[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[Extensions of Remarks]
[Page E2066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          MEDICARE OUTPATIENT COPAYMENT REDUCTION ACT OF 2001

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, November 13, 2001

  Mr. STARK. Mr. Speaker, today, I am introducing legislation to reduce 
the coinsurance amounts that Medicare beneficiaries are required to pay 
for hospital outpatient services. For most Medicare services, 
beneficiaries are required to pay 20 percent of the allowed payment 
amount, and Medicare pays 80 percent. However, for hospital outpatient 
services, Medicare beneficiaries are required to pay much higher 
copayments--up to 90 percent for some services.
  These higher coinsurance levels are based on an historical artifact 
of the Medicare method of paying for hospital outpatient services. 
Prior to implementation of the hospital outpatient prospective payment 
system (HO-PPS) just last year, Medicare paid for hospital outpatient 
services based on a hospital's ``costs'' for those services. However, 
coinsurance amounts were based on 20 percent of the hospital's 
``charges'' for those services, which were much higher than its 
``costs''. Therefore, over time, coinsurance levels for hospital 
outpatient services grew until they now average almost 50 percent, and 
are more than 90 percent for some services.
  The Balanced Budget Act (BBA) of 1997, which mandated the 
implementation of the hospital outpatient prospective payment system, 
would have reduced coinsurance levels to 20 percent over time; however, 
the Medicare Payment Advisory Commission (MedPAC) estimated that this 
reduction would have occurred over 30 to 40 years for most services, 
and up to 60 years for some services. The Balanced Budget Refinement 
Act (BBRA) limited the highest coinsurance levels to the dollar amount 
of the hospital inpatient deductible in any year ($792 in 2001); this 
limit affected coinsurance amounts for about 20 services.
  The Beneficiary Improvement and Protection Act (BIPA) of 2000 
accelerated the reduction in beneficiary coinsurance levels by reducing 
coinsurance in increments of 5 percent each year until it reaches 40 
percent in 2006. MedPAC estimates that without further legislation, it 
would take an additional 23 years after 2006 to reduce beneficiary 
coinsurance levels to 20 percent for all hospital outpatient services. 
In its March 2001 report to Congress, MedPAC recommended that the 
Congress continue to reduce beneficiary coinsurance in increments of 5 
percent each year to achieve a coinsurance level of 20 percent in 2010.
  Mr. Speaker, my bill would implement the MedPAC recommendation. It 
would reduce beneficiary coinsurance rates in increments of 5 percent 
each year beginning in 2007 until the coinsurance rate for all hospital 
outpatient services is 20 percent in 2010.
  Mr. Speaker, high coinsurance rates are particularly devastating for 
Medicare beneficiaries who have no supplemental insurance. MedPAC 
estimates that in 1998, 14.4 percent of Medicare beneficiaries had no 
supplemental insurance. Most of those individuals were ``near poor''--
with incomes too high to qualify for Medicaid or the Qualified Medicare 
Beneficiary (QMB) program, but with incomes too low to be able to 
afford supplemental insurance. Thus, almost 6 million Medicare 
beneficiaries have no supplemental insurance and must pay cost sharing 
amounts out-of-pocket. MedPAC reports that the number and percentage of 
Medicare beneficiaries without supplemental insurance grows each year 
as premiums for such insurance increases, and a recent report by the 
American Academy of Actuaries estimated that one-fourth of recent 
increases in Medigap premiums are due to the costs of outpatient 
coinsurance.
  MedPAC also reports that coinsurance amounts are much higher for 
certain services than others. Those with the highest coinsurance are 
the ``high tech'' services, such as radiology services and cancer 
chemotherapy services. Thus, high coinsurance greatly limits access to 
these services for ``near poor'' Medicare beneficiaries, and MedPAC 
analyses confirm that use of these services is much lower for ``near 
poor'' beneficiaries than for beneficiaries with supplemental 
insurance.
  Mr. Speaker, it is wrong to limit Medicare services to the ``near 
poor'' simply because they are not poor enough to qualify for Medicaid, 
nor wealthy enough to be able to purchase supplemental insurance. I 
urge the Congress to accept the MedPAC recommendation and enact 
legislation to reduce coinsurance for hospital outpatient services to 
20 percent by 2010.

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