contains proposals for Medicaid/SCHIP as well
as expanded benefits for Medicare beneficiaries.
According to an outline distributed Sept. 26, teaching hospitals
would receive a FY 2003 update of Market Basket (MB) minus
0.25 percent and full MB updates in FY 2004 and beyond. The
proposal also increases the FYs 2003 and 2004 Indirect Medical
Education (IME) adjustment to 6.5 from 5.5 percent and the
FY 2005 adjustment to 6.0 from 5.5 percent.
The outline does not address any of the Direct Graduate Medical
Education (DGME) provisions as [see Washington
Highlights, June 28]
passed in House-passed Medicare legislation H.R.
4954. Under the Baucus-Grassley agreement, certain geriatric
residencies would be exempt from a hospital's resident cap
for purposes of determining Medicare IME and DGME payments.
The proposal also increases the standardized amount for rural
and small hospitals and lowers the labor-related share for
hospitals with a wage index below 1.0 from 71 percent to 68
percent in FY 2003-05.
For physicians, the outline states that physician payment
increases are the "same as" the House-passed H.R.
4954. H.R. 4954 sets the CY 2003 physician update at 2 percent
and modify the calculation of updates for CYs 2004 and 2005,
subsequently generating a 2 percent increase each year. The
agreement also establishes a 1.0 geographic practice cost
index floor in the physician work component in CYs 2003-05.
The proposal extends, through FY 2005, Medicaid Disproportionate
Share Hospital (DSH) provisions that otherwise expire this
year, thereby preventing state allotments from reverting to
Balanced Budget Act (BBA)'s FY 2002 levels (adjusted by inflation).
State Medicaid DSH allotments continue to increase annually
by inflation, as initiated by Medicare, Medicaid, SCHIP Benefits
Improvement Act (BIPA) of 2000.
In addition, the proposal allows states with Medicaid DSH
programs totaling less than 3 percent of their overall Medicaid
spending to increase their Medicaid DSH allotments to 3 percent
of Medicaid spending. In addition, the proposal includes an
increase in the Federal Medical Assistance Percentage (FMAP),
or "Medicaid match," by 1.3 percent for 12 months
for all states.
It remains unclear how the measure will move through the
Senate, although a mark-up in the Finance Committee is unlikely.
The proposal has been sent to Senate Majority Leader Thomas
A. Daschle (D-S.D.) for his review. Stated in a Sept. 26 prepared
statement, Baucus and Grassley said, "with many Medicare
payment provisions set to expire Oct. 1 2002, and with little
time remaining in the legislative session, we call on Congress
and the President to act swiftly on this comprehensive bipartisan
Medicare legislation and enact it into law."
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Office of Governmental Relations
ldavisboyle@aamc.org
(202) 828-0526
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