[Congressional Record Volume 146, Number 108 (Thursday, September 14, 2000)]
[Senate]
[Pages S8586-S8589]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself and Mr. Domenici):
  S. 3050. A bill to amend title XVIII of the Social Security Act to 
make improvements to the prospective payment system for skilled nursing 
facility services; to the Committee on Finance.


             THE SKILLED NURSING FACILITY CARE ACT OF 2000

  Mr. HATCH. Mr. President, I am pleased to join my colleague, Senator 
Domenici, in introducing today legislation to increase Medicare 
reimbursements for skilled nursing facilities, SNFs, which care for 
Medicare beneficiaries.
  As my colleagues recall, last year the Congress passed a measure to 
restore nearly $2.7 billion for the care of nursing home patients. This 
action provided much needed relief to an industry that was facing 
extraordinary financial difficulties as a result of the spending 
reductions provided under the Balanced Budget Act of 1997 (BBA) as well 
as its implementation by the Health Care Financing Administration 
(HCFA).
  Unfortunately, the problem is not fixed, and more needs to be done. 
That is why Senator Domenici and I are introducing the ``Skilled 
Nursing Facility Care Act of 2000'' to ensure that patient care will 
not be compromised and so that seniors can rest assured that they will 
have access to this important Medicare benefit.
  As I have talked to my constituents in Utah about nursing home care, 
it is clear to me as I am sure it is to everyone that no one ever 
expects--or certainly wants--to be in a nursing home. Yet, it is an 
important Medicare benefit for many seniors who have been hospitalized 
and are, in fact, the sickest residents in a nursing home.
  In Utah, there are currently 93 nursing homes serving nearly 5,800 
residents. I understand that seven of these 93 facilities, which are 
operated by Vencor, have filed for Chapter 11 protection. These seven 
facilities care for approximately 800 residents. Clearly, we need to be 
concerned about the prospect of these nursing homes going out of 
business, and the consequences that such action would have on all 
residents--no matter who pays the bill.
  The ``Skilled Nursing Facility Care Act of 2000'' has been developed 
to address this problem. Medicare beneficiaries who need care in 
nursing

[[Page S8589]]

homes are those who have been hospitalized and then need comparable 
medical attention in the nursing home setting. In other words, they 
have had a stroke, cancer, complex surgery, serious infection or other 
serious health problem. These seniors are often the sickest and most 
frail.
  Medicare's skilled nursing benefit provides life enhancing care 
following a hospitalization to nearly two million of these seniors 
annually. Unless Congress and the Health Care Financing Administration 
take the necessary steps to ensure proper payments, elderly patients 
will be at risk, especially in rural, underserved and economically 
disadvantaged areas.
  Moreover, in an economy of near full employment, nursing homes face 
the added difficulty of recruiting and retaining high quality nursing 
staff. The ability to retain high quality skilled nursing staff ensures 
access to lifesaving medical services for our nation's most vulnerable 
seniors.
  Flaws in the new Medicare payment system have clearly underestimated 
the actual cost of caring for medically complex patients. Subsequent 
adjustments have led to critical under- funding. Patient care is being 
adversely affected. Unfortunately, HCFA maintains that it needs 
statutory authority to fix the problem. The provisions in the Hatch/
Domenici bill are designed to address this issue.
  Our legislation provides that authority. In addition, the bill 
requires HCFA to examine actual data and actual Medicare skilled 
nursing facility cost increases. Studies have indicated that the 
initial HCFA adjustment has been understated by approximately 13.5 
percent. Pursuant to the Hatch/Domenici bill, HCFA would be required to 
make the necessary adjustments in the SNF market basket index to better 
account for annual cost increases in providing skilled nursing care to 
medically complex patients.
  Since HCFA's review and adjustments as provided under our bill will 
not be immediate, our legislation would also increase the inflation 
adjustment by four percent for fiscal year 2001 and fiscal year 2002, 
respectively. This immediate funding increase is necessary to ensure 
continuity of quality patient care in the interim. It will provide some 
assurance that quality skilled nursing facility services for our 
nation's seniors will continue, while HCFA examines actual cost data 
and develops a more accurate market basket index.
  Skilled nursing facilities are being underpaid and most of the 
payment is for nurses' aides and therapists. According to a study 
conducted by Buck Consultants that surveyed managerial, supervisory, 
and staff positions in nursing homes, actual wages for these valued 
employees increased, on average, 21.9 percent between 1995 and 1998.
  Buck Consultants examined data gathered from a voluntary nursing home 
survey by looking at salary increases for 37 types of clinical, 
administrative, and support positions. The difference between HCFA's 
8.2 percent inflation adjustment and these salary increases over the 
same period of time equal 13.7 percent. Again, it is clear that skilled 
nursing facilities are not receiving adequate payment from the Medicare 
program. With such funding shortfalls, skilled employees cannot be 
hired and patient care will be impacted.
  Mr. President, it is my hope that the ``Skilled Nursing Facility Care 
Act of 2000'' will provide immediate relief to skilled nursing 
facilities and the seniors they serve, while attempting to address a 
fundamental payment shortcoming for the long-term. We cannot forget our 
commitment to our nation's elderly.
  Senator Domenici and I are working with the Chairman of the Finance 
Committee, Senator Roth, who is also concerned about the impact that 
the BBA Medicare reimbursement levels are having on skilled nursing 
facilities and who is currently developing a package of Medicare 
restorations for health care providers. Over the next several weeks, we 
will work with him and with members of the Finance Committee in an 
effort to restore funding for SNFs and for other health care providers 
who are facing similar reimbursement reductions.
  Once again, I want to thank the distinguished Chairman of the Budget 
Committee, Senator Domenici, and his staff for working with me in 
developing this important bill and preserving Medicare's commitment to 
our nation's elderly.
  Mr. DOMENICI. Mr. President, I rise today to join Senator Hatch in 
introducing the ``Skilled Nursing Facility Care Act of 2000.''
  We can all take a certain amount of pride in the bipartisan Balanced 
Budget Act of 1997. However, it should come as no surprise that 
legislation as complex as the Balanced Budget Act (BBA), as well as its 
implementation by the Health Care Financing Administration, has 
produced some unintended consequences that must be corrected.
  Heeding this advice, Congress made a down payment last year on the 
continued health of the skilled nursing facility benefit by passing the 
Balanced Budget Refinement Act of 1999. While I believe this was a very 
good first step, I am convinced the bill we are introducing today is 
urgently needed to assure our senior citizens continue to have access 
to quality nursing home care through the Medicare program.
  The transition to the Prospective Payment System (PPS) for Skilled 
Nursing Facilities (SNFs) contained in the BBA is seriously threatening 
access to needed care for seniors all across the country. For instance, 
almost 11 percent of nursing facilities in the United States are in 
bankruptcy. In my home State of New Mexico the number is nothing short 
of alarming, nearly 50 percent of the nursing facilities are in 
bankruptcy.
  I simply do not know how we can stand by in the face of this crisis 
and watch our seniors continue to lose access to nursing home care. My 
belief is only buttressed in light of the fact that as the baby boomers 
grow older we will be needing more nursing homes, not less.
  We must have a strong system of nursing home care not only now but, 
in the future. With time having already run out on many nursing home 
operators and quickly running out on others, I believe Congress must 
act immediately.
  In New Mexico, there are currently 81 nursing homes serving almost 
7,000 patients, and as the bankruptcies have proven, the current 
Medicare payment system, as implemented by HCFA, simply does not 
provide enough funds to cover the costs being incurred by these 
facilities to care for our senior citizens.
  For rural States like New Mexico, corrective action is critically 
important. Many communities in my State are served by a single facility 
that is the only provider for many miles. If such a facility were to 
close, patients in that home would be forced to move to facilities much 
farther away from their families. Moreover, nursing homes in smaller, 
rural communities often operate on a razor thin bottom line and for 
them, the reductions in Medicare reimbursements have been especially 
devastating.
  The legislation we are introducing today would go a long way to build 
upon the steps we took last year with the Balanced Budget Refinement 
Act in restoring stability in the nursing home industry. The Hatch-
Domenici Care Act of 2000 would increase reimbursement rates through 
two provisions.
  First, for a 2-year period, the bill eliminates the one percentage 
point reduction in the annual inflation update for all skilled nursing 
facility reimbursement rates and raises that same update by four 
percent. I believe this provision is a matter of simple fairness 
because we are merely attempting to accurately keep reimbursements in 
line with the actual cost of providing care.
  Second, the bill directs the Secretary of Health and Human Services 
to reexamine the annual inflation update, the so-called market basket 
index, using actual data to determine the necessary level of update. As 
a result of the reexamination, the Secretary may adjust the inflation 
update accordingly.
  I look forward to again working with Senator Hatch to pass this 
critical legislation.
                                 ______