[Congressional Record Volume 144, Number 6 (Wednesday, February 4, 1998)]
[Senate]
[Pages S379-S380]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. D'AMATO (for himself and Mr. Grassley):
  S. 1604. A bill to amend title XVIII of the Social Security Act to 
repeal the restriction on payment for certain hospital discharges to 
post-acute care of imposed by section 4407 of the Balanced Budget Act 
of 1997; to the Committee on Finance.


                  MEDICARE TRANSFER REPEAL LEGISLATION

  Mr. D'AMATO. Mr. President, I am introducing legislation today to 
repeal a provision of the Balanced Budget Act (BBA) of 1997 that is 
particularly onerous and unfair to New York's and our nation's 
hospitals. The provision is one that expands the definition of a 
Medicare transfer and it is inherently counterintuitive to assuring the 
delivery of appropriate health care services to patients.
  As many of my colleagues might recall, I was actively involved during 
the Senate's debate of the BBA in fighting for the elimination of the 
transfer provision. I thought then, and I still believe now that it is 
bad health care policy that runs counter to the mission that we should 
be advocating when we make policy: to encourage the providers of health 
care in our communities to provide the most appropriate care for the 
good of their patients. Along with my colleague Senator Dodd, last 
year, we were able to mitigate the impact of the original transfer 
provision in the final BBA that was enacted. Unfortunately, we were not 
able to eliminate it from the BBA and that is why I am here today, 
offering legislation to finish the job we started last summer.
  Included in the BBA was a provision that would expand the definition 
of a Medicare acute care transfer to include discharges to any 
rehabilitation or psychiatric hospital, nursing home or home health 
agency. This policy is scheduled to go into effect on October 1, 1998, 
for 10 Medicare hospital procedures that will be determined by the 
Secretary of Health and Human Services. What this means for hospitals 
that transfer patients is that the hospital would no longer get paid 
the appropriate payment (a DRG payment)--they would instead get paid a 
lesser amount--just because the patient was discharged to receive a 
more appropriate level of care. This policy would only apply for 
patients that are transferred in under the average length of stay.
  Let me give you an example: a patient goes into the hospital for one 
of the 10 designated procedures, for example, a hip operation, which 
has an average length of stay of 10 days. At 7 days, the patient's 
doctor wants to transfer him to a rehabilitation hospital to continue 
his recovery. This is where the transfer policy would have an effect: 
the hospital that discharged him would no longer receive the payment 
that is due to them--the DRG payment. Instead, they would receive a 
lesser per diem payment, merely because the patient was discharged to 
receive a more appropriate, cost effective level of care.
  Let me spend a moment here talking about the hospital payment system. 
The DRG system was put into place by Congress to create the proper 
incentives for providing an appropriate level

[[Page S380]]

of care for patients. It is a system that is built on average: patient 
cases that have higher lengths of stay are ``underpaid'' and cases that 
have lower than average lengths of stay are ``overpaid'' because, 
regardless of the length of stay, hospitals get the same payment. The 
new transfer policy would begin a serious erosion of the DRG system 
and, as a result, create the wrong incentives for hospitals. Hospitals 
that are faced with receiving a lesser payment for providing the 
appropriate care for a patient, will undoubtedly change their behavior: 
they will end up keeping a patient in the hospital longer--until the 
average length of stay is reached, and then transfer the patient to a 
post-acute care facility. As a result, the transfer policy creates a 
disincentive for hospitals to efficiently provide the most appropriate 
level of care for their patients.
  The transfer policy is not necessary. Patients that use post-acute 
care services tend to have more complicated health care needs and 
longer hospital stays than those patients that don't use post-acute 
care. For this reason, the transfer policy does not address a problem 
in the Medicare system that needs fixing. Even the Prospective Payment 
Assessment Commission rejected this policy change because they believed 
it was bad health care policy and that it provided the wrong incentives 
for a hospital prospective payment system.
  It also creates billing documents for our hospitals who would be held 
responsible for the future actions of former patients. This sets up our 
hospitals for future allegations of fraud. For example, a hospital 
discharges a patient, who goes home from the hospital, expecting to be 
cared for by a family member. Suddenly, the family member becomes ill 
and unexpectedly cannot care for a patient. The patient's doctor calls 
the local home health care agency, who now sends a nurse out to the 
patient's home for 3 weeks of home care. The hospital has no knowledge 
of this and will bill Medicare for the full DRG because it believed 
that the patient was discharged and at home recovering. The hospital is 
unaware of actions of the patient and therefore would have no reason to 
bill the Medicare program differently. The government later could cite 
the hospital for fraud because they billed the Medicare program 
improperly. Hospitals are faced with the impossible and untenable task 
of tracking the future actions of patients that left their care.
  Repeal of the transfer policy is the only way to right a very 
misguided policy that was adopted last year. I urge my colleagues to 
support legislation that will eliminate a provision of the BBA that is 
bad health policy and disruptive to a system that aims to assure that 
patients receive the right care in the most appropriate setting.
  Mr. President, I ask unanimous consent that the text of the bill be 
included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1604

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF RESTRICTION ON MEDICARE PAYMENT FOR 
                   CERTAIN HOSPITAL DISCHARGES TO POST-ACUTE CARE.

       (a) In General.--Section 1886(d)(5) of the Social Security 
     Act (42 U.S.C. 1395ww(d)(5)), as amended by section 4407 of 
     the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 
     401), is amended--
       (1) in subparagraph (I)(ii), by striking ``not taking in 
     account the effect of subparagraph (J),'', and
       (2) by striking subparagraph (J).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the enactment of the 
     Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 
     251).
                                 ______