Medicare and Medicaid Payment
Relief to Rural Providers Tacked onto Senate Tax Cut Bill
May 16, 2003 - The Senate May 15 amended its tax cut
legislation, S.
1054, with three important amendments that would increase
Medicare payments to rural providers by $25 billion and specify
how the bill's $20 billion in state fiscal relief would be
provided. The Medicare amendment, offered by Senate Finance
Committee Charles Grassley (R-Iowa) increases Medicare payment
to rural providers including hospitals, physicians, ambulances,
home health agencies, and skilled nursing facilities. Sens.
Susan Collins (R-Maine) and Jeff Bingaman (D-N.M.) also offered
accepted amendments that would increase federal matching rates
for Medicaid, provide grants to states, and increase state
Medicaid disproportionate share hospital allotments (DSH)
for some states with low Medicaid DSH spending.
For rural hospitals and physicians, the Grassley amendment,
which was approved 86-12 includes:
- A full and permanent equalization of the standardized
payment amount for rural and small urban hospitals;
- Revision of the labor-related share of the inpatient PPS
area wage index to 62 percent for hospitals with a wage
index below 1.0;
- Equalization of Medicare Disproportionate Share Payments
for rural hospitals;
- Extending for one year the hold harmless for rural hospitals
under the Outpatient Prospective Payment System (OPPS);
- Temporarily increasing for three years add-on payments
for clinic and ER visits for small rural hospitals under
the OPPS;
- Improving Critical Access Hospital (CAH) payments and
other changes;
- Assisting Low-Volume Hospitals;
- Making Medicare Incentive Payment 10% bonus payments to
physicians in rural HPSAs automatic; and
- Setting work, practice expense and malpractice geographic
indices for physician payments at 1.0.
To offset these increases, the amendment would reduce the
average wholesale price (AWP) rate, freeze the consumer price
index for durable medical equipment (DME) and add a deductible
and coinsurance for clinical laboratory services.
The Senate also voted 95-3 to add language to its tax bill
that ensures half of the legislation's $20 billion in state
fiscal aid will go directly to state Medicaid programs. Specifically,
$10 billion of the $20 billion would be set aside to increase
the federal Medicaid match, known as the federal medical assistance
percentage (FMAP). The remaining $10 billion is directed to
local governments and states for a broad range of purposes.
While the tax bill reported out of the Senate Finance Committee
set aside $20 billion for fiscal aid, it did not specify how
it should be spent. The AAMC supported the Collins amendment.
Another amendment accepted by unanimous consent would provide
a temporary one-year increase in FY 2004 Medicaid DSH allotments
for "extremely low DSH states." The amendment would
increase the allotments of 18 low DSH states from 1 percent
to 3 percent of their Medicaid spending and 2 "non-DSH"
states. The AAMC supported the low DSH amendment and sought
to include additional DSH relief for state allotments that
were cut as of Oct. 1, 2002.
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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