[Congressional Record Volume 143, Number 12 (Tuesday, February 4, 1997)]
[Extensions of Remarks]
[Pages E140-E141]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




COURT RULING SHOWS WHY CONGRESS MUST CLOSE MEDICARE HOSPITAL OUTPATIENT 
                 DEPARTMENT LOOPHOLE THAT HURTS SENIORS

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, February 4, 1997

  Mr. STARK. Mr. Speaker, today, Representative Bill Coyne and I have 
introduced legislation to close the Medicare Hospital Outpatient 
Department [HOPD] loophole that is costing retirees and the disabled 
billions and billions of dollars a year in improper charges.
  On June 25, the U.S. Ninth Circuit Court of Appeals denied a class 
action motion to require hospitals to charge no more than a reasonable 
amount for services rendered in HOPD's under Medicare part B.
  To quote from the Bureau of National Affairs' description of the 
case:

       At the center of this case is a fight over cost sharing, 
     and in particular, how much of the cost beneficiaries should 
     be responsible for,'' the appeals court wrote. It explained 
     that under the basic formula for Part B services, a 
     beneficiary must pay 20 percent of the reasonable charges for 
     the items and services rendered and the federal government 
     pays a lesser of the reasonable cost of such services or the 
     customary charges, but in no case may the payment exceed 80 
     percent of the reasonable cost. [emphasis added]
       The court explained that the cost-sharing arrangement is 
     known as the ``80-20 split,'' but the label is misleading 
     because of the total amount paid to the provider, the 
     beneficiary's share typically exceeds 20 percent.
       That share rises because the Health Care Financing 
     Administration reimburses on the basis of the hospital's 
     costs, while the beneficiary owes a percentage of hospital 
     charges. Because providers normally charge above cost, the 
     beneficiary's share represents

[[Page E141]]

     something more than 20 percent of the total payment to the 
     hospital.
       Carol Jimenez, an attorney for the Los Angeles-based Center 
     for Health Care Rights and the appellants' lead attorney, 
     said the ruling ``will result in both beneficiaries and the 
     Medicare program paying more for hospital outpatient 
     services.''
       In an announcement following the decision, Jimenez cited a 
     General Accounting Office report finding that Medicare 
     patients' cost sharing, as well as Medicare's costs, vary 
     dramatically for the same service depending on where it is 
     received. For example, cataract surgery that cost a patient 
     $1,200 in a hospital [plus additional amounts paid by 
     Medicare] would cost a patient only $250 and the Medicare 
     program only $1,000 if performed in an independent surgical 
     center.
       * * * the Ninth Circuit * * * concluded, ``While we are 
     sympathetic to the plight of Medicare beneficiaries who are 
     burdened by ever rising medical costs, we conclude that 
     ``none of [the existing laws] compels HHS to limit the 
     charges.
       The court wrote that Congress is aware of both the cost-
     shifting problems and HHS' failure to ``correct'' it. ``* * * 
     Congress is aware of the issue--indeed Congress may have 
     caused the problem by introducing prospective payment for 
     some services but not others--and that Congress has 
     deliberatively declined to address it.
       The court also noted that Congress is studying the 
     feasibility of a prospective payment system for hospital 
     outpatient services which could address the beneficiaries 
     concerns. ``Thus, we decline the beneficiaries' invitation to 
     preempt congressional action in this very delicate area of 
     public policy,'' the court wrote.

   Mr. Speaker, it is way past time that Congress acted to correct this 
multi-billion dollar cost shift onto retirees and the disabled and to 
fulfill Medicare's promise of an 80-20 copay system.

                          ____________________