[Congressional Record Volume 141, Number 183 (Friday, November 17, 1995)]
[Extensions of Remarks]
[Pages E2211-E2212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  HEALTHY CHOICE: BALANCING THE FEDERAL BUDGET AND IMPROVING MEDICARE

                                 ______


                          HON. STEVE GUNDERSON

                              of wisconsin

                    in the house of representatives

                       Friday, November 17, 1995

  Mr. GUNDERSON. Mr. Speaker, within the past few weeks, Congress has 
taken historic steps to balance the Federal budget and improve the way 
the Federal Government provides and delivers health care services to 
the more than 36 million Medicare beneficiaries. The goal of this 
reform initiative has been to secure the future of Medicare for today 
and tomorrow while providing beneficiaries with better benefits, 
additional health care options, and lower out of pocket costs. All of 
this will be accomplished while slowing the overall growth of Federal 
Medicare spending. I commend the House and Senate Committees for their 
work to improve and preserve Medicare.
  Many of the Medicare provisions in the Balanced Budget Act will 
benefit the ailing health care delivery system in many small 
communities in my western Wisconsin district and identical communities 
throughout rural America.
  In terms of rural health care, I believe the most dynamic Medicare 
improvement was changing the adjusted average per capita cost [AAPCC] 
payment formula. As the cochair of the Rural Health Care Coalition, the 
dedication of the coalition enabled us to work with the leadership 
during House and conference committee deliberations to craft a new 
formula favorable to all beneficiaries regardless of where they live. 
In this endeavor, the Rural Health Care Coalition had the good fortune 
to receive outstanding technical assistance, counsel and support from 
the Fairness Coalition, representing a diverse group of hospital 
systems, hospital associations, managed care providers, and insurers.
  What does an improved AAPCC payment formula mean for Medicare 
beneficiaries? The AAPCC is the total amount of Medicare fee-for-
service dollars spent on doctors and hospitals annually in a county, 
divided by the number of Medicare beneficiaries in that county. It also 
represents the dollars available to beneficiaries to purchase health 
care choices under the new Medicare-plus program.
  For Grandma Smith living in the Bronx, NY, her 1995 AAPCC payment is 
$679 a month and she can enroll in a health maintenance organization 
[HMO] providing the required Medicare services and additional benefits 
or traditional fee-for-service. Grandma Smith's brother living in Fall 
River County, SD, has a monthly payment of $177. Unfortunately, because 
of the low payment an HMO is not available to him, just the traditional 
fee-for-service. A low AAPCC payment has a devastating effect on the 
health care choices available to beneficiaries living in rural counties 
and in those counties with efficient health care markets. Why should 
there be a 367-percent payment difference between these two Medicare 
beneficiaries just because of where they live?
  The situation facing Grandma Smith's brother is not unusual. 
Approximately 4 million beneficiaries live in counties that have access 
only to Medicare fee-for-service. My home State of Wisconsin, with 
769,000 Medicare beneficiaries, is 1 of 15 States that currently 

[[Page E 2212]]
do not have a Medicare HMO option available to them. It is difficult to 
understand how beneficiaries who paid into the Medicare trust funds at 
the same rate and pay the same part B premium now receive very 
different AAPCC payments. This is not equitable or fair. Improving the 
AAPCC payment formula is critically important to fulfill our 
legislative promise of providing health care choices as well as equity 
and fairness to all beneficiaries.

  Why can some beneficiaries today choose to receive their Medicare 
services from the traditional fee-for-service or an HMO and others 
cannot? HMO's and hospital associations suggested that a monthly 
payment between $325 to $350 begins to provide them with the 
opportunity to offer Medicare managed care services. For this reason, 
it was necessary to craft an AAPCC payment formula that would support 
the establishment and operation of an HMO or the new options of a 
provider-sponsored organization [PSO] or medical savings accounts 
[MSA's].
  The Balanced Budget Act improves the AAPCC payment formula by setting 
a payment floor of $350. This is extremely beneficial for counties in 
43 States with below average payment rates between $177-$300 and offers 
hope to the more than 4 million beneficiaries in rural and efficient 
markets that they may soon have the choice to receive Medicare services 
through an HMO, PPO, MSA, or PSO. Other important rural health care 
provisions incorporated into the Balanced Budget Act only enhance the 
care and services available to rural America:
  Clarifying the Medicare payments to essential access community 
hospitals/rural primary care hospitals.
  Implementing a new Rural Emergency Access Care Hospital Program.
  Increasing by 10 percent the Medicare bonus payment to 20 percent for 
rural, primary care physicians practicing in health personnel shortage 
areas.
  Reinstating the Medicare Dependent Hospital Program for facilities 
with 100 or fewer beds and at least 60-percent Medicare patient 
discharges or days.
  Establishing of a uniform reimbursement rate for physician assistants 
and nurse practitioners at 85 percent of the physician fee schedule 
payment for outpatient services.
  Setting a floor for the area wage index used in determining 
prospective payments to hospitals.
  Prohibiting the Medicare Geographic Reclassification Review Board 
from rejecting applications of rural referral centers on the basis of 
area wage index.
  Extending the rural referral center classification for any hospital 
previously classified.
  The health of rural health care and services to Medicare 
beneficiaries will only be improved with the enactment of these very 
important provisions in the Balanced Budget Act. I am pleased to lend 
my support to this legislation.

                          ____________________