[Congressional Record Volume 143, Number 24 (Friday, February 28, 1997)]
[Senate]
[Pages S1785-S1787]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE MEDICARE PAYMENT EQUITY ACT
Mr. THOMAS. Mr. President, I will not, myself, use 30 minutes.
I rise today to talk about a bill we introduced this week, introduced
the day before yesterday, along with several of my friends from rural
areas, including the Presiding Officer and Mr. Grams, who joins me, the
Senator from Minnesota. We will talk a little bit about the Medicare
Payment Equity Act.
I come from a place called Wapiti, WY. It is actually a post office
between Cody and Yellowstone Park. This is a rural area. So, the unique
problems of rural medicine are near and dear to my heart.
We have in the Senate what is called a rural health caucus which,
actually, 77 Senators have shown an interest in. I do recall the rural
health group in the House, as well, which was very active and, as a
matter of fact, the Senator from Kansas, now presiding, was cochairman
of that group.
So, we have a bill that deals with rural health care. And there are
unique problems in rural health care. Other sponsors include Senator
Burns from Montana, Senator Grassley from Iowa, and Senator Kempthorne
from Idaho.
Basically, it is a question of fairness. All Americans pay the same
rate into the payroll tax for Medicare, and I believe, as I think all
would believe that each, then, deserves the same kind of health care
and the same kind of health care choices, the same kinds of services
for having paid that. But that is not the case. The payments for
Medicare, managed care within Medicare, are greatly different
throughout the country. They are greatly different largely because they
were put into place, as a matter of history, as a matter of utilization
in the fee-for-service area. So they vary a great deal.
This chart will give some idea of what they are. Remember, each of
these folks who receives these benefits has paid in similarly. However,
the payments for managed care in Medicare, in Arthur, NE, are $221 a
month. On the other hand, in Richmond County, NY, $767 a month. You can
see the changes that exist here, and they are basically the highly
utilized areas, the Floridas, the New Yorks and others who, in history
of payments, have had high utilization so have a history of higher
payments. The costs are not necessarily the same, but they are not that
much different. What has happened is these risk contracts have
basically been set on history and give enough additional services to
take up that additional dollar. Not only do they get more money but
they get more services.
Here, in Blue Earth County, MN, the yearly payment is $600. Portland,
OR, had $500; the beneficiary has to pay additional money, as is shown
in the yellow. However, in Dade County, in Florida, the payment is
$8,200 dollars a year. Not only do they get the additional payment,
they have unlimited prescription drugs, a $700 credit for hearing aids,
and have a great deal of additional benefits. Remember, all of them pay
the same into the program.
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So what we have is a bill that would, over time, tend to equalize or
at least levelize these kinds of payments.
There are cost differences. The costs in New York City for rent and
other kinds of things are higher than they are in Greybull, WY. We are
willing to take that into account. However, expertise, medicines, and
other kinds of things are just as valuable in Kansas as they are in
Florida.
So, what we propose to do and what this bill does is, rather than to
continue this kind of reimbursement that is so out of place, it would
gradually bring into account not only the costs that differentiate, but
also a national average, intending to level these out. We do not
propose to reduce the costs that are in place in the higher levels but
we do propose to lift the increases, bring the increases up in the
bottom levels so Wyoming providers will have an opportunity to compete,
to provide these kinds of care.
The other effect, in addition to not getting the kinds of services
that are available through this inequity, is that users, seniors in
Medicare who would like to have the option of managed care, really do
not have it in rural areas because it has not come, due to the
payments. For example, where is there growth in managed care and
Medicare? Only 3.6 percent in rural areas have an opportunity for this.
On the other hand, it is over 70 percent where the benefits are high,
in the larger areas.
So, our proposal is to equalize, at least move to equalize these
payments, to move to equalize these benefits to reflect the fact that
everyone pays the same and that there ought to be some equity with
respect to the benefits that are provided. It is a fairness bill. It is
one we have talked about before and, indeed, was part of the omnibus
bill last year which was vetoed by the President.
So we come back with it singled out to show that there is a problem,
there is an inequity, there is an unfairness between rural and more
populated areas. This bill, the Rural Medicare Payment Equity Act, will
move to remove that inequity from Medicare and managed Medicare to all
seniors of this country.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Mr. GRAMS. Mr. President, I am also pleased to be here this morning
and to join with my colleagues in introducing the Medicare Payment
Equity Act, as the Senator from Wyoming has just outlined. The passage
of this legislation, I believe, is critical in righting the wrongs in
the Medicare system against States like Minnesota, Kansas, Wyoming, and
some of the other more rural States in the country.
There are three points I would like to emphasize, just to add to what
the Senator from Wyoming has already said. First, again, to reiterate,
the Medicare reimbursement formula is just plain unfair. While every
American pays the same payroll tax to the Medicare trust fund,
Minnesotans find themselves with the second-lowest reimbursement rates
in the Nation. By the way, every county in Minnesota falls below the
national average in the terms of Medicare reimbursement.
Second, the Medicare reimbursement formula discourages quality health
care. My State of Minnesota has been consistently recognized throughout
the Nation as one of the most innovative, one of the most efficient and
cost-conscious States in the terms of health care. Yet these very same
qualities, the traits which should be encouraged, not discouraged, have
skewed the Medicare formula against our providers and also against our
beneficiaries.
Finally, the Medicare reimbursement formula discriminates against
senior citizens who live in rural areas of America. These older
Americans already face fewer health care options than those who live in
urban centers. That is due to the lower reimbursement rates received by
health plans. However, there is no incentive for them to offer managed
care services. So that means fewer choices for the senior citizens who
are living in rural parts of the United States.
So, Mr. President, the system needs to be changed and that is exactly
what our legislation does. By making fundamental corrections to the
Medicare reimbursement formula, this bill will restore equity, it will
help to expand access, and will also help to ensure a greater array of
health care choices to beneficiaries in States like Minnesota as well
as across rural America. It will change the system, and I am very proud
to join my colleagues in introducing this very important piece of
legislation.
Again, I am pleased to be here to join my colleagues again in
reintroducing and supporting the Medicare Payment Equity Act.
I yield the floor.
Mr. ROBERTS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Thomas). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. ROBERTS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Kansas.
Mr. ROBERTS. Mr. President, I rise today, as was indicated by my
colleagues, Senator Thomas and Senator Grams, to speak to the Medicare
Payment Equity Act of 1997. Like my colleagues have indicated, this
legislation will hopefully end the longstanding unfairness that denies
the Medicare beneficiary in rural counties the same services and
benefits that their urban peers receive. As has been indicated by both
of my colleagues, all Americans, whether they live in the city or
whether they live in the country, pay the same 2.9 percent of payroll
to the Medicare trust fund all during their working lives. All
Americans who choose Medicare part B pay the same monthly premium, but
that is where the similarities stop.
Based on the geographic area where seniors choose to retire, they
receive vastly different choices and benefits. Seniors living in New
York City or in Miami, as has been indicated by my colleagues, are
offered more options to the Medicare system than almost all of Kansas'
400,000 seniors who rely on Medicare. Many of these plans have no
additional premiums, and they may include extra benefits, such as
prescription drug coverage or hearing aids or eyeglasses, just to name
a few.
Let me demonstrate what I am talking about. When a Kansas senior
citizen visits a relative in Miami or New York or Phoenix or some other
metropolitan area and talks to his brother, his cousin or any relative
and learns that they receive, under their managed care plan under
Medicare, free eyeglasses, free prescription drugs, even exercise
lessons, of course, then that senior citizen goes back to Kansas or
Wyoming or Minnesota, or any other rural area, and they do not have
that opportunity. Yet, they pay the same amount.
Why does this happen? The difference is really due to the payment
formula used to finance the managed care plans under Medicare. I am
going to quarrel a little bit with the description of managed care. I
know that has a connotation in some areas, quite frankly, as rationing
health care. I know that is harsh. Why don't we use the term
``physician service network''? The acronym--everything has to have an
acronym in Washington--is PSN. It allows the local hospitals, local
doctors, local administrators and the boards to join together, which
they are already doing, and offer, yes, a managed care plan, but it is
a physician service network.
We have something like that in Kansas in Salina where about 13
hospitals have joined together under something called ``the sunflower
network.'' We hope and we think that if we can offer that option to our
seniors, we can hold the Medicare costs down, but we can bring them
better delivery. It is a voluntary plan, it is not mandatory, and
certainly we think that is part of the overall Medicare reform plan.
Basically, under the current system, Medicare rewards any
beneficiaries who live in an inefficient medical market and punishes
those who participate in health plans that operate in efficient
markets.
Medicare pays these health plans a capitation payment based on
regional fee-for-service costs. This payment is known as the adjusted
average per capita costs--here is another acronym--AAPCC rate. That is
extremely important in regards to the health care field.
The variation in the AAPCC rate is extreme. As has been indicated by
my
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colleagues, for example, the AAPCC rate in Richmond, NY, is $767 per
Medicare beneficiary, while the AAPCC rate for my constituents in
Republic County, KS--Belleville is the county seat--there it is only
$265. This county is almost the lowest paid county in the United
States. In fact, 93 percent of all counties in Kansas are at or below
the national average of $467.
Clearly, there are cost factors that account for some of this
difference, but as Senator Thomas has pointed out, a difference of over
$500 is simply unexplainable. This legislation really does address this
issue by creating a new payment formula for managed care plans.
Specifically, our bill establishes a minimum payment for rural counties
of 80 percent of the national input price adjusted capitation rate.
This will ensure all payments, even those in rural counties, will cover
the comprehensive benefits.
This legislation also includes an aggressive blend of national and
local rates that will raise the lower payment areas closer to the
average, while taking into account actual input cost differences that
exist from one region to another. This rate, which is based on an
average of 3 years of past data, will smooth the payments and reduce
all of the volatility price differences. It is a transition.
Finally, this legislation excludes the disproportionate share of
payments and graduate medical education funds from the calculations of
the formula.
Mr. President, this inequity must stop. Until we end this inequity,
Medicare beneficiaries will not have the choices they deserve. We will
not control the Medicare costs that in some areas are out of control.
Hospitals and doctors will not have the tools they need to compete in
today's physician service network markets, and Medicare will continue
to overpay health plans in inefficient markets.
I want to add one other thing, lest people misunderstand. This is not
an either/or choice. Senator Thomas, Senator Grams, myself, and Senator
Burns are not trying to take away anything from Dade County, FL, or New
York or any other urban area. Under our formula, the premiums will
increase by 2 percent. That is not the idea here. We are merely trying
to equalize this on a transition basis.
I urge my colleagues to join us in support of the Medicare Payment
Equity Act. That is precisely what it is.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROBERTS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. GORTON. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Roberts). Without objection, it is so
ordered.
Mr. GORTON. Mr. President, is the Senate under any time rules?
The PRESIDING OFFICER. We are in morning business, with 5 minutes per
Senator.
Mr. GORTON. I ask unanimous consent I might be permitted to speak for
up to 10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
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