"It's important to act now, before Medicare's flawed payment formulas inflict more damage on health care for older Iowans," Grassley said. "We took the opportunity to fix these egregious problems quickly and cleanly right away. There's more to come. This hospital provision is a down payment on Medicare equity for Iowa and the many other states that get short-changed for doing more with less. I'll keep working on ways to bring even greater Medicare equity to Iowa this spring."
This week, House and Senate negotiators completed working out the differences between each chamber's version of the Fiscal Year 2003 omnibus appropriations bill. Last night, each chamber approved the negotiators' agreed-upon version of the legislation, including Grassley's proposals to adjust health care payments. The President is expected to sign the legislation in the next few days.
Grassley said the hospital provision is a six-month base payment rate increase for hospitals in rural and small urban areas. Grassley said current law penalizes hospitals in rural areas and small cities by paying them 1.6 percent less on every inpatient discharge than their counterparts in urban areas of a million or more people. This is one reason that non-partisan Medicare payment experts recommended the increase; they found that Medicare inpatient profit margins are substantially worse for rural and small urban facilities than for those located in large urban areas. This makes it difficult for these hospitals in rural and small cities to stay in business and continue serving their patients, Grassley said.
The provision raises the inpatient base rate for hospitals in rural and small urban areas to the same rate as that in large urban areas for six months, Grassley said. Almost every state has hospitals in rural or small urban areas, so almost every state will benefit from this provision.
The cost of the provision is $300 million for the six-month period beginning April 1, 2003, and ending Sept. 30, 2003, according to preliminary scores from the Congressional Budget Office.Of that amount, about $7 million would go to Iowa hospitals via Medicare, Grassley said.
The doctor payment adjustment prevents a 4.4 percent cut in payments to physicians scheduled for February from taking effect. The cuts were mandated as part of the 1997 budget balancing deal, but the Iowa Medical Society and other doctors groups since have argued that the formula used to calculate those payment reductions has been erroneously harsh and endangers their participation in the Medicare program.
This adjustment would result in an approximated $1 billion increase in Fiscal Year 2003 for doctor payments nationwide. In 2000, Iowa had 5,825 doctors out of 792,000 nationwide; many of them participate in Medicare. Iowa's Medicare-participating doctors would receive a proportionate share of the $1 billion, or millions of new dollars this year alone, Grassley said.
Grassley said the final legislation includes a provision he supports to help low-income Medicare beneficiaries.
This continues funding for the Qualified Individual Program, which pays low-income Medicare beneficiaries' premiums. This adds up to a total annual benefit of more than $700 per beneficiary. The program was created as a five-year block grant to states and was scheduled to expire on Dec. 31, 2002, but through a continuing resolution, Congress extended the benefit through March 31, 2003. This provision extends the program through Sept. 30, 2003, at a cost of an estimated $40 million.
The Centers for Medicare and Medicaid Services estimates that about 515,000 people are eligible for this program, but only about 118,000 are enrolled nationally, including just over 1,500 Iowans, Grassley said.
Grassley is a long-time advocate of adjusting Medicare's flawed payment formulas, especially those that penalize low-cost states like Iowa that provide efficient, high quality health care. Last October, he and his Democratic colleague, Sen. Max Baucus, introduced a comprehensive Medicare payment adjustment bill to address these problems. The bill did not receive final approval before Congress adjourned.
"Iowa needs immediate relief to stop cuts that might otherwise hurt older citizens' access to care," Grassley said. "And then we need long-term fixes to payment formulas that don't make sense."