House GOP Proposal Would Increase Medicare+Choice Payments, Reduce Annual Inflation Increases for Hospitals

A draft version of an emerging House Republican Medicare reform proposal shows that Medicare+Choice plans would be the "big winners" under the legislation while hospitals would take the "biggest hit," CongressDaily/AM reports. The package also calls for a Medicare drug benefit, details of which GOP leaders unveiled yesterday (see related story). According to the draft, Medicare+Choice plans would receive a one-year increase that is equivalent to the fee-for-service payment in the county where the plan is offered. That boost would represent a 5% increase over the amount the plans received before the reimbursement system was separated from fee-for-service Medicare in the 1997 Balanced Budget Act. The plan would also push back to September the date by which Medicare+Choice plans have to decide whether to continue participation in the program the following year. For hospitals, the bill would extend for four years a policy that reduces annual inflation increases by 0.55%. The annual reduction was set to expire after fiscal year 2003. Nursing homes would receive an 8% increase in Medicare funding, replacing a temporary 16% increase. The bill would not eliminate a scheduled 15% cut for home health providers scheduled to take effect Oct. 15, "but much of that would be offset by an update in the base year on which payments are calculated," CongressDaily/AM reports. In addition, rural home health agencies would receive a 20% increase in funding and home health beneficiaries would for the first time pay a coinsurance fee, equal to 1.5% of the average national cost of their services (Rovner/Fulton, CongressDaily/AM, 5/2).

Lawmakers hope that reducing hospital reimbursements and introducing home health care copayments will allow for greater Medicare reimbursements to physicians (California Healthline, 4/29). The draft, however, did not address revising the formula for doctor reimbursements, which resulted in a 5.4% drop in payments on Jan. 1. That issue is still being worked on, according to House Ways and Means Committee Chair Bill Thomas (R-Calif.) (CongressDaily/AM, 5/2).