[Congressional Record Volume 144, Number 13 (Monday, February 23, 1998)]
[Senate]
[Pages S859-S860]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MEDICARE TRANSFER REPEAL

 Mr. GRASSLEY. Mr. President, on February 4, I joined Senator 
D'Amato in introducing legislation to repeal a provision of the 
Balanced Budget Act of 1997 which penalizes hospitals that provide 
appropriate and efficient care. This law punishes hospitals that make 
use of the full continuum of care and discourages them from moving 
patients to the most appropriate levels of post-acute care.
  The current hospital prospective payment system is based on an 
average length of stay for a given condition. In some cases, patients 
stay in the hospital longer than the average and in other cases their 
stay is shorter. Historically, a hospital has been reimbursed based 
upon an average length of stay regardless of whether the patient 
remained in the hospital a day less than the average or a day more than 
the average. When the Balanced Budget Act transfer provision takes 
effect, however, this will no longer be the case.
  This new policy penalizes facilities that transfer patients from the 
hospital to a more appropriate level of care earlier than the average 
length of stay. It encourages hospitals to ignore the clinical needs of 
patients and keep them in the most expensive care setting for a longer 
period of time. In short, it offers an incentive for hospitals to 
provide an unnecessary level of care, for an unnecessary length of 
time.
  The transfer policy is particularly hard on hospitals in low-cost 
states like Iowa, where the cost of implementation has been estimated 
at $25 million a year. Because Iowa's hospitals

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practice efficient medicine, they have average lengths of stay well 
below the national average. These hospitals will be hit especially 
hard. This kind of perverse incentive is part of the problem with 
Medicare, not part of the solution.
  I understand that there may be concerns about abuses by some 
hospitals moving patients to lower levels of care sooner than is 
clinically appropriate. If that is a problem, let's attack it. But 
let's not punish all hospitals--especially the most efficient for the 
sins of a few others.
  In addition to the irrational incentives this policy creates, there 
is the very real problem of administering it. This law holds hospitals 
accountable for the actions of patients that are no longer under their 
care. If a Medicare beneficiary were discharged from the hospital 
without the expectation of a need for further care and circumstances 
changed, the hospital would not be entitled to the full Medicare 
payment. But the reality is that, the hospital may or may not know of 
this change. The law sets hospitals up for accusations of fraud due to 
events that are completely beyond their control.
  This law is a serious roadblock to the provision of appropriate and 
efficient care. The repeal of this legislation will help ensure that 
logical coordinated care remains a primary goal of the Medicare 
program.

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