[Congressional Record Volume 145, Number 110 (Friday, July 30, 1999)]
[House]
[Pages H6753-H6757]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE
The SPEAKER pro tempore (Mrs. Biggert). Under the Speaker's announced
policy of January 6, 1999, the gentlewoman from Connecticut (Mrs.
Johnson) is recognized for 60 minutes as the designee of the majority
leader.
Mrs. JOHNSON of Connecticut. Madam Speaker, I rise today to address
the increasingly acute, immediate problems in our Medicare program, one
of the pillars of retirement security for America's seniors. It is
significant that I rise at a time when Republicans, Democrats, the
Congress and the President recognize that Medicare must include a new
prescription drug benefit. While I strongly agree that we need to add
prescription drugs to the Medicare system, we must provide coverage
prudently and fairly and not by endangering funding for other Medicare
services. Medicare simply cannot tolerate the scheduled deep cuts
ahead, much less the billions of dollars in cuts proposed by the
President in his budget and in the outline of his prescription drug
proposal. I fervently believe that we must address the current problems
immediately or hundreds of providers nationwide will close their doors,
creating a crisis in access to care for our seniors of unprecedented
proportions.
My purpose in this speech today is not to address long-term reform of
Medicare nor the crying need to provide access to prescription drugs
through Medicare, as important as those issues are to strengthening
this crucial seniors' security program.
My purpose is more mundane and more urgent. It is critical to
assuring seniors' access to quality care now and to assuring the
survival of critical community health care institutions like our local
hospitals, home health agencies and nursing homes.
In 1997, Congress adopted many reforms to Medicare because it was
galloping toward bankruptcy. Already in 1997, it was paying out more
for services than it was collecting in payroll taxes and premiums.
Medicare spending was exploding, especially in the areas of home health
and skilled nursing facility costs. And as it reached the unsustainable
level of 11 percent growth per year, the Balanced Budget Act reforms
were adopted to cut this growth rate in half, from 11 percent to 5.5
percent, a modest and responsible goal.
Why, then, are home health agencies, nursing homes and hospitals
begging us to hear their problems and pleading for relief? Alas, it is
simple. The projected savings from the Balanced Budget Act were $106
billion over 5 years. The real savings that will be achieved are about
$100 billion above that. While the goal was to slow the rate of growth
to 5.5 percent, growth has dropped to 1.5 percent, though the number of
seniors and frail elderly continues to grow.
I believe we face a crisis and must act now. While the data from the
real world has not reached the shores of Washington, in the real world
in my estimation the crisis is immediate and beginning to endanger the
quality of care available under Medicare. Seniors' access is at stake
and the very institutions we depend on for care are at risk.
There are five causes for the very serious problems we face in
Medicare:
First, though a relatively minor factor, important mistakes were made
in writing the Balanced Budget Act reforms.
Second, bureaucratic problems have developed and are delaying
payments to providers for many, many months.
Third, the reform bill included expanded funding and authority to
eliminate fraud and abuse. As a result, the Inspector General has not
only identified and eliminated a lot of fraud and abuse but has changed
many rules, delaying payments unmercifully and unfairly in my mind.
Further, the fear of the Inspector General is causing some providers to
cancel negotiated discounts and pushing costs up as reimbursements are
going down, all because the Inspector General is ignoring old rules and
refusing to clarify new ones.
Fourth, the fact that rates are based on data that is 4 years old is
exacerbating our problems dramatically.
And, fifth and possibly the most significant cause of the looming
crisis is the unintended and unanticipated consequences of the
interaction of the many changes in payment levels and payment systems
made by both public and private payers over a short period of time.
In fairness, we have placed enormous burdens on the good people of
the Health Care Financing Administration which administers Medicare and
their claims processors and on the providers with the level of changes
that we have enacted. It would be sheer hubris to believe that so many
changes could be
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implemented without unintended consequences, especially as they are
interacting with private sector changes of a pace and a breadth
unprecedented. Not surprisingly, there are slowdowns in the payments,
real mistakes to be corrected and unanticipated problems to be solved.
There is no shame in the problems. The shame would be if we did not
address them this Congress.
We must simply have the political courage to examine the concerns of
the providers and deal with those that are legitimate, and we must have
the courage to fund the changes from the surplus we have set aside for
retirement security since many of what we call surplus dollars are
dollars we appropriated to spend on care for Medicare patients and that
are needed by those very patients.
Some people are discouraging action and criticizing providers for
whining. Not so. Go visit hospitals, nursing homes, home health
agencies and physicians. Changes made and the additional cuts of $11
billion proposed by the President in his budget will, I think, put
providers in severe constraints, put many small providers out of
business, and will go directly to affect access and quality of care for
our seniors. We cannot expect facilities to simply absorb millions of
dollars of loss without compromising their role in our communities. We
cannot expect small providers that are not getting paid for many months
to be able to meet payroll, provide medications and meet the standard
of care we expect.
Over the August District Work Period, I encourage my colleagues to
meet with providers in their district and listen to what they are going
through, see what precisely they are facing and the impact the current
law cuts in the HCFA administration, the administrators of Medicare,
their actions are having on service availability and quality. Then make
your judgment. I think you will come to the same conclusion that I
have. Through many visits to hands-on caregivers, I am convinced that
providers cannot survive if we do not act and the administration does
not provide relief from policies that are harsh and unfair and begin
spending the full appropriation provided for Medicare services.
Congress must listen up and act. The administration, HCFA, the agency
that governs the Medicare program, must also listen up and act, for it
will take all of us working hard and now to prevent a catastrophic loss
of providers, research capability and sophisticated treatment options.
We do not need to fundamentally undo the reforms adopted in 1997. In
fact, we cannot undo those reforms because we must succeed in slowing
the rate of growth in Medicare. But we must act now to respond to the
doubly deep cuts that resulted unintentionally from the law to preserve
access to needed health care services and ensure community providers
will survive.
I will now look at each sector, nursing homes, hospitals and home
health agencies, to suggest administrative fixes in the way the
balanced budget is being implemented and legislative changes to the
policies enacted, in other words, actions that the executive branch can
take immediately and laws, legal changes, that the Congress must adopt.
In the area of payments to skilled nursing facilities, we expected to
save $9.5 billion through the Balanced Budget Act, but the savings are
now estimated at $16.6 billion, more than half again as much.
There are two administrative policies that together have delayed
payments to nursing homes so severely that literally payrolls will not
be met if relief does not come soon, spelling closure for good
facilities providing compassionate care.
First, HCFA needs to repeal sequential billing for nursing homes. The
balanced budget reforms required nursing homes to coordinate and pay
for all ancillary services given to Medicare patients in nursing homes,
but the law does not require sequential billing. If one ancillary
service provider is late in submitting their bill, the nursing home is
late in submitting its bill to Medicare. This creates a domino effect
of payment delays when we require all of May's bills to be settled
before June's bills can be looked at. HCFA, the Medicare administrator,
has announced that they are ending sequential billing for home health
agencies and they should repeal this destructive and unfair policy for
nursing homes. Payments for room, board and regular services need to
flow predictably as they have in the past while the problems with the
ancillary services billing system are ironed out. This will prevent the
serious cash flow problems that threaten small providers, particularly
small providers in our rural areas and small cities.
Secondly, the administration must speed up Medicare payment denials.
In my region, nursing homes are having difficulty getting payment
denials from Medicare. The real world problem for providers is that
they cannot bill other payers, such as Medicare or the private sector,
until they get a payment denial from Medicare. Yet they are providing
care month after month, often borrowing money, accruing interest
charges and endangering their solvency and licensure. We also need to
ensure that these denials are written in clear language. Even when
providers do get letters of denial, the language is so convoluted and
legalistic that it is difficult to determine whether a payment has been
denied or not.
In addition to these two administrative actions, which I urge the
Health Care Financing Administration to take promptly to relieve the
terrible strain on nursing homes that threatens the institutional
survival of some, there are legislative corrections to the Balanced
Budget Act that we must make if quality care is to be maintained.
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First, we must fairly address the issue of medically complex
patients. There is clear evidence that the payments under the nursing
home prospective payment system are not sufficient to pay for the
medical needs of the acutely ill patient.
The General Accounting Office testified before the Senate Finance
Committee that, and I quote, certain other modifications to the
prospective payment system must be, may be appropriate because there is
evidence that payments are not being appropriately targeted to patients
who require costly care. The potential access problems that may result
from underpaying for high-cost cases will likely result in
beneficiaries staying in acute care hospitals longer rather than
foregoing care, end quote.
Indeed, I have already heard about this problem from the hospitals in
my district, yet we cannot expect hospitals to continue to treat
patients without compensation simply because there is not a nursing
home that can afford to care for them, nor can we expect nursing homes
to accept patients for whose care they will not be paid sufficiently.
The Health Care Financing Administration has also testified about its
concern that the prospective payment system, and I quote, does not
fully reflect the costs of non-therapy ancillaries such as drugs for
high acuity patients, unquote. HCFA announced that they were conducting
research that will serve as the basis for refinements to the resource
utilization groups that we expect to implement next year.
It is good that HCFA has recognized that we do not have the data to
account for the cost of medications for acutely ill patients, but
gathering the data for next year is not an acceptable solution. We
cannot ignore patients and care providers who are facing serious
problems now. We must take immediate action to direct increased
payments to the sicker patients or to allow nursing homes to bill
directly for drugs until we have better data to refine the payment
system.
Secondly, we must exclude ambulance, the cost of ambulance rides and
prosthetic devices from the current payment system. When Congress
passed the prospective payment system, we did not expect to require
that nursing homes cover the cost of ambulance transport.
Fortunately, the Health Care Financing Administration has exempted
several types of ambulance transportation from the payments, but they
are still requiring that nursing homes pay for the cost of ambulance
transport when it is necessary as part of a patient's treatment plan.
This requirement is terribly burdensome for rural nursing homes that
face significant charges for long ambulance trips. A rural nursing home
in my district gets $200 a day in Medicare payments. An ambulance ride
to the nearest hospital costs $800. How could such a home accept a
dialysis patient who needs regular transportation
[[Page H6755]]
to a dialysis facility for treatment? We do not require the nursing
home to pay for the cost of dialysis treatment, but we are requiring to
pay for the transportation associated with that treatment.
The same is true for radiation treatments. We should exclude these
types of transport charges from the prospective payment system and fold
them into the negotiated rulemaking process that is currently under way
to set an ambulance fee schedule.
It is also difficult for a nursing home to serve an amputee because
of the high cost of prosthetic devices. The cost of these devices can
often run from 2 to $7,000. It is impossible for a facility to
accommodate this cost in their 2 to $400 a day reimbursement and still
provide all the services necessary for a patient to recover from an
amputation. The patient cannot get the device while they are in the
hospital because their wound must recover, and they cannot wait until
they have been discharged from the nursing home because they must begin
to use it for therapy. So the nursing home must find a way to pay for
it, and that is impossible without losing thousands of dollars on a
case. That is unfair to both patient and nursing home.
In sum, if the Health Care Financing Administration moves swiftly to
address administrative problems that it has the power to address and
Congress acts on legislative issues, we can both meet the savings goal
of the Balanced Budget Act for nursing homes and not lose the small
homes that are truly at risk of closure though they provide wonderful
care for our seniors.
And now to turn to hospital payment problems which are too numerous
to detail here. Instead, I will mention only some of the most
troublesome.
First, the balanced budget amendment projected savings of 48.9
billion from hospital reimbursements.
Currently the Congressional Budget Office projects savings of 52.6
billion. So the savings are being made in spite of major payment cuts
in the law that have not yet gone into effect and now, I believe, are
inappropriate. In fact, without relief, current law will dramatically
escalate cuts in hospital reimbursements and severely damage our
community hospitals as well as the medical centers on which we rely for
sophisticated expertise, research into new treatments, training of new
physicians and a great deal of uncompensated care for uninsured and
low-income patients.
First, we must repeal the transfer policy. Hospitals are currently
paid based on the average cost for caring for a patient with a specific
disease. Naturally the facility will have some patients whose treatment
requires them to stay longer than the average and some that will be
able to be discharged earlier than the average. The difference in the
cost to the hospital of the longer- and shorter-stay patients works
well over all. The incentive is to reduce the length of stay by getting
patients to the most appropriate care setting, and this payment
structure has indeed reduced the length of hospital stays dramatically.
Starting in the Balanced Budget Amendment, however, through enactment
of the transfer policy, we began to send hospitals a completely
different message about how they treat patients by reducing payment for
patients referred to nursing homes, long-term care hospitals or home
health agencies. We know that the bulk of the cost of hospital care is
eaten up in the first few days of admission in which a procedure is
done and tests are performed. Yet the transfer policy revokes the full
prospective payment for the hospital and instead pays them at a lower
per diem rate if a patient is transferred to another facility to
recover or even to home care.
This policy must be repealed because it works against the positive
incentives of the prospective payment system which has successfully
over time reduced the length of hospital stays by providing less costly
alternatives for recovery. Ironically, if a patient tells the hospital
discharge planner that they have a relative who can care for them at
home but that care-giver becomes overwhelmed or their circumstances
change and they cannot provide home care, the transfer policy penalizes
the hospital by reducing its payments simply because the patient now
legitimately needs home care services. That is unfair to the patient
and to the hospital.
In addition to repealing the transfer policy, which we must do
legislatively, the Health Care Financing Administration must not go
forward with a 5.7 percent cut in reimbursements for outpatient
services, which was clearly not intended by Congress. The Health Care
Financing Administration's interpretation of the law would effectively
implement a 5.7 percent across-the-board cut in payments to outpatient
departments. That would be a heavy cut.
It is clearly inconsistent with Congress' intent and threatens to
undercut support for what had been a delicately balanced policy
compromise. The House and Senate language in the 1997 bills was
identical regarding our outpatient policy clearly precluding this
payment reduction, and the conference report reiterated that no change
was intended.
Further, the 1997 bill included a 7.2 billion outpatient payment
reduction, but no additional payment reductions were discussed nor
contemplated by Congress nor were analyzed or scored by the
Congressional Budget Office. Congress' intent throughout a very long
process was very clear that total payment to hospitals for outpatient
services was to be budget neutral to a clearly identified new baseline
in the law that did save money.
No additional hospital outpatient payment reduction of the type
outlined in the notice of proposed rulemaking was contemplated. The
department should carry out Congress' clear intent and withdraw the
proposed rule. It would be inappropriate and destructive to impose 850
million per year of additional payment cuts on hospital outpatient
departments. Seventy-seven Senators have signed a letter to the Health
Care Financing Agency saying just this, and I am seeking your
signatures on a similar letter to get this problem addressed now.
Thirdly, the Health Care Financing Administration must recognize the
true cost of cancer drugs in the outpatient prospective payment system.
The Medicare Payment Advisory Commission has reported to Congress a
concern that the method of developing payments under the outpatient PPS
system is likely to overpay for some services, and I quote, ``and
underpay for others,'' unquote. HCFA has developed payments on
aggregate failing to recognize the high costs associated with
individual patients. This has a particularly dramatic impact on cancer
treatments.
HCFA's current proposed rule fails to recognize the complexities of
chemotherapy, individual drug costs, and most importantly, differing
medical needs of cancer patients. As a result, the new system will
create financial incentives that may lower the quality of care
available to cancer patients and restrict their access to care. HCFA
needs to follow MEDPAC'S recommendations and adjust the outpatient
payment system to reflect the complexity of care within hospital
outpatient departments.
Fourthly, HCFA must recognize the higher cost of treating patients in
cancer institutes. There are 10 cancer centers throughout the country
that are distinguished from other acute-care hospitals because they are
devoted exclusively to the treatment of cancer patients. These
facilities provide the most up-to-date cancer treatments available, are
on the cutting edge of research, develop many of their new treatments
for patients, and are now treating 50 percent of their cancer patients
in the outpatient setting, reducing the cost of providing care.
We have recognized them as distinct hospitals by making them exempt
from the acute-care perspective payment system, and in the Balanced
Budget Act we directed HCFA to consider establishing a separate payment
methodology for cancer centers. HCFA has failed to do this in their
proposed regulation, and their initial analysis of the new payment
system is that payments to cancer centers will fall by one-third
compared to a 5 percent decline across all hospitals.
MEDPAC has recognized this problem and recommended that HCFA modify
its payment rationale to better reflect the needs of cancer center
outpatient departments. Such administrative remedies are extremely
important to preserving access to high-quality care in outpatient and
cancer centers;
[[Page H6756]]
but as important as they are to stemming overly severe cuts and
hospital reimbursements legislative action is also required.
First, we must pass a stop-loss bill to prevent sudden and deep cuts
in outpatient payments. According to MEDPAC, Medicare paid hospitals
only 90 cents for each dollar of outpatient care provided prior to the
1997 Balanced Budget Act. The balanced budget has further reduced this
to 82 cents for every dollar. Once the proposed outpatient PPS system
is in place, hospitals will lose an additional 5.7 percent on average
if the administration does not act in accordance with Congress'
intention.
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And some hospitals will be impacted even further.
More than half the Nation's major teaching hospitals would lose more
than 10 percent, and nearly half of our rural hospitals would lose more
than 10 percent. Catastrophic losses would be experienced in some
individual hospitals.
For example, large hospitals in Iowa and New Hampshire, will
immediately lose 14 to 15 percent of Medicare outpatient revenue. Other
large, urban hospitals in Missouri, Massachusetts, Wisconsin, Florida,
and California will lose 20 to 40 percent. Some small rural hospitals
in Arkansas, Kansas, Mississippi, Washington, and Texas will lose more
than 50 percent of their Medicare revenue.
We must enact legislation to limit the amount of losses that any
hospital sustains. As more treatments are moving into the outpatient
setting, we simply cannot expect hospitals to absorb losses of 15
percent and more. Legislation to limit losses will ensure that
hospitals will still be able to treat patients, and Medicare will
secure the savings it needs to remain solvent in the short term.
Secondly, we must legislatively prevent any further cuts in the
disproportionate share of hospital payments. Many hospitals' emergency
departments are the only option for people without health insurance,
because they cannot refuse to see patients. With the increasing number
of uninsured Americans, hospitals are bearing an increasing burden.
Congress must reassess our cuts in disproportionate share of payments
in light of the increasing number of uninsured, by freezing payments at
their present levels.
Thirdly, we must increase the hospital update to reflect the costs of
preparing for Y2K. MEDPAC has recommended that hospitals receive one-
half to a 1 percent increase in their operating payments to account for
the need to update information systems and medical devices to become
Y2K compliant, year 2000 compliant. Perhaps more than any other
industry, hospitals have had to spend significant amounts of money to
update their systems because of the wide variety of devices and systems
that they deal with.
I have talked with hospitals in my district that have had to replace
entire systems and devices ahead of schedule to ensure that they will
continue to operate after the clock strikes midnight at the close of
this year. The replacements range from simple devices such as IV pumps
to costly systems such as a monitoring system in the intensive care
unit. It is important to note that the ICU monitoring system was only 8
years old and was not due to be replaced, but the Y2K computer glitch
possibility made replacement necessary.
The Y2K problem is not something that hospitals could have planned in
their operating and capital budgets a few years ago, but it is
something they cannot afford to ignore.
The American Hospital Association survey of their membership shows
that member hospitals will spend $8.2 billion to become Y2K compliant.
We should follow MEDPAC's recommendation to increase reimbursements to
hospitals to reflect these additional costs.
Finally, immediate attention must be paid to the needs of our great
teaching hospitals. These institutions have been particularly hard hit
because they are affected by essentially all of the Balanced Budget Act
changes, while most institutions are only affected by a few provisions.
They deal with a large number of uninsured, have more acutely ill
patients, because they serve as regional referral centers. They must
train the specialists of the future and maintain cutting-edge
technology. And they must use National Institutes of Health grants
which require a 25 percent match from the institution to do the
clinical research that we so deeply depend upon.
Madam Speaker, we must look at the way that all the payment changes
adopted are affecting these hospitals and provide relief in this
Congress.
Lastly, let us turn to home health agencies. In this sector, we
projected that the Balanced Budget Act would save $16 billion. We have
now realized savings of $48.8 billion, more than any other area. The
Balanced Budget Act imposed significant changes on the home health
industry, and we achieved the greatest savings in this area. I believe
the high savings reflects the useful work of the Fraud and Abuse Unit,
but through talking to my providers, I know a lot of nonpayment lurks
behind that $48.8 billion figure, and good agencies are on the brink of
closure from both administrative actions by the government and the
balanced Budget Act's effects.
First, having saved more than double the intended goal in home health
services, we need to eliminate the threat of the 15 percent further
additional reduction that will take place on October 1 in the year
2000.
While we put the 15 percent reduction in the system to ensure that
there would be sufficient savings, we should remove the 15 percent,
because the necessary savings have been achieved, completely
eliminating the 15 percent reduction. If we are to assure our sickest
seniors that home health services will continue to be available, will
be expensive, about $7 billion over 5 years. But we should be able to
accomplish this out of the savings that we have already generated,
which are now making the surplus larger than expected.
We must also increase slightly the per-patient reimbursement limit,
and the administration must stop the waste of revenues, the scandalous
squandering of our resources that is taking place as a result of the
high review rate in these agencies. It is a technical problem. It is
administrative, but it is taking nurses away from care. It is raising
administrative costs at an unprecedented rate, and HCFA must address
this terrible problem of the high rate of post-payment reviews.
Lastly, we must raise the $1,500 cap on rehabilitative therapy
services for both home health care providers and nursing homes. The
Balanced Budget Amendment implemented two caps on outpatient
rehabilitative therapy services, a $1,500 cap for occupational and
physical therapy, and a $1,500 cap for speech therapy. This is an
arbitrary dollar limit that does not take into account the severity of
a patient's illness. While this cap may be sufficient to provide
services to many seniors, there are those who have multiple conditions
or who have more than one illness in a career that quickly exceeds the
$15,000 allowed and must pay themselves or go to hospital outpatient
departments.
The Health Care Financing Administration has identified this problem
in testimony before the Senate Finance Committee, and I quote: ``We
continue to be concerned about these limits, and are troubled by
anecdotal reports about the adverse impact of these limits. Limits on
these services of $1,500 may not be sufficient to cover necessary care
for all beneficiaries.''
HCFA has directed the Inspector General to study the cap to assess
whether any adjustments to the cap should be made. MEDPAC has also
expressed concern in this area. We need to get relief to the patients
most in need, and not let them slip through the cracks.
This has been a long and sometimes technical Special Order; however,
its message is simple. There are real, serious problems in today's
Medicare program that are affecting care for seniors and threatening
the future of some of our most beloved community hospitals, nursing
homes, doctors' practices, and visiting nurses associations. We need to
address these problems now, not next year, through targeted, immediate
relief and through strong action.
Congress must act now. The administration must act now. At stake, I
believe, is quality care for our seniors and indirectly for all of us
who rely on our community hospital and community providers.
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Mr. Speaker, I ask my colleagues to please join me in this crusade
for action.
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