[Congressional Record Volume 145, Number 8 (Tuesday, January 19, 1999)]
[Senate]
[Pages S437-S440]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY:
  S. 37. 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 imposed by section 4407 of the Balanced Budget Act of 
1997; to the Committee on Finance.


              hospital transfer penalty repeal act of 1999

  Mr. GRASSLEY. Mr. President, today I have introduced the Hospital 
Transfer Penalty Repeal Act of 1999. This legislation would repeal the 
Balanced Budget Act of 1997 (BBA)'s hospital transfer penalty. 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. I ask my colleagues to spend a few minutes learning 
about this issue, because I believe that if they do, they will come to 
see the need for repeal.
  The current hospital prospective payment system is based on the 
average length of stay for a given diagnosis. 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.
  Under the Balanced Budget Act transfer provision, however, this is no 
longer the case. If a patient in one of ten specified diagnosis-related 
groups (DRGs) is released earlier than the national average length of 
stay for that DRG, the hospital does not receive its full prospective 
payment. Instead, it receives only a smaller per-diem payment.
  This 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. Because Iowa's hospitals 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.
  In addition to the irrational incentives this policy creates, 
administering it is simply maddening for providers. As a knowledgeable 
Iowa constituent, Joe LeValley of North Iowa Mercy Health System, has 
pointed out, the law creates conflicting incentives that make clinical 
management of patients a baffling experience. Medicare now expects 
physicians to move patients to the most cost-effective level of care as 
quickly as possible--unless those patients have a condition in one of 
these

[[Page S440]]

ten DRG's, in which case Medicare wants the physician to keep them in 
the hospital. Is it any wonder that physicians and hospital 
administrators are frustrated with Medicare?
  In fact, isn't it physicians, not hospital administrators, who should 
be making decisions about patient care settings? If we think that 
doctors should be determining the appropriate location for a patient, 
it seems absurd to force the hospital into that role. But the transfer 
penalty does exactly that.

  In addition, the law holds hospitals accountable for the actions of 
patients that are no longer under their care. In some cases, patients 
are not admitted to post-acute care directly from the hospital, and the 
hospital may not know that the patient is receiving such care, let 
alone steer the patient to it. The law thus sets hospitals up for 
accusations of fraud due to events that are beyond their control.
  I understand that there are valid grounds for concern about hospitals 
moving patients to lower levels of care sooner than is clinically 
appropriate, simply in order to game the reimbursement system. That is 
unacceptable conduct, and we do need to attack it. I am open to 
discussions on possible alternatives to outright repeal of the transfer 
penalty, if these bad apples are the ones targeted. But we need to make 
sure we don't punish all hospitals--especially the most efficient--for 
the sins of a few.
  This transfer penalty is a serious roadblock to the provision of 
appropriate and efficient care. Its repeal will help ensure that 
logical coordinated care remains a primary goal of the Medicare 
program.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 37

       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, 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 on the date of enactment of this Act.
                                 ______