[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Pages 18066-18067]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          BALANCED BUDGET ACT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Illinois (Mr. Shimkus) is recognized for 5 minutes.
  Mr. SHIMKUS. Mr. Speaker, I would like for my 5 minutes to be joined 
by my colleague, the gentleman from Illinois (Mr. Davis), to talk about 
one of the real health care crises that we have.
  We are going to hear a lot about health care in the next 8 weeks, 
issues that we hope to address, the Patients' Bill of Rights, 
prescription drug coverage. But there is really a more pressing issue 
out there, and that is the effect of the Balanced Budget Act of 1997 on 
health care providers.
  My colleague, the gentleman from Chicago, Illinois (Mr. Davis), and I 
had a hearing in Chicago on August 28 in which we had providers come 
testify about the impact of the Balanced Budget Act. And they are 
serious and they are important.
  They are so important that we have come down to the floor to just 
start the drumbeat of noise so that before we end this legislative 
session we have some assistance and aid to our health care providers 
who are really working in the field to address some of the funding 
shortfalls.
  The Balanced Budget Act was passed in order to reduce the deficit and 
balance our Nation's budget and control health care entitlement 
spending. I am proud to say that that goal was accomplished but with 
some unintended consequences, as so happens in legislation.
  According to the Congressional Budget Office, the actual reductions 
brought about by the Balanced Budget Act, including the adjustment in 
the Balanced Budget Reconciliation Act that we passed last year, 1999, 
are $124 billion, that is ``billion'' with a ``b,'' more than Congress 
voted for when we passed the Balanced Budget Act.
  We heard a lot of testimony. I would like to quote Allan Gaffner of 
Utlaut Memorial Hospital in my Congressional district: ``The Balanced 
Budget Act will cause Utlaut Extended Care Unit to lose revenue 
totaling $185,000 in 2000. Last year the unit lost an average of 
$190,000. From 1999 through 2003, the Extended Care Unit is projected 
to operate with $1 million less revenue than before the Balanced Budget 
Act was instituted. The total Medicare operating margin of Utlaut last 
year was a negative 10.8 percent.''
  Let me rephrase that.
  The total Medicare operating margin, that is our promise to our 
seniors, we paid our providers 10.8 percent below the cost of providing 
that service.
  I do not see how they survive.
  Mr. Speaker, I yield to my colleague, the gentleman from Chicago, 
Illinois (Mr. Davis).
  Mr. DAVIS of Illinois. Mr. Speaker, I want to thank the gentleman for 
yielding. Mr. Speaker, I am pleased to be here to share in this Special 
Order with my colleague from Illinois.
  Mr. Speaker, I was pleased on August 28 to cosponsor a statewide 
hearing on the impact of the Balanced Budget Act on hospitals in the 
State of Illinois. And they came from all over the State: from down 
state, central Illinois, from Chicago, the northern part of the State, 
the University of Illinois Hospital, Rush Presbyterian, St. Lukes 
Medical Center, Cook County Hospital, Northwestern University Hospital, 
Bethany Hospital, the Illinois Home Health Association, the Illinois 
Nursing Home Association, Community Health Centers, the University of 
Chicago, Home Health Agencies, the National Hospice Association.
  All of them saying essentially the same thing and that is, while they 
recognize and appreciate the fact that we need to reduce waste and 
fraud and abuse in the Medicare program, in all of our health programs, 
in the Medicaid program, the one thing that they also understood is 
that we have gone too far with the Balanced Budget Act and we have 
actually cut services in institutions that we cannot afford to cut. We 
have thrown out in many instances the baby with the bath water.
  And so I join with the gentleman from Illinois (Mr. Shimkus) and 
others in calling for another look at the impact of the Balanced Budget 
Act. We must find a way to save these institutions which are teetering.
  I am pleased to join with the gentleman tonight.
  Mr. SHIMKUS. Mr. Speaker, reclaiming my time, I would also like to 
highlight another issue that was raised, which was the 
intergovernmental transfer issue, which HCFA is going to oppose on 
States.
  HCFA has approved the Illinois program 22 times over the years 
without any indication there was a problem. Now they are going to 
promulgate a rule, and it is going to take an additional, and this is 
an additional more than what has been affected in the Balanced Budget 
Act, $500 million from the health care delivery system in the State of 
Illinois.
  Ann Patla, who testified before our hearing, said this would be 
catastrophic and it is a critical issue we need to be concerned of.
  I would like to thank my colleague for coming down to the floor. Time 
is

[[Page 18067]]

running shy. But we will be back to talk about real health care 
problems in America, and that is the Balanced Budget Act's impact on 
health care and also the intergovernmental transfer issue.
  The Balanced Budget Act was passed in order to reduce the deficit and 
balance our nation's budget.
  I am proud to say that our goal was accomplished and we are now 
working with a budget surplus.
  However, the BBA resulted in unintended consequences, cutting much 
more funding out of the Medicare system than was originally intended.
  According to the Congressional Budget Office (CBO), the actual 
reductions brought about by the BBA--including the adjustment in the 
BBRA of 1999--are $124 billion more than Congress voted for when 
passing the 1997 BBA.
  Dean Harrison from the Northwestern Memorial Hospital:

       Approximately 30 percent of the Northwestern Memorial 
     Hospital's patient volume are Medicare beneficiaries, and 
     they account for 37 percent of its patient days due to their 
     longer length of stay. As a result, the BBA cuts in Medicare 
     reimbursement will mean a total loss to NMH of an estimated 
     $65 million over the course of the five-year schedule of 
     reductions. . . . The total negative Medicare margin will 
     double from 1999 to negative 11.6 percent for the year 
     2000.''

  John Buckley, Jr. from Southern Illinois Healthcare:

       [The] outpatient reimbursement situation isn't much 
     brighter. Since the BBA was implemented three years ago, the 
     reimbursement has fallen steadily, from 97% of costs in FY 
     1997 to 89% of costs in FY 2000. . . Without additional BBA 
     relief, out outpatient losses will exceed $1 million.

  BBA spending reductions are forcing hospitals to lay off staff, 
cancel much-needed upgrades of facilities and equipment, and shut down 
critical services like home health care and other needed programs that 
cannot be maintained without compromising quality.
  Allan Gaffner of Edward Utlaut Memorial Hospital testified:

       As a result of the Balanced Budget Act cuts, the Utlaut 
     Rehabilitation Department, which provides therapy services to 
     the Extended Care Unit patients, was reduced to 54 percent. 
     The Utlaut Rehabilitation Department, which previously 
     consisted of 13 staff members, now has only six staff 
     members. The limit on therapy services as covered by the 
     Medicare Skilled Nursing Facility rules is delaying a return 
     to health and greater independence. Rather than receiving as 
     many as two hours of physical occupational and speech therapy 
     services per day, Medicare patients are limited to a maximum 
     of 75 minutes a day.

  John Buckley, Jr. from Southern Illinois Health Care:

       Access to home health care is suffering in the communities 
     Southern Illinois Healthcare serves. Because of the BBA 
     spending cuts, we are serving 1,000 fewer patients and 
     providing 86,000 fewer home health visits than we did three 
     years ago. On top of that, we've had to lay off 150 staff 
     members. Even with those dramatic cutbacks, we still lost 
     nearly $1.2 million on home health services in FY 2000.

  Dean Harrison from the Northwestern Memorial Hospital:

       Continuation and expansion of cost control efforts and the 
     elimination of some services have allowed NMH to endure the 
     cutbacks in Medicare thus far. In recognition of the effect 
     the BBA would have on NMH, the hospital's skilled nursing 
     facility was closed in early 1998 due to losses the unit was 
     already incurring and a negative prognosis for its survival 
     under the BBA.

  According to HCFA: 933,687 Medicare beneficiaries will lose health 
maintenance organization coverage in January. Many of these people are 
left with no other Medicare options.


                   intergovernmental transfers (igts)

  Illinois hospitals are also very concerned about a rule HCFA is 
threatening to issue that would restrict intergovernmental transfers by 
limiting the amount that can be paid to county hospitals and nursing 
homes under the Medicaid ``upper limit'' rule.
  HCFA has approved the Illinois program 22 times over the years 
without any indication that there was a problem.
  The first time state officials were notified that HCFA had concerns 
was when the agency indicated they were issuing a rule against IGTs.
  If the rule is enacted as proposed it would slash up to $500 million 
in health care funding for low income residents of Illinois. This makes 
no sense, especially as the number of uninsured Americans continues to 
skyrocket.
  After talking to hospital leaders back home, I am convinced that the 
Administration should not proceed with a rule that threatens the 
already fragile health care safety net across the country.
  Ann Patla, Director of the Illinois Department of Public Aid:

       If this federal regulation is adopted, the loss of funding 
     will devastate the largest health care system in Illinois, 
     operated by Cook County, and will severely impair the State's 
     ability to serve Medicaid participants in all other counties. 
     The State may be forced to: (1) seek repeal of recent health 
     care expansions for the elderly and disabled; (2) retreat 
     from rate reforms that encourage access to preventive and 
     lower cost health care; (3) reduce outreach programs to 
     encourage the use of Medicaid and SCHIP; and (4) 
     substantially cut rates to FQHCs, hospitals, physicians, and 
     other providers who serve Medicaid and SCHIP participants, as 
     well as almost two million uninsured Illinoisans.

  If some states are abusing IGTs--by using them to pay for highway 
repairs or tax cuts, for example--then regulatory changes should be 
targeted at curbing those abuses.
  HCFA's current proposal, however, penalizes states like Illinois 
which use IGTs to maintain a health care safety net for low income 
residents.
  A rule change, if one is needed, should preserve the legitimate and 
appropriate use of IGTs to provide health care for low-income persons.


              inpatient service reimbursements (h.r. 3580)

  BBA reduces Medicare payments for hospital services. Medicare 
provides payment updates below the marketbasket index.
  Over 1998, 1999, and 2000 hospital inflation rates rose 8.2 percent, 
while the payment updates totaled 1.6 percent.
  Below inflation updates coupled with rising costs associated with 
wage increases, prices per prescription for new drugs, new blood 
screening techniques, and mandated changes for compliance with 
administrative simplification and privacy are additional costs for 
hospitals.
  How do we expect hospitals to maintain quality services when their 
reimbursement rates are so low?
  We should pass a reform package that includes legislation to repeal 
Medicare inpatient update reductions of 1.1 percent scheduled for FY 
2001 and FY 2002. To this end, I have cosponsored H.R. 3580, the 
``Hospital Preservation and Equity Act.''
  Northwestern Memorial Hospital testified:

       [H.R. 3580] recognizes that Medicare reimbursement to 
     hospitals does not keep pace with the costs of caring for 
     patients and would repeal the BBA's payment to hospitals for 
     Medicare inpatient services for FYs 2001 and 2002.

  Illinois Hospital and HealthSystems Association testified:

       Recently the Medicare Payment Assessment recommended that 
     Congress address the inpatient PPS update. MedPAC is the 
     independent body that advises Congress on Medicare payment 
     rates. It's data analysis show that nearly 35% of the 
     nation's hospitals are operating in the red.

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