[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (1999, Book II)]
[October 19, 1999]
[Pages 1827-1828]
[From the U.S. Government Publishing Office www.gpo.gov]
[[Page 1827]]
Letter to Congressional Leaders on Medicare Reform
October 19, 1999
Dear Mr. Chairman: (Dear Senator
Moynihan:)
It was a pleasure to meet with you and Senator Moynihan earlier this
month to discuss our mutual commitment to strengthening and modernizing
Medicare. It continues to be my hope that the Congress will take action
this year to, at minimum, make a downpayment on needed reforms of the
program. I look forward to working with you toward that end.
In 1997, the Medicare trustees projected that Medicare would become
insolvent in 2001. Working together across party lines, the Congress
passed and I enacted important reforms that contributed towards
extending the life of the Medicare trust fund to 2015. As with any major
legislation, the Balanced Budget Act (BBA) included some policies that
are flawed or have had unintended consequences that are posing immediate
problems to some providers and beneficiaries. In addition, the program
faces the long-term demographic and health care challenges that will
inevitably result as the baby-boom generation ages into Medicare. As we
worked together in 1997 to address the immediate threat to Medicare, we
must work together now to address its short-term and long-term
challenges.
Preparing and strengthening Medicare for the next century is and
will continue to be a top priority for my Administration. For this
reason, I proposed a plan that makes the program more competitive and
efficient, modernizes its benefits to include the provision of a long-
overdue prescription drug benefit, and dedicates a portion of the
surplus to help secure program solvency for at least another 10 years.
However, I also share your belief that we need to take prompt action--
whether in the context of broader or more limited reforms--to moderate
the excessive provider payment reductions in the BBA of 1997. I believe
that legislative modifications in this regard should be paid for and
should not undermine the solvency of the Medicare trust fund.
You have requested a summary of the administrative actions that I
plan to take to moderate the impact of the BBA. In the letter that you
sent to me last Thursday, you also asked about four specific issues
related to payment for hospital outpatient departments, managed care,
skilled nursing facilities, and disproportionate share hospitals.
Attached is a summary of the over 25 administrative actions that my
Administration is currently implementing or will take to address
Medicare provider payment issues. The Department of Health and Human
Services is taking virtually all the administrative actions possible
under the law that have a policy justification, which will accrue to the
benefit of hospitals, nursing homes, home health agencies, and other
providers.
We are finishing our review of our administrative authority to
address the 5.7 percent reduction in hospital outpatient department
payments. We believe that the Congressional intent was to not impose an
additional reduction in aggregate payments for hospitals and I favor a
policy that achieves this goal. The enactment of clarifying language on
this subject would be useful in making clear Congressional intent with
regard to this issue. I have attached a letter from Office of Management
and Budget Director Jack Lew, which was sent at
the request of Congressman Bill Thomas,
detailing how such language would be scored by OMB.
With regards to managed care, we share your commitment to expanding
choice and achieving stability in the Medicare+Choice marketplace. The
BBA required that payments to managed care plans be risk adjusted. To
ease the transition to this system, we proposed a 5-year, gradual phase-
in of the risk adjustment system. This phase-in forgoes approximately
$4.5 billion in payment reductions that would have occurred if risk
adjustment were fully implemented immediately. The Medicare Payment
Advisory Commission and other experts support my Administration's risk
adjustment plan. Consistent with this position, most policy experts
believe that a further slowdown of its implementation is unwarranted.
However, we remain committed to making any and all changes that improve
its methodology. Moreover, as you know, any administrative and
legislative changes that increase payment rates to providers in the fee-
for-service
[[Page 1828]]
program will also increase payments to managed care plans.
On the issue of skilled nursing facilities, we agree that nursing
home payments for the sickest Medicare beneficiaries are not adequate. I
intend to take all actions possible to address this. Administratively,
we can and will use the results of a study that is about to be completed
to adjust payments as soon as possible. While we believe that these
adjustments must be budget neutral, we are continuing to review whether
we have additional administrative authority in this area.
Finally, it appears that there has been confusion about the current
policy for disproportionate share hospital (DSH) payments. Hospitals
across a considerable number of states have misconstrued how to
calculate DSH payments. The Department of Health and Human Services
(HHS) has since concluded that this resulted from unclear guidance.
Thus, as reported last Friday, HHS will not recoup pass overpayments and
will issue new, clearer guidance as soon as possible.
We believe that our administrative actions can complement
legislative modifications to refine BBA payment policies. These
legislative modifications should be targeted to address unintended
consequences of the BBA that can expect to adversely affect beneficiary
access to quality care. I hope and expect that our work together will
lay the foundation for much broader and needed reforms to address the
demographic and health care challenges confronting the program. We look
forward to working with you, as well as the House Ways and Means and
Commerce Committees, as we jointly strive to moderate the impact of BBA
on the nation's health care provider community.
Sincerely,
Bill Clinton
Note: Identical letters were sent to William V. Roth, Jr., chairman, and
Daniel Patrick Moynihan, ranking member, Senate Committee on Finance.