[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

[[Page H6754]]

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.

                              {time}  1615

  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.

                              {time}  1630

  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.

[[Page H6757]]

  Mr. Speaker, I ask my colleagues to please join me in this crusade 
for action.

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