[Congressional Record (Bound Edition), Volume 145 (1999), Part 1]
[Extensions of Remarks]
[Pages 1188-1189]
[From the U.S. Government Publishing Office, www.gpo.gov]



INTRODUCTION OF LEGISLATION TO HELP MEDICARE BENEFICIARIES HURT BY Y2K 
    COMPUTER DELAYS IN HOSPITAL OUTPATIENT DEPARTMENT PAYMENT REFORM

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, January 19, 1999

  Mr. STARK. Mr. Speaker, a number of Medicare provisions in the 
Balanced Budget Act have been delayed because of the Year 2000 computer 
``bug'' problem. One delay involves postponing reforms in the way 
Medicare pays for beneficiaries who receive services in hospital 
outpatient departments (HOPDs).
  This is as complicated and Byzantine an area of payment policy as 
exists in Medicare--but the bottom line is that the delay will cost 
seniors and the disabled $460 million in 1999 compared to what they 
would have saved if the HOPD reform that Congress intended and enacted 
had proceeded on course.
  $460 million is a lot of money for seniors facing medical problems. 
Hopefully, HCFA's Y2K corrections will proceed on schedule and 
beneficiaries can begin saving money in 2001 when the HOPD changes are 
implemented. But in case there are problems, seniors could continue to 
see higher costs than they should well into year 2000.
  This is a relatively simple problem to fix. I am introducing a bill 
today that will deliver on the BBA's promise to seniors of nearly half 
a billion in savings in 1999. I urge the Ways and Means and Senate 
Finance Committees to consider this proposal on an emergency basis. It 
will have no cost of Medicare--but it will provide much needed relief 
from HOPD overcharges. It has the support of the Administration.

[[Page 1189]]

  Following is a technical explanation of the problem and the solution. 
Again, Mr. Speaker, we should not get lost in the turgidness of the 
issue--we should just keep our eyes on the fact that the half billion 
in promised savings can still be achieved.

     Proposal to Reduce Medicare Outpatient Department Coinsurance


                              Current Law

       Coinsurance for hospital outpatient department (OPD) 
     services is currently based on 20 percent of a hospital's 
     charge. Under the prospective payment system (PPS) for 
     hospital OPD services, coinsurance will no longer be based on 
     charges. Instead, base copayment amounts will be established 
     for each group of services based on the national median of 
     charges for services in the group in 1996 and updated to 
     1999. These copayment amounts will be frozen until such time 
     as coinsurance represents 20 percent of the total fee 
     schedule amount. If the OPD PPS were implemented in 1999, 
     calculation of the copayment amounts in such a fashion would 
     result in coinsurance savings of $460 million for 
     beneficiaries in 1999.
       HCFA, however, will not be able to implement the OPD PPS in 
     1999 due to the intensive efforts and resources that must be 
     devoted to achieving year 2000 compliance. It will be 
     implemented as soon as possible after January 1, 2000. In the 
     absence of the OPD PPS, coinsurance will continue to be based 
     on 20 percent of charges.


                                Proposal

       Beginning on January 1, 1999 and until such time as the OPD 
     PPS is implemented, coinsurance would be based on a specified 
     percentage of charges, which will be lower than 20 percent. 
     The specified percentage (e.g., 18% or 17.5%) would be 
     calculated by the Secretary and specified in law so that the 
     beneficiaries, in aggregate, would achieve coinsurance 
     savings equal to $460 million in 1999. These savings are 
     equal to the amount that would have been saved by 
     beneficiaries in 1999 if the OPD PPS were implemented.
       The Medicare payment, however, would continue to be 
     calculated as if coinsurance were still based on 20 percent 
     of charges. In so doing, the beneficiary coinsurance savings 
     are not passed on to the Medicare program as a cost. Instead, 
     the loss will be absorbed by hospitals, which is the same 
     outcome that would have occurred in 1999 under the OPD PPS.
       Under this proposal, hospitals would not be able to recoup 
     their losses by increasing their charges. In fact, increasing 
     their charges would result in a further loss. This is because 
     higher charges cause an increase in coinsurance but an 
     offsetting reduction in the Medicare payment since 
     coinsurance is subtracted out in order to determine the 
     Medicare payment. Furthermore, since the Medicare payment is 
     calculated as if coinsurance is 20% (rather than 18%), the 
     Medicare payment would go down by more than the increase in 
     the coinsurance payment (which is based on a lower 
     percentage).

     

                          ____________________