[Pages S10661-S10664]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ASSISTANCE FOR SOUTH DAKOTA MEDICARE BENEFICIARIES AND PROVIDERS

Mr. JOHNSON. Mr. President, one of the key remaining issues of the
107th Congress that I believe must be addressed yet this year is
Medicare relief for rural health care providers and beneficiaries.
Recently, bipartisan legislation was introduced, called the Beneficiary
Access to Care and Medicare Equity Act of 2002, S. 3018, that will
provide definitive steps to strengthen South Dakota's rural health care
delivery system. I am pleased to be a cosponsor of this bill.
The legislation will provide $43 billion over ten years for provider
and beneficiary improvements in the Medicare and Medicaid programs.
Earlier

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this summer, the House passed a Medicare bill, which provides
approximately $30 billion over ten years. The Senate legislation will
provide South Dakota with nearly $84.2 million in Medicare improvements
for rural hospitals, skilled nursing facilities, home health services,
physicians, and beneficiaries alike. Although the Administration has
expressed some resistance to working with Congress on Medicare
legislation this year, I will continue to fight for passage of this
critically important legislation.
As I travel throughout South Dakota, many health care providers and
Medicare beneficiaries have expressed concerns regarding inequities
with Medicare reimbursements in rural states like South Dakota. It is a
travesty that nationwide, rural providers receive less Medicare
reimbursement for providing the same services as their urban
counterparts. Therefore, I remain committed to improving the equity in
Medicare reimbursement levels for rural States, and increasing access
to quality, affordable health care for the citizens of South Dakota.
As a member of the Senate Rural Health Caucus, I joined several of my
fellow caucus members in sending a letter to the Senate Finance
Committee expressing our rural health priorities as compiled from the
input that I received from South Dakotans, such as yourself. I was
pleased that many of my rural priorities were included in S. 3018, and
would ask unanimous consent that the text of this letter be printed in
the Congressional Record. As well, I ask unanimous consent that the
summary of S. 3018 also be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

U.S. Senate,

Washington, DC, September 16, 2002.
Hon. Max Baucus, Chairman,
Hon. Charles Grassley, Ranking Member,
Committee on Finance,
Washington, DC.
Dear Chairman Baucus and Ranking Member Grassley: As
members of the Senate Rural Health Caucus, we write to urge
you to take definitive steps this year to strengthen our
nation's rural health care delivery system. We are
particularly concerned about geographic inequities in
Medicare spending, which are caused in part by disparities in
current Medicare payment formulas. Related to this, we
strongly urge the Committee to address needed rural payment
improvements in its Medicare refinement bill.
Nationwide, rural providers receive less Medicare
reimbursement for providing the same services as their urban
counterparts. According to the latest Medicare figures,
Medicare's annual inpatient payments per beneficiary by state
of residence range from slightly more than $3,000 in
predominately rural states like Wyoming, Idaho and Iowa to
over $7,000 in other states.
This problem is compounded by the fact that rural Medicare
beneficiaries tend to be poorer and have more chronic
illnesses than urban beneficiaries. This inherent
vulnerability of rural providers combined with historic
funding shortfalls and rising costs has placed additional
burdens on an already strained rural health care system.
It is due to these unique circumstances that rural
providers and beneficiaries deserve to be the Committee's top
priority as it writes legislation to strengthen the Medicare
system. We encourage the Committee to give special
consideration to those states that are experiencing the
lowest aggregate negative Medicare margins. We request the
following rural specific provisions be included in the
Committee's final Medicare provider legislation:

1. Rural Hospitals

Market Basket Update: Under current law, all hospitals will
receive a Medicare payment update in FY2003 of hospital cost
inflation minus approximately one-half percent. However,
hospitals in rural areas and smaller urban areas have
Medicare profit margins far lower than those of hospitals in
large urban areas. Therefore, we urge the Committee to
provide hospitals located in rural or smaller urban areas
with a full inflation update.
Equalize Medicare Disproportionate Share Hospital Payment
(DSH) Formula: Hospitals receive add-on payments to help
cover the costs of serving a high proportion of uninsured
patients. While urban facilities can receive unlimited add-
ons corresponding with the amount of patients served, rural
add-on payments are capped at 5.25 percent of the total
amount of the inpatient payment. We urge the Committee to
remove this cap for rural hospitals, bringing their payments
in line with the benefits urban facilities receive.
Close Gap Between Urban and Rural ``Standardized Payment''
Levels: Inpatient hospital payments are calculated by
multiplying several different factors, including a
standardized payment amount. Under current law, hospitals
located in cities with more than 1 million people receive a
base payment among 1.6 percent higher than those serving
smaller populations. We urge the Committee to address this
disparity by bringing the rural base payment up to the urban
payment level.
Low-Volume Hospital Payment: According to recent data, the
current hospital inpatient payment rate has placed low-volume
hospitals at a disadvantage because it does not adequately
account for the fact that smaller facilities have difficulty
achieving the economies of scale of their larger
counterparts. To address this problem, we request the
Committee create a low-volume inpatient payment adjustment
for hospitals that have less than 1,000 annual discharges per
year and are located more than 15 miles from another
hospital.
Outpatient Payment Improvements: Rural Hospitals are highly
dependent on outpatient services for revenue; however, the
Medicare Outpatient Prospective Payment System sets payments
at 16 percent below costs. We urge the Committee to take the
following actions to ensure outpatient stability for rural
hospitals.
1. Increase emergency room and APC payments by 10 percent.
2. Limit the pro rata reduction in pass-through payments to
20 percent.
3. Limit the budget neutrality adjustment to no more than 2
percent.
4. Extend current provision that holds small, rural
hospitals harmless from the current Outpatient PPS for three
more years.
5. Improve and extend transitional corridor payments to
rural hospitals.
Wage Index Issues: Medicare's current inpatient hospital
payments fail to accurately reflect today's labor costs in
rural areas. The Caucus has long been concerned about this
issue and its impact on rural hospitals as they strive to
recruit and retain key health care personnel. We strongly
urge the Committee to address the area wage index disparities
with new money.
Current law allows rural facilities located near urban area
to receive the higher wage index available to the facilities
located in the metropolitan area. However, this wage index
``reclassification'' is available only for inpatient and
outpatient services. We believe re-classification should
extend to other services offered by hospitals, such as home
care and skilled nursing services.

2. Critical Access Hospital Program Improvements

The Balanced Budget Act of 1997 created the Critical Access
Hospital program (CAH) to ensure access to essential health
services in underserved rural communities that cannot support
a full service hospital. This program has proven to be
critically important to rural areas as 667 hospitals across
the nation have converted to Critical Access Hospital status.
We urge the Committee to include the following modifications
to strengthen this critical program.
<bullet> Reinstate Periodic Interim Payments (PIP), which
provide facilities with a steadier stream of payment in order
to improve their cash flow.
<bullet> Eliminate the current requirement that CAH-based
ambulance services be at least 35 miles from another
ambulance service in order to receive cost-based payment.
<bullet> Allow for home health services operated by CAHs to
be reimbursed on a cost basis, as other CAH services already
are.
<bullet> Provide cost-based reimbursement for certain
clinical diagnostic lab tests furnished by a CAH.
<bullet> Provide Medicare coverage to CAHs for certain
emergency room on-call providers.
<bullet> Allow CAHs to interchange the number of their
acute and swing beds as necessary, but still maintain the
current 25 bed limit.
<bullet> Alleviate payment reductions that will occur as a
result of recent cost report changes made by CMS related to
the amount of allowable beneficiary coinsurance payments.

3. Rural Home Health Improvements

Home health care is a critical element of the continuum of
care, allowing Medicare beneficiaries to remain in their
homes rather than being hospitalized. Current law provides
for a 10 percent payment boost for patients residing in rural
areas, to reflect the higher costs due to distance, as well
as the reality that there is often only one provider in rural
areas. However, this special payment will expire with the
current fiscal year.

4. Rural Health Clinics

Under current law, rural health clinics receive an all-
inclusive payment rate that is capped at approximately $63.
Various analyses have suggested that this cap does not
appropriately cover the cost of services for more than 50
percent of rural health clinics that the cap should be raised
by 25 percent to address this shortfall. We request that the
Committee raise the rural health clinic cap to $79.
Certain provider services, such as those offered by
physicians, nurse practitioners, physician assistants, and
qualified psychologists are excluded from the consolidated
payments made to skilled nursing facilities (SNFs) under the
prospective payment system. However, the same services
provided to SNFs by physicians and other providers employed
by rural health clinics are not excluded from the
consolidated SNF payment. We request the Committee ensure
skilled nursing services offered by rural health clinic
providers will receive the same payment treatment as services
offered by providers employed in other settings.

5. Rural Providers

Rural Physicians: There are several ways to improve the
current Medicare Incentive

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Payment program to increase payments to rural physicians.
Such changes include: placing the burden for determining
eligibility for the current 10 percent rural physician bonus
payment on the Medicare carrier rather than the individual
physician; creating a Medicare Incentive Payment Education
program at CMS; and establishing an on-going analysis of the
program's ability to improve Medicare beneficiaries' access
to physician services. We urge the Committee to make these
critical changes to the Medicare Inventive Payment program.
Mental Health Providers: The majority of rural and frontier
areas are federally designated mental health professional
shortage areas. In many of these underserved communities, a
Marriage and Family Therapist or a Licensed Professional
Counselor is the only mental health provider available to
seniors, but is not able to bill Medicare for their services.
We strongly urge the Committee to provide Medicare
reimbursement for Licensed Professional Counselors and
Marriage and Family Therapists at the rate that Social
Workers are paid.

6. Other Rural Issues

Ambulance Services: The Balanced Budget Act of 1997
directed the Secretary of Health and Human services to
establish a fee schedule payment system for ambulance
services. The negotiated rule making committee that was
utilized in the regulatory process instructed the Secretary
to account for geographic differences and develop a more
appropriate coding system. However, the current ambulance
payment system does not recognize the unique circumstances of
low-volume, rural providers. We strongly urge the Committee
to address these issues to ensure access to critical
ambulance services in rural and frontier communities.
Pathology Labs: Currently, independent labs can bill
Medicare directly for all services. After January 1, 2003
labs will only be able to bill for diagnosis of slides
prepared by the lab. The costs of slide preparation must be
recovered separately from the hospital. Small, rural
hospitals that do not have their own pathology departments
and independent labs face increased administrative costs and
complexity in this new billing arrangement. We request that
the Committee make permanent the grandfather clause enacted
in BIPA to allow independent labs to receive direct
reimbursement from Medicare.
National Health Service Corps Taxation: The National Health
Service Corps program (NHSC) provides either scholarships or
loan-repayments to clinicians who agree to serve for at least
three years in a designated health professional shortage
area. Last year's tax cut exempted NHSC scholarships from
taxation, but loan-repayments are still considered taxable
income. As a result, almost half of the current NHSC
appropriation is spent in the form of stipends to clinicians
to offset the tax liability on loan repayments. We strongly
urge the Committee to exempt the NHSC loan repayments from
taxation.
Flex Reauthorization: As you know, the Balanced Budget Act
of 1997 created the Rural Hospital Flexibility program (known
as the ``flex'' program) to assist small rural hospitals in
making the switch to Critical Access Hospital status (CAH).
This program has proven to be very successful in rural areas
as it has maintained access to critical care in small
communities. Program funds are used by states for Critical
Access Hospital designation and assistance, rural health
planning and network development, and rural emergency medical
services. We urge the Committee to reauthorize this important
rural health program.
We greatly appreciate the Committee's past efforts on
behalf of our nation's rural health care delivery system. We
look forward to continuing to work with you to ensure that
all rural providers receive the necessary resources to
provide quality health care services to rural seniors.
Sincerely,
Craig Thomas (Co-Chair), Sam Brownback, ----, Byron L.
Dorgan, Ben Nelson, ----, Fred H. Thompson, Conrad R.
Burns, Jesse Helms, Wayne Allard, Michael Crapo, Chris
Bond, James Inhofe, Patrick Leahy, Jeff Sessions,
Debbie Stabenow, Paul Wellstone, Mike DeWine, Carl
Levin, Ben Nighthorse Campbell, Jean Carnahan.
Tom Harkin (Co-Chair), Tim Johnson, Jeff Bingaman, Maria
Cantwell, Mary Landrieu, Larry Craig, Pat Roberts, John
Edwards, Blanche Lincoln, Susan Collins, Patty Murray,
Mark Dayton, Gordon Smith, Tom Daschle, Tim Hutchinson,
Jim Jeffords, ----, Ernest Hollings, Thad Cochran, Kay
Bailey Hutchison, Ron Wyden, Orrin Hatch.
____

The Beneficiary Access to Care and Medicare Equality Act of 2002

total cost over 10 years: approximately $43 billion

Note: subtotals below do not sum to $42 billion due to Part
B premium and Medicaid interactions and rounding. Part B
premium and Medicaid interactions total approximately -$2.5
billion over 10 years.
Title I--Rural Health Care Improvements
(Approx. $12.8 billion over 10 years)
Sec. 101. Full standardized amount for rural and small
urban hospitals by FY04 and thereafter.
Sec. 102. Wage index changes: labor-related share for
hospitals with a wage index below 1.0 is 68% for FY03 through
FY05; labor-related share for hospital with a wage index
above 1.0 is held harmless (i.e. remains at current level of
71%).
Sec. 103. Medicare disproportionate share (DSH) payments:
increases the maximum DSH adjustment for rural hospitals and
urban hospitals with under 100 beds to 10% (phased-in over
ten years).
Sec. 104. 1-year extension of hold harmless from outpatient
PPS for small rural hospitals.
Sec. 105. 5% add-on for clinic and ER visits for small
rural hospitals.
Sec. 106. 2-year extension of reasonable cost payments for
diagnostic lab tests in Sole Community Hospitals.
Sec. 107. Critical Access Hospital improvements: (a)
Reinstatement of periodic interim payments; (b) Condition for
application of special physician payment adjustment; (c)
Coverage of costs for certain emergency room on-call
providers; (d) Prohibition on retroactive recoupment; (e)
Increased flexibility for states with respect to certain
frontier critical access hospitals; (f) Permitting hospitals
to allocate swing beds and acute care inpatient beds subject
to a total limit of 25 beds; (g) Provisions related to
certain rural grants; (h) Coordinated survey demonstration
program.
Sec. 108. Temporary relief for certain non-teaching
hospital for FY03 through FY05 (same as House-passed
provision).
Sec. 109. Physician work Geographic Practice Cost Index at
1.0 for CY03 through CY05, holding harmless those areas with
work GPCIs over 1.0.
Sec. 110. Make existing Medicare Incentive Payment 10%
bonus payments on claims by physicians serving patients in
rural Health Professional Shortage Areas automatic, rather
than requiring special coding on such claims.
Sec. 111. GAP study on geographic differences in physician
payments.
Sec. 112. Extension of 10% rural add-on for home health
through FY04.
Sec. 113. 10% add-on for frontier hospice for CY03 through
CY07.
Sec. 114. Exclude services provided by Rural Health Clinic-
based practitioners from Skilled Nursing Facility
consolidated billing.
Sec. 115. Rural Hospital Capital Loan Authorization.
Title II--Provisions Relating to Part A
(Approx. $9.0 billion over 10 years)
Subtitle A--Inpatient Hospital Services
Sec. 201. FY03 inflation adjustment of market basket minus
-0.25% for PPS hospitals; full market basket for Sole
Community Hospitals.
Sec. 202. Update hospital market basket weights more
frequently.
Sec. 203. IME Adjustment: 6.5% in FY03, 6.5% in FY04, 6.0%
in FY05.
Sec. 204. Puerto Rico: 75%-25% Federal-Puerto Rico blend
beginning in FY 03.
Sec. 205. Geriatric GME programs: certain geriatric
residents do not count against caps.
Sec. 206. DSH increase for Pickle hospitals from 35% to
40%.
Subtitle B--Skilled Nursing Facility Services
Sec. 211. Increase to nursing component of RUGs: 15% in
FY03, 13% in FY04, 11% in FY05; increase in payment for AIDS
patients cared for by SNFs; GAO study.
Sec. 212. Require collection of staffing data; require
staffing measure in CMS quality initiative.
Subtitle C--Hospice
Sec. 221. Allow payment for hospice consultation services
based on fee schedule set by Secretary; remove one-time limit
set by House.
Sec. 222. Authorize use of arrangements with other hospice
programs.
Title III--Provisions Relating to Part B
(Approx. $10.0 billion over 10 years)
Subtitle A--Physicians' Services
Sec. 301. Physician payment increase (same as House-passed
version); GAO study; MedPAC report.
Sec. 302. Extension of treatment of certain physician
pathology services through FY05.
Subtitle B--Other Services
Sec. 311. Competitive bidding for DME: begin national
phase-in CY03 for MSAs with over 500,000 people.
Sec. 312. 2-year extension of moratorium on therapy caps.
Sec. 313. Acceleration of reduction of beneficiary
copayment for hospital outpatient department services.
Sec. 314. End-Stage Renal Disease: Increase composite rate
to 1.2% in CY03 and CY04; composite rate exceptions for
pediatric facilities.
Sec. 315. Improved payment for certain mammography
services.
Sec. 316. Waiver of Part B late enrollment penalty for
certain military retirees and special enrollment period.
Sec. 317. Coverage of cholesterol and blood lipid
screening.
Sec. 318. 5% payment increase for rural ground ambulance
service, 2% increase for urban ground ambulance services.
Sec. 319. Medical necessity criteria for air ambulance
services under ambulance fee schedule.
Sec. 320. Improved payment for thin prep pap tests.
Sec. 321. Coverage of immunsuppressive drugs.
Sec. 322. Geriatric care assessment demonstration program.

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Sec. 323. CMS study and recommendations to Congress on
revisions to outpatient payment methodology for drugs,
devices and biologicals.
Title IV--Provisions Relating to Parts A and B
(Approx. $0.0 billion over 10 years)
Subtitle A--Home Health Services
Sec. 401. Eliminate 15% reduction in payments for home
health services.
Sec. 402. Reduce inflation updates in FY03 through FY05;
full market basket increases thereafter.
Subtitle B--Other Provisions
Sec. 411. Information technology demonstration project.
Sec. 412. Modifications to the Medicare Payment Advisory
Commission.
Sec. 413. Requires CMS to maintain a carrier medical
director and carrier advisory committee in every state to
ensure access to the local coverage process.
Title V--Medicare+Choice and Related Provisions
(Approx. $2.3 billion over 10 years, including M+C
interactions)
Sec. 501. Increase minimum updates to 4% in CY03 and 3% in
CY04.
Sec. 502. Clarify Secretary's authority to disapprove
certain cost-sharing
Sec. 503. Extend cost contracts for 5 years.
Sec. 504. Extend the Social HMO Demonstration through 2006.
Sec. 505. Extend specialized plans for special needs
beneficiaries for 5 years (Evercare).
Sec. 506. Extend 1% entry bonus for M+C for 2 years; bonus
does not apply for private fee-for-service or demonstration
plans.
Sec. 507. PACE technical fix regarding services furnished
by non-contract providers.
Sec. 508. Reference to implementation of certain M+C
provisions in 2003.
Title VI--Medicare Appeals, Regulator, and Contracting
Improvements
(Approx. $0.0 billion over 10 years)
Subtitle A--Regulatory Reform
Sec. 601. Require status report on interim final rules;
limit effectiveness of interim final rules to 12 months with
one extension permitted under certain circumstances.
Sec. 602. Requires only prospective compliance with
regulation changes.
Sec. 603. Secretary report on legal and regulatory
inconsistencies in Medicare.
Subtitle B--Appeals Process Reform
Sec. 611. Requires Secretary to submit detailed plan for
transfer of responsibility for medicare appeals from SSA to
HHS; GAO evaluation of plan.
Sec. 612. Allows expedited access to judicial review for
Medicare appeals involving legal issues that the DAB does not
have the authority to decide.
Sec. 613. Allows expedited appeals for certain provider
agreement determinations, including terminations.
Sec. 614. Tightens eligibility requirements for QICs and
reviewers; ensures notice and improved explanation on
determination and redetermination decisions; delays
implementation of Section 521 of BIPA for 14 months, but
continues implementation of expedited redeterminations;
expands CMS discretion on the number of QICs.
Sec. 615. Creates hearing rights in cases of denial or
nonrenewal of enrollment agreements; requires consultation
before CMS changes provider enrollment forms.
Sec. 616. Permits provider to appeal determinations
relating to services rendered to an individual who
subsequently dies if there is no other party available to
appeal.
Sec. 617. Permits providers to seek appeal of local
coverage decisions and to request development of local
coverage decisions under certain circumstances.
Subtitle C--Contracting Reform
Sec. 621. Authorizes Medicare contractor reform beginning
in October 2004.
Subtitle D--Education and Outreach Improvements
Sec. 631. New education and technical assistance
requirements.
Sec. 632. Requires CMS and contractors to provide written
responses to health care providers' and beneficiaries'
questions with 45 days.
Sec. 633. Suspends penalties and interest payments for
providers that have followed incorrect guidance.
Sec. 634. Creates new ombudsmen offices for health care
providers and beneficiaries.
Sec. 635. Authorizes beneficiary outreach demonstration.
Subtitle E--Review, Recovery, and Enforcement Reform
Sec. 641. Requires CMS to establish standards for random
prepayment audits.
Sec. 642. Requires CMS to enter into overpayment repayment
plans. Prevents CMS from recovering overpayments until the
second level of appeal is exhausted.
Sec. 643. Establishes a process for the correction of
incomplete or missing data without pursuing the appeals
process.
Sec. 644. Expands the current waiver of program exclusions
in cases where the provider is a sole community physician or
sole source of essential health care.
Title VII--Medicaid-SCHIP
(Approx. $10.8 billion over 10 years)
Sec. 701. Extend Medicaid disproportionate share hospital
(DSH) inflation updates (for 2001 and 2002) to 2003, 2004 and
2005 allotments; update District of Columbia DSH allotment.
Sec. 702. Raise cap from 1% to 3% for states classified as
low Medicaid DSH in FY03 through FY05.
Sec. 703. Five year extension of QI-1 Program.
Sec. 704. Enable public safety net hospitals to access
discount drug pricing for inpatient drugs.
Sec. 705. CHIP Redistribution: give states an additional
year to spend expiring funds that would otherwise return to
the Treasury; continue BIPA arrangement for SCHIP
redistribution; establish caseload stabilization pool
beginning in FY04; allow certain states to use a portion of
unspent SCHIP funds to cover specified Medicaid
beneficiaries; GAO study to evaluate program implementation
and funding.
Sec. 706. Improvements to Section 1115 waiver process for
Medicaid and State Children's Health Insurance Program
(SCHIP) waiver.
Sec. 707. Increase the federal medical assistance
percentage in Medicaid (FMAP) by 1.3% for 12 months for all
states; ``hold harmless'' states scheduled to have a lower
FMAP in FY03; $1 billion increase in Social Services Block
Grant for FY03.
Title VIII--Other Provisions
(Approx. $0.9 billion over 10 years)
Sec. 801. Extend funding for Special Diabetes Programs for
FY04, FY05, and FY06 at $150 million per program per year.
Sec. 802. Disregard of certain payments under the Emergency
Supplemental Act, 2000 in the administration of Federal
programs and federally assisted programs.
Sec. 803. Create Safety Net Organizations and Patient
Advisory Commission.
Sec. 804. Guidance on prohibitions against discrimination
by national origin.
Sec. 805. Extend grants to hospitals for EMTALA treatment
of undocumented aliens.
Sec. 806. Extend Medicare Municipal Health Services
Demonstration for 1 year.
Sec. 807. Provides for delayed implementation of certain
provisions.

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