As chairman of the Senate's tax-writing committee, Grassley is managing the floor debate on the tax bill. He said he is bringing up the Medicare equity issue because communities across Iowa are hurt economically by the program's flawed payment structure, and he is committed to fight for Medicare fairness at every opportunity.
"This bill presents an opportunity to fix shortcomings in Medicare that shortchange Iowa and other rural states," Grassley said. "I'm committed to a long-term solution that rectifies the flawed Medicare payments system once and for all. Health care providers and hospitals in rural areas should not be penalized for doing more with less."
As it stands today, Medicare's complex funding formula penalizes states such as Iowa for practicing cost-effective medicine with an inequitable reimbursement rate. Iowa health care providers and hospitals get less money back from Medicare for the same procedure performed in Florida or New York, for example.
Grassley said this creates a disincentive for physicians to practice medicine in Iowa and pinches an already razor-thin operating margin for vulnerable hospitals. "This adversely affects the quality of care available in communities in Iowa and shortchanges Iowans who pay the same Medicare payroll tax as every worker in the country," he said.
Grassley first introduced a comprehensive plan to address unfair treatment by the Medicare program a year ago. The amendment he filed today contains many of these provisions for rural hospitals and more robust measures for rural physicians. Grassley said the legislation includes reducing the payment inequity that hurts rural physicians; improving an existing program which offers a 10-percent bonus to physicians serving patients in medically under-served rural areas; boosting the base payment to put all Iowa hospitals on equal footing with their urban counterparts; protecting the funding stream for outpatient services provided by rural hospitals and better protection for 40 small-town hospitals which qualify as Critical Access Hospitals; creating a five-percent payment boost for home health care services provided in rural areas; improving the hospital wage index that currently pulls down Iowa's reimbursements; and, assisting rural ambulance services.
Grassley said his Medicare amendment would be paid for primarily by reducing the high prices Medicare pays for currently covered prescription drugs. His legislation would also slow the growth of Medicare spending on certain items of durable medical equipment and add reasonable co-payments to covered laboratory services. These co-payments don't exist in current law.
In addition to tax policy, the Senate Finance Committee which Grassley chairs has legislative and oversight jurisdiction over Medicare. In January, Grassley won passage of targeted, short-term fixes to smooth out critical inequities in the system until permanent relief can be achieved.