[Congressional Record Volume 148, Number 94 (Friday, July 12, 2002)]
[House]
[Pages H4571-H4572]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          REINSTATE CALIFORNIA'S MEDICAID UPPER PAYMENT LIMIT

  The SPEAKER pro tempore (Mr. Kirk). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from California (Mr. Dreier) 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. DREIER. Mr. Speaker, I know that we have been talking about a 
wide range of issues today, corporate responsibility, establishing the 
Department of Homeland Security, and many other challenges that we are 
facing; economic recovery, of course, being very important. But I would 
like to take a few minutes to share with our colleagues some prepared 
remarks that I have on a very unique challenge that we as Californians 
face when it comes to dealing with the issue of health care.
  As I said, California's public health care system is one of the most 
unique in our country. Unlike most States which run their own hospitals 
or States which have no public hospitals at all, California relies on a 
network of county-supported public hospitals working in conjunction 
with a network of private safety net hospitals. Together these public 
and private hospitals care for over 5 million Californians eligible for 
Medicaid and an additional 7 million Californians who are uninsured.
  Obviously, supporting this network of health care for low-income 
Americans requires a reliable source of funding. California, like a 
number of other States, relies heavily on Federal dollars paid through 
what is known as Medicaid's Upper Payment Limit Program. The safety net 
hospitals in my County of Los Angeles receive over $120 million each 
year through the Upper Payment Limit Program. UPL was initiated a 
decade ago based on the recognition that public hospitals are the 
hospitals of last resort for most needy patients.
  It is a mechanism that allows qualified public hospitals to receive 
reimbursement for services at 150 percent of the Medicare allowable 
payment rate. Only city and county public hospitals which provide 
trauma and emergency room services to a large number of uninsured and 
low-income patients are eligible for the program. The reason for the 
increased payments is very simple, there is no market incentive for 
hospitals to offer emergency services to patients who will never have 
the means to pay for expensive procedures.
  So it was with great dismay this past January when I learned that the 
Center for Medicare and Medicaid Services had instituted a rule to 
actually lower the upper payment limit and reduce Medicaid 
reimbursements for city and county public hospitals to 100 percent of 
the Medicare allowable payment rate.
  Mr. Speaker, implementation of this rule will have immediate and 
devastating consequences for the public health system in my State. By 
the time final implementation of this new policy is complete, 
California will lose over $300 million in Medicaid funding each year, 
an amount that cannot be replaced by any State or local source. The 
stated explanation for reducing UPL is that certain States were 
misallocating UPL payments and using them for non-Medicaid-related 
expenditures, and we all understand that concern; and we want to make 
sure that those States are in fact getting back on track.
  While several States were identified as misusing these Federal 
Medicaid dollars, it is very important to note that California was not 
among them. In fact, a number of States did misuse UPL dollars; 
California was not one of those States. In fact, we never spent any 
Federal Medicaid dollars on anything other than public health care.
  In its haste to close the so-called upper payment limit loophole, CMS 
has issued this regulation with too broad a stroke. This lowered upper 
payment limit punishes not only the States that were abusing Federal 
funds, and they should be punished, but it has hurt States like 
California which were operating properly.
  This program for 10 years, under both Democrats and Republicans, has 
been implemented and strongly supported. Moreover, this regulation 
ignores the will of this Congress in regards to the upper payment limit 
for public hospitals. When the allegations of misused UPL funds came to 
light several years ago, this body responded by severely limiting these 
supplemental payments and by fixing the upper payment limit at the 150 
percent level.
  As I said, the House and Senate reached a bipartisan agreement that 
was codified when the Medicare and Medicaid Beneficiaries and 
Improvement Act was signed into law in the 106th Congress. By lowering 
the Medicaid upper payment limit to 100 percent, CMS is undoing a 
carefully crafted compromise that balanced the Federal Treasury with 
the need to ensure that health care remain available to the most 
vulnerable of our fellow citizens.
  Mr. Speaker, as I stand here today, there may be skeptics out there 
who say that when compared to the overall Medicaid budget for the State 
of California, the $300 million received under the 150 percent UPL is 
nothing more than a drop in the bucket. Well, to that let me say that 
the financial situation in California, and indeed in many of our State 
and local governments across this country, is so constrained that not 
one Federal dollar can be cut from the Federal Medicaid allocation 
without it adversely affecting the availability of care for Medicaid 
patients.
  Just recently, Los Angeles County revealed that it plans to close 
nearly a dozen community health clinics and lay off over 5,000 health 
care workers because of a lack of budgetary resources. What alarms me 
the most is that the county's budget does not include the tidal wave of 
Federal Medicaid cuts that are scheduled to go into effect next year, 
including the reduction in the upper payment limit.
  The fact is, if the UPL reduction is implemented by CMS, health care 
for low-income and uninsured patients will be compromised as a result. 
If the counties across California are forced to reduce hospital 
services because of decreased Federal support, those patients faced 
with long waits at the few remaining open public hospitals will turn to 
private hospitals for emergency care. While Federal law prohibits 
private hospitals from refusing to treat uninsured emergency care 
patients, it does not prohibit them from closing their emergency room 
doors.
  Faced with overflowing emergency rooms and inadequate Medicaid 
reimbursements, this is the choice that many private hospitals would be 
forced to make. Therefore, a decreased upper payment limit would force 
both public and private hospitals in California to curtail emergency 
and trauma care services resulting in an absurd situation where a 
constituent of mine from Claremont, California, could conceivably be 
forced to drive over 30 miles in rush hour traffic to the Los Angeles 
USC Medical Center to find an open trauma center. The prospect of such 
an occurrence is simply unacceptable.
  Mr. Speaker, I wanted to make clear that, in stating my opposition to 
the reduction of the UPL, I am not asking for special treatment for 
California. I am simply asking for fair treatment of California.
  Under its federally approved Medicaid UPL, California follows some of 
the most stringent requirements for UPL eligibility. To access those 
funds in California, more than 25 percent of a hospital's patients have 
to be Medicaid-eligible or uninsured. I reiterate that California has 
exclusively spent the money that it has received under the UPL program 
on health care, not on anything else. To punish California for the 
misdeeds of other States is unwise and unfair.

[[Page H4572]]

  We are all aware of the fact that California provides more tax 
dollars to the Federal Treasury than it receives in Federal support. 
Our State is third to the last in Federal Medicaid spending on a per 
capita basis. We can afford to fall no further. The public health 
system in California is at a critical juncture, and we must act now to 
prevent a crisis that will affect tens of millions of California 
taxpayers.
  Yet I am very cognizant of the fact that our Nation is currently at 
war, and because of that we face significant budgetary limitation this 
fiscal year and we will face challenges next year as well. I do not 
believe, however, that we should reduce health care services for our 
most disadvantaged people in our efforts to reduce costs. Such action 
will undoubtedly cause more instability and expense in the long run 
than any benefit that would be provided in the short term.
  Because implementation of the reduction of the upper payment limit is 
not scheduled to take place for California until fiscal year 2004, we 
have a unique opportunity to address these concerns without impacting 
the budget of this Congress, but we must take action this year. We must 
further the bipartisan compromise that was put together in the 106th 
Congress, and I am underscoring the importance of that.
  Mr. Speaker, I am here today to ask for the support of Members on 
both sides of the aisle to find a commonsense solution to this 
impending crisis and to protect California's public health system from 
financial attack. The people of California deserve no less. We 
obviously want to do everything that we possibly can to ensure that 
there is not a continued reliance on emergency services, and we are 
working on a broad range of reforms in the area of health care, 
including the delivery of prescription drugs to seniors and other 
reforms which we believe are very important. But in the meantime, until 
we bring about those reforms, we cannot leave those who are the most 
disadvantaged among us hurting.
  Mr. Speaker, I thank my colleagues on both sides of the aisle from 
California who have joined in working hard to deal with this Medicaid 
upper payment limit issue. We remain strongly united as a California 
delegation to preserve the health care system in our State and for the 
country.

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