[Congressional Record Volume 143, Number 130 (Thursday, September 25, 1997)]
[Extensions of Remarks]
[Pages E1859-E1860]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 THE MEDICARE HOSPITAL OUTPATIENT PAYMENT FAIRNESS ACT OF 1997 AND THE 
    HOSPITAL OUTPATIENT DEPARTMENT TRUTH-IN-ADVERTISING ACT OF 1997

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Thursday, September 25, 1997

  Mr. STARK. Mr. Speaker, I am pleased to introduce two bills today. 
The first would modernize Medicare's payment policy for ambulatory care 
by the year 2000. The second would immediately stop hospitals from 
egregiously gaming the current, outdated policy.
  Medicare pays more for ambulatory care provided in a Hospital 
Outpatient Department [HOPD] than it does for the same care provided in 
a doctor's office or freestanding ancillary facility. This means that 
the same medical personnel for the same patients are reimbursed 
differently based on the name on the door of a clinic that provides 
ambulatory care. If a hospital owns a clinic, it can call it a HOPD and 
charge Medicare and its beneficiaries more, no matter where the clinic 
is actually located.
  Hospitals are purchasing, leasing, and building doctors' offices and 
ancillary facilities in farflung locations. They are changing the names 
on the doors to HOPD to take advantage of Medicare's more generous 
payment rates. Meanwhile, they are pushing out independent competitors 
who cost less and provide the same services.
  Most importantly, beneficiaries pay more, because their copayments 
are based on what the hospital charges, and not on the amount Medicare 
ultimately determines is a fair cost. The Balanced Budget Act takes 
over 20 years to fix this overcharge, so beneficiaries pay much more 
than the normal 20 percent copayment for HOPD costs.
  Under current law, a hospital might purchase a physician group 
practice located 5 miles away from its campus. Before the purchase, 
services to Medicare beneficiaries were billed as physician office 
visits and paid according to a fee schedule. Now, the hospital labels 
the same services, in the same office, by the same physicians, as HOPD 
visits. It bills Medicare for the fee schedule amount the independent 
physicians used to get. But in addition, it bills Medicare for hospital 
overhead costs. Beneficiaries also get bigger bills than before. And, 
there is one less independent physician practice to compete with the 
hospital by offering lower-cost services.
  There are a thousand variations on the theme: chemotherapy clinics, 
radiology clinics in towns without any hospitals, and new clinics next 
to retirement homes. You name it--hospitals are acquiring or building 
whatever freestanding facilities they can and inappropriately labeling 
them HOPD's. They are driving out the healthy competition and profiting 
by overcharging Medicare and its beneficiaries.
  Medicare and its beneficiaries should not pay more for the same 
services just because they are called something different. The Medicare 
Hospital Outpatient Payment Fairness Act of 1997 would limit Medicare 
payments for HOPD services to the amount that Medicare would pay for 
those services if they were provided in a freestanding clinic or 
ancillary facility that was not labeled a ``Hospital Outpatient.'' The 
hospital would receive no additional Medicare payment for overhead 
costs, and it would not be allowed to charge beneficiaries more than 20 
percent of its Medicare reimbursement. In order to give hospitals time 
to prepare for this change, these provisions would not take effect 
until January 1, 2000.
  Hospitals are shifting costs for inpatient and emergency care onto 
outpatient care. While Medicare reimbursement rates are sufficient to 
cover hospital costs in most cases, they may not be sufficient to cover 
costs for emergent care. Since the first bill I am introducing today 
would prevent hospitals from shifting emergent care costs to the 
outpatient side, it would also ensure that hospitals are reimbursed 
sufficiently to cover these emergency services. Specifically, the bill 
would require that MedPAC report to Congress by January 1, 1999, on 
whether the payments made for emergency room [ER] cases are adequate to 
cover the costs of ER use by Medicare patients, and that the Secretary 
adjust payments to ensure that hospital ER costs of Medicare patients 
are appropriately covered by January 1, 2000.

[[Page E1860]]

  While giving hospitals time to prepare for a completely overhauled 
payment policy may be prudent, we should not allow them to continue 
abusing the current policy. The second bill I am introducing today, the 
Hospital Outpatient Department Truth-in-Advertising Act of 1997, would 
reduce hospitals' incentives to build, purchase, and lease freestanding 
clinics. Specifically, it would define as HOPD's only those facilities 
that are located on the same campus as an inpatient, acute-care 
hospital. Facilities reimbursed as HOPD's on or before September 25, 
1997, would be exempted.
  I urge my fellow Members of Congress to join with me in passing these 
crucial pieces of legislation. Together, we can modernize Medicare 
payment policy, lower our constituents' health care costs, keep healthy 
competition alive, and show the Nation that we will not tolerate abuse 
and waste of Medicare tax dollars.

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