[Congressional Record Volume 145, Number 76 (Tuesday, May 25, 1999)]
[Extensions of Remarks]
[Pages E1081-E1082]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   PREVENTING ABUSE OF THE HOSPITAL PAYMENT SYSTEM: INTRODUCTION OF 
                      MEDICARE MODERNIZATION NO. 5

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Tuesday, May 25, 1999

  Mr. STARK. Mr. Speaker, in the Balanced Budget Act of 1997, Congress 
provided that for 10 hospital diagnosis related groups (DRG's), we 
would not pay the full DRG if the patient was discharged to further 
treatment in a nursing home, home health agency, or to a rehab or long-
term-care hospital. I include at the end of my statement the conference 
report language describing this provision. Note that as originally 
passed by the House and Senate, it applied to all hospital discharges--
not just 10 DRG's.
  The administration and the Congress were worried that some hospitals 
have been gaming the Medicare hospital prospective payment system. They 
have been discharging patients early to downstream treatment facilities 
(which they often own), collecting the full DRG payment, and requiring 
Medicare to pay for longer and more expensive treatments in these 
downstream facilities.
  Many of the nation's hospitals are lobbying for the repeal of this 
discharge provision--even though repeal would cost Medicare billions of 
dollars in the years to come. The intensity of the lobbying on this 
issues shows that early discharge to subsidiaries has become a major 
strategy of many hospitals. It may have been part of the Columbia/HCA 
scheme to maximize Medicare revenues.
  Mr. Speaker, I think we should return to our earlier decision and 
apply the policy to all discharges, not just 10 DRG's.
  The HHS inspector general has found that hospitals that own nursing 
homes discharge patients much earlier than average, and the patient 
then stays in the nursing home longer than average--an extra 8 days 
(OEI-02-94-00320). The OIG has also found that patients' stays are 
shorter when they are discharged to a home health agency. With about 
half the nation's hospitals owning a home health agency, this is 
another way to double dip.
  The bill I am introducing will save Medicare billions of additional 
dollars in the years to come, and it will remove a temptation to abuse 
patients by pushing them out of hospitals too soon.
  I hope that this legislation--one of a series of bills I am 
introducing to modernize Medicare and make it more efficient--will be 
enacted as part of our efforts to save Medicare for the Baby Boom 
generation.

                  Certain Discharge To Post Acute Care

    Section 10507 of the House bill and Section 5465 of the Senate 
                               amendment


                              current law

       PPS hospitals that move patients to PPS-exempt hospitals 
     and distinct-part hospital units, or skilled nursing 
     facilities are currently considered to have ``discharged'' 
     the patient and receive a full DRG payment. Under current 
     law, a ``transfer'' is defined as moving a patient from one 
     PPS hospital to another PPS hospital. In a transfer case, 
     payment to the first PPS hospital is made on a per diem 
     basis, and the second PPS hospital is paid the full DRG 
     payment.


                               house bill

       Defines a ``transfer case'' to include an individual 
     discharged from a PPS hospital who is: (1) admitted as an 
     inpatient to a hospital or distinct-part hospital unit that 
     is not a PPS hospital for further inpatient hospital 
     services; (2) is admitted to a skilled nursing facility or 
     other extended care facility for extended care services; or 
     (3) receives home health service from a home health agency if 
     such services directly relate to the condition or diagnosis 
     for which the individual received inpatient hospital 
     services, and if such services were provided within an 
     appropriate period, as determined by the Secretary in 
     regulations promulgated no later than September 1, 1998. 
     Under the provision, a PPS hospital that ``transferred'' a 
     patient would be paid on a per diem basis up to the full DRG 
     payment. The PPS-exempt hospital or other facility would be 
     paid under its own Medicare payment policy.
       Effective Date. With respect to transfer from PPS-exempt 
     hospitals and SNFs, applies to discharges occurring on or 
     after October 1, 1997. For home health care, applies to 
     discharges occurring on or after October 1, 1998.


                            senate amendment

       Similar provision, except defines a transfer case as 
     including the case of an individual who, immediately upon 
     discharge from and pursuant to the discharge planning process 
     of a PPS hospital, is admitted to a PPS-exempt hospital, 
     hospital unit, SNF, or other extended care facility. The 
     provision does not include home health services in the 
     definition of a transfer.


                          conference agreement

       The conference agreement would provide that for discharges 
     occurring on or after October 1, 1998, those that fall within 
     a specified group of 10 DRGs would be treated as a transfer 
     for payment purposes. The Secretary would be given the 
     authority to select the 10 DRGs focusing on those with high 
     volume and high post acute care. The provision would apply to 
     patients transferred from a PPS hospital to a PPS-exempt 
     hospital or unit, SNF, discharges with subsequent home health 
     care provided within an appropriate period (as defined by the 
     Secretary), and for discharges occurring on or after October 
     1, 2000, the Secretary may propose to include additional post 
     discharge settings and DRGs to the transfer policy.
       Payments to PPS hospitals would be fully or partially based 
     on Medicare's current payment policies applicable to patients 
     transferred from one PPS hospital to another PPS hospital 
     (per diem rates). The Secretary would determine whether the 
     full transfer policy or a blended payment rate (50% of the 
     transfer per diem payment and 50% of the total DRG payment) 
     would apply based on the distribution of marginal costs 
     across days, so that if a substantial portion of the costs of 
     a case are incurred in the early days of a hospital stay the 
     payment would reflect these costs. For FY 2001, the Secretary 
     would be required to publish a proposed rule which included a 
     description of the effect of the transfer policy. The 
     Secretary would be authorized to include in the proposed rule 
     and final rule for FY 2001 or a subsequent fiscal year, a 
     description of additional post-discharge services that would 
     result in a qualified discharge and diagnosis-related groups

[[Page E1082]]

     specified by the Secretary in addition to the 10 diagnosis-
     related groups originally selected under this policy.
       The Conferees are concerned that Medicare may in some cases 
     be overpaying hospitals for patients who are transferred to a 
     post acute care setting after a very short acute care 
     hospital stay. The Conferees believe that Medicare's payment 
     system should continue to provide hospitals with strong 
     incentives to treat patients in the most effective and 
     efficient manner, while at the same time, adjust PPS payments 
     in a manner that accounts for reduced hospital lengths of 
     stay because of a discharge to another setting.
       The Conferees expect that the application of the Transfer 
     policy to 10 high volume/high post-acute use DRGs will 
     provide extensive data to examine hospital behavioral effects 
     under the new transfer policy

     

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