"Until work is completed on a Medicare prescription drug benefits bill, we need these additional payments for hospitals in Iowa and other rural states," Grassley said.
Iowa's senior senator said that the comprehensive Medicare legislation currently under consideration by a Senate-House conference committee contains permanent payment-rate increases to help level off the historic inequity in the way that Medicare reimburses hospitals in rural states, including Iowa.
The current law penalizes rural and small urban hospitals 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 for the finding by MedPAC, an independent federal body that advises Congress on issues affecting the Medicare program, that Medicare inpatient profit margins are substantially worse for rural and small urban facilities than for those located in large urban areas.
The provision adopted by the Senate last night raises the inpatient base rate for hospitals in rural and small urban areas to the same rate as that in large urban areas for an additional six months, Grassley said. Every state except Rhode Island has rural or small urban hospitals, so 49 states will benefit. For Iowa, the temporary extension will mean about $7 million between now and March 31, 2004.
Grassley was able to secure his first six-month provision of this policy in January as part of the fiscal year 2003 omnibus appropriations bill. It was effective April 1 through September 30, 2003. A permanent version of the policy was included last summer in the Senate- and House-passed prescription drug bills. MedPAC has endorsed a permanent version of this policy in its 2003 draft recommendations.