The Medicare, Medicaid, and SCHIP Refinement Act: Health Care Policy at the Cross Roads.
With the dust having begun to settle following the passage of a sweeping law on November 29, 1999, analysts have been mulling over the likely effect of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (226128156the Act226128157). Given the tremendous number of items in the Act, this article is only able to address some of the more important provisions. Although the Act is extremely important for the impact that it will have on virtually every sector of the Medicare market, it is also important as a window into the tensions developing within and without government as the pressures on the Medicare program become more obvious.
A. The Big Picture
The Act is remarkable for a number of reasons. In part, it collects a series of unusually specific provisions that, in essence, 226128156second-guess226128157 various Balanced Budget Act of 1997 (226128156BBA226128157) provisions and, in many cases, Clinton Administration decisions made in implementing the BBA. Typically, these provisions are 226128156temporary226128157 in effect, but ask various policy analysts (the General Accounting Office (226128156GAO226128157), the Secretary of the Department of Health and Human Services (226128156the Secretary of HHS226128157), the Agency for Healthcare Research and Quality (226128156AHRQ226128157), MedPAC, and others) to determine if more permanent or more expansive changes are necessary. The effect of this is to set the stage for as large and, perhaps, even a larger Congressional reexamination of the services at issue in the Act over the next several years.
The Act also can and does tell us a good deal about Congress226128153 appreciation for its role in affecting health care policy. The often detailed nature of the Act226128153s provisions reflects a more sophisticated view of health care policy and a deepening awareness on the part of Congress that health care reform is a difficult thing to achieve without running afoul of the law of unintended consequences. The Act also shows a stronger sensitivity to the effect of rate-setting on the quality of services, which appears to be a function of ever-growing public expectations about the services provided through the Medicare program.
Significantly, the Act reflects a careful understanding of the likely weaknesses of the prospective payment systems that Congress and the Clinton Administration have so ardently supported in the last several years. For instance, the Act acknowledges the threat to quality and innovation that can be the by-product of prospective payment systems that are too restrictive or that are built on aged data.
Some critics question, however, the manner in which Congress has reacted to these clearly important issues, wondering if the Act inappropriately equates the need to account for innovation with the interests of too narrow a set of health care interests. The Act is remarkable for its repetitive focus on pharmaceutical interests and the interests of selected patient populations.
Others have wondered if the Act226128153s repeated admonitions to the Secretary of HHS to consider the increased costs of innovative services has implicitly created a Congressional policy that an already over-burdened Medicare program will pay for those new (and, perhaps, costly) services. With baby boomers likely to reshape the expectations of Medicare beneficiaries in the years to come, some analysts are concerned about what they perceive to be the 226128156implicit messages226128157 operating within the Act.
Another striking component of the Act, which is no surprise to those who have been involved in representing clients seeking changes in health care policy, is its demand for increased data on a variety of key issues. As Congress struggles to control the costs of the Medicare program while responding to the ever-increasing cries of concern coming from provider groups, Congress has been struck by the paucity of hard data available to guide it. Similarly, Congress is critical of what it perceives to be a willingness by the Health Care Financing Administration (226128156HCFA226128157) to implement regulatory changes without what Congress believes to be adequate data.
Although some with the agency will candidly admit that some of its sweeping regulatory proposals are based on inadequate data, it insists, with some merit, that its hands have been tied. In making this argument, HCFA argues that it is laboring under burdens created by inadequate internal resources, a complicated and sometimes inconsistent agenda established by Congress, and the perceived need to 226128156act quickly226128157 before the situation with the Medicare and Medicaid trust funds becomes worse. HCFA personnel also privately have expressed frustration at what they see as the Congressional penchant for micro-management at work in the Act.
The sheer number of regulatory items created by the Act and the promise of a continuing cycle of legislative changes may create more interest among more of HCFA226128153s managers to leave public service. With some key managers and consultants having already left HCFA in the last year or so, additional departures could complicate and slow the agency226128153s work as it attempts to implement the mandated refinements.
B. Medicare Refinements
1. Hospital Outpatient Prospective Payment Changes
With hospitals across the country howling about the projected effects of the development of a hospital outpatient department prospective payment system (226128156HOPD PPS226128157), the Act requires a series of important changes to the BBA226128153s hospital outpatient mandates and HCFA226128153s regulatory proposal to implement those mandates. The sweep of the changes represent a rather stinging criticism of HCFA226128153s proposal. At one point, the Conference Report states that 226128156HCFA226128153s plans for implementing [the PPS]... raise many concerns.226128157 According to the Conference Report, HCFA226128153s proposal (1) it fails to provide reimbursement for high cost care, (2) does not adequately provide for medical devices, drugs, and biologics, and (3) did not provide for annual adjustments to account for changes in technology and clinical practice.
In an effort to respond to criticism of the HOPD PPS that it would fail to adequately reimburse 226128156high cost226128157 services, Congress adopted an 226128156outlier226128157 payment approach. A pool of funds will be set aside for these 226128156high cost226128157 services in an amount not to exceed 2.5 percent of program payments for three years and 3.0 percent thereafter. Because these payments must be budget-neutral, they will necessarily decrease payments made to all non-226128157outlier226128157 services.
In a nod to pharmaceutical interests, the medical device industry, and the cancer lobby, the Act creates another pool for 226128156innovative226128157 medical devices, cancer therapy drugs and biologics, orphan drugs, and certain 226128156new226128157 drugs. The pool will be set at a maximum of 2.5 percent for the years through 2004 and 2.0 percent thereafter. Defenders of this provision argue that it is necessary to prevent the HOPD PPS from effectively killing the development of new services and products. In a further effort to respond to the concern of cancer patients, the Conference Report announced an additional item, a transitional pass-through of costs associated with radiopharmaceuticals.
The outlier and transitional adjustment pools will create a major implementation headache for HCFA. Because of the pool caps, HCFA will have to proportionately reduce the add-ons that would otherwise be made to each qualifying service in the amount that the pools are 226128156expected226128157 to otherwise exceed the caps.
In perhaps the most important hospital outpatient change contained in the Act, Congress also created a transitional corridor, which effectively creates stop-loss protection during the implementation of the PPS. For a three year period, hospitals will receive what could be called a blended rate of PPS and pre-BBA payments that vary depending on how a given institution226128153s PPS rates compare to its pre-BBA provisions. Additional provisions guarantee rural hospitals with not more than 100 beds 100 percent of their pre-BBA payments through 2004. Cancer hospitals will receive the same hold harmless protection, but on a permanent basis. The HCFA proposal had been sharply criticized for not providing special treatment for these providers even though HCFA226128153s own projections appeared to show dramatic cuts for these institutions. MedPAC is to evaluate, within two years, the advisability of including cancer and rural hospitals in the PPS.
The Act also criticizes the HCFA proposal for placing widely disparate services in the same ambulatory patient classifications (226128156APCs226128157), despite significantly different costs. In an effort to force HCFA to reevaluate the APCs, the Act will prevent HCFA from placing any service in an APC whose median costs are more than twice any other service in the APC. In a response to industry criticism that the use of median, instead of mean, costs in setting the HOPD rates unfairly took funds away from outpatient providers, the Act gives HCFA the 226128156option226128157 of using mean costs.
In yet another important provision that will add to HCFA226128153s agenda for the foreseeable future, the Act requires annual reevaluations of the PPS. Citing potential access implications if HCFA does not take this step, the Conference Report also 226128156expect[s]226128157 HCFA to 226128156carefully analyze226128157 the proposed treatment of blood, blood products, and recombinant therapies.
The changes to HCFA226128153s proposed HOPD PPS are so great that some analysts are wondering, not if these changes will further delay implementation of the HOPD PPS, but how long that delay will be. Congress, for its part, however, states in the Conference Report that it 226128156fully expects226128157 that the PPS will be implemented in a timely manner, particularly with respect to the co-payment components of the PPS.
2. ASC APC Phase-in
Congress also acted to respond to growing criticism of HCFA226128153s pending proposal to alter the Medicare ASC rates. If HCFA decides not to revise the pending ASC proposed rates using 1999 cost survey data, the Act requires HCFA to phase in the revised ASC rates over a three year period. First year rates will be determined by using the new payment rates for not more than one-third of the total payment. Second year rates may not use more than two-thirds of the revised payments in calculating a total payment. The new rates may provide the total payment in year three. The most recent information from HCFA suggests that it is planning to move forward with the phase-in as required since data from the 1999 survey will not be available in time.
HCFA appears determined to push forward with the new rates, believing that the use of the 1999 survey data would prevent the introduction of revised rates for three years. HCFA also seems to be intent on attempting to have the new payment rates, with the phase-in required by the Act, implemented by July of this year. Industry analysts are frankly skeptical that HCFA can accomplish this.
3. Physician Services
Physician groups have long decried how the sustainable growth index (226128156SGR226128157) has artificially and unfairly cut payments to physicians based on faulty projections of medical inflation and other factors. The Act attempts to limit the 226128156oscillations226128157 that the SGR has created in the available pool of money to fund physician fee schedule services under the Medicare program beginning in 2001. The Act requires early publication of SGR calculations and MedPAC commentary on the proposed calculation.
The Act also calls for an AHRQ study of utilization of physician services under the fee-for-service program. The Medicare program has assumed that it needs to employ 226128156behavioral offsets226128157 to compensate for supposed practitioner attempts to increase services to 226128156offset226128157 SGR and other reimbursement reductions. The study is an attempt to move beyond using what are largely a set of untested assumptions in this critical area.
In an effort to ensure fairness to small specialty groups in the setting of practice expense relative value units, the Act requires the Secretary to issue a regulation setting out acceptable data collection standards. Information supplied by specialty societies and other interested parties must be accepted for use to the maximum extent practicable that is consistent with sound data practices. The Secretary is required to report to Congress on the process used and the extent it uses or fails to use data submitted. This provision both reflects Congress226128153 growing impatience with the lack of available data and its creation of mechanisms that will inevitably call upon it to revisit issues addressed in the Act.
4. Non-Practitioner Provisions
Reflecting greater Congressional and public interest in quality issues as the Medicare program moves more and more to a series of prospective payment systems, several provisions in the law focus attention on non-physician practitioner credentialing, certification, and licensure issues. Interestingly, however, these related issues were assigned to different agencies for review or consideration, a fact that could produce mixed results and conflicting policy initiatives.
The Secretary of HHS, for instance, was given a year to report on 226128156licensure and certification standards for workers providing respiratory therapy in SNFs.226128157 The Act also asks MedPAC to submit a study of Medicare payment policy with respect to professional clinical training of non-physician health care professionals, including nurses, nurse practitioners, allied health professionals, physician assistants, and psychologists.
A highly controversial and hotly contested measure in the Act, which reflects the pitched battle being waged between some anesthesiologist and certified registered nurse anesthetist groups, requires the Secretary of HHS to conduct a study regarding physician supervision of anesthesia services, if the Secretary determines that there is insufficient current scientific data comparing mortality and adverse incomes in Medicare anesthesia services. The Secretary is authorized to make appropriate regulatory changes to ensure quality of care, when she has sufficient data.
5. Host of SNF Refinements
The Act contains so many SNF 226128156refinements226128157 that some observers believe that the term 226128156refinement226128157 is misleading. One section of the Act, which was based primarily on the Senate report, provides temporary increased payments to skilled nursing facilities (226128156SNFs226128157) for services furnished on or after April 1, 2000 until the latter of October 1, 2000 or the date that HCFA implements a new refined RUG system. The payments are to increase by 20 percent for 15 specified RUGs falling within the Extensive Services, Special Care, Clinically Complex, High Rehabilitation, and Medium Rehabilitation categories. The law also calls for an increase of 4 percent to the federal per diem rates for both fiscal year 2000 and 2001, although these increases are to be determined without considering the special 20 percent increases. Interestingly, neither the House bill nor the Senate reported version called for increases to the Rehabilitation categories. The Senate version had called for 25 percent increases, but those increases were reduced to 20 percent to provide funding for the additional Rehabilitation areas.
In a somewhat odd provision, given the intent of the package to target situations where providers were deemed to not be able to provide services under new and revised payment system, the law permits SNFs whose facility rates are lower than the federal rates to elect the higher federal rates for cost reporting periods beginning on or after January 1, 2000, with SNFs having an opportunity to elect 226128156immediate transition226128157 up to 30 days after the start of an affected cost report period.
The law also provides for exclusions of certain services from the RUGs. Excluded items are certain 226128156high cost, low profitability226128157 items. These include (certain chemotherapy drugs not traditionally provided by SNFs that are exceptionally expensive, or that involve infusions requiring special expertise to administer, as well as ambulance services for End Stage Renal Disease patients. Significantly, the Conference Report states that Congress 226128156expects [HCFA] to use [its] authority to review periodically and modify, as needed, the list of excluded services and items,226128157 indicating that subsequent additional legislative action is possible if HCFA does not act. Congress also requested a report on the excluded items by July 1, 2000.
In a statement laden with potential meaning for subsequent legislative efforts, the Conference Report also stated that, although Congress was aware of HCFA226128153s efforts to base the SNF rates on updated 1992 cost data, it expects HCFA to reexamine the 226128156updating226128157 issue. In a nod to concerns that the RUG system will, like other prospective payment systems, stifle innovation and new technologies, the Conference Report specifically reminds HCFA that 226128156[i]nnovative medical research techniques, combined with significant technological advances, have led to the development of numerous new medications over the past seven years.226128157 Congress also states that it 226128156expects226128157 HCFA to continue to ensure that 226128156these types of changes are reflected226128157 in the rate-setting methodology.
Yet another rate-setting methodology is created for certain SNFs who serve a disproportionately high number of patients with infectious diseases. The temporary rate measure applies, rather inexplicably, only to certain facilities certified for Medicare services 226128156before July 1, 1992.226128157 Qualifying facilities must have served patients who were immuno-compromised secondary to an infectious disease. The treatment of such patients has to account for 226128156more than 60 percent226128157 of a qualifying facility226128153s total patient days in 1998. The special payment rate is a per diem based fifty percent on the facility-specific rate and fifty percent on the federal rate for hospital-based SNFs. Although only temporarily available for the first cost reporting period starting after the enactment of the law through the end of September 30, 2001, the law also requires the Secretary of HHS to 226128156assess and report226128157 within one year and recommend whether 226128156permanent adjustments226128157 should be made.
6. Therapy Cap Changes
The BBA implemented two annual caps on Medicare payments for outpatient therapy services rendered by non-hospital providers. The first cap limited annual per beneficiary Medicare payments for speech language pathology services and physical therapy to $1,500. Similarly, an annual $1500 per beneficiary cap on occupational therapy services was established. Because the BBA provisions had a tremendously negative effect on the delivery of therapy services, the Act places a two year moratorium on the caps for services provided during 2000 and 2001.
In addition, the legislation requires the Secretary of HHS to compare outpatient therapy utilization patterns in 2000 to those of 1998 and 1999 and to conduct focused medical reviews of therapy claims during these two years with particular emphasis on services provided to residents of skilled nursing facilities and to recommend an alternative payment system for outpatient therapy services which takes into account beneficiaries226128153 diagnosis and functional status. The Act also clarifies that, for the purpose of reimbursement for occupational therapy services, a beneficiary may be under the care of an optometrist as well as a medical doctor, osteopath, or podiatrist.
7. Medical Education Changes
In the wake of a relentless attack on the effect of BBA changes to teaching hospital226128153s medical education reimbursements, teaching hospitals also successfully argued for some changes to existing law in the Act.
The Act provides, for instance, some relief from BBA provisions implementing a gradual reduction of indirect medical education payments and a cap on the number of residents for which a graduate medical education program will receive Medicare funding. With respect to Direct Graduate Medical Education, the Act attempts to adjust for differences in costs related to physician training across locations by establishing a payment methodology for resident services based upon a national average per resident payment amount adjusted for geographic wage differences. Beginning in fiscal 2001, each hospital226128153s per resident amount would be benchmarked against standardized upper and lower national averages using resident amount thresholds (modified by the geographic adjustment factor). Institutions with per resident amounts below 70 percent of the adjusted national average would have their per resident payments increased to the 70 percent floor, and payments to hospitals with per resident amounts greater than 140 percent of the average would be frozen for two years, with CPI updates minus 2 percent during the following three years. According to the Conference report, hospitals with per resident amounts within the 70 and 140 percent boundaries will 226128156continue to be paid portions of their per resident amounts and would receive updates for inflation.226128157
Congress has also extended the time line for the planned indirect medical education cuts. Under the BBA, IME payments were to be set at 6.5 percent for each 10 percent increase in a hospital226128153s ratio of interns and residents to beds for fiscal year 1999, with the percentage to fall to 6.0 percent in fiscal 2000 and 5.5 percent in fiscal 2001 and thereafter. Under the Act, the reimbursement will be 6.5 percent through fiscal 2000, 6.25 percent in fiscal 2001, and 5.5 percent in fiscal 2002 and thereafter.
In addition, the Act stipulates that, on or after July 1, 2000, the period of board eligibility and initial residency for individuals enrolled in pediatric neurology residency programs will be equal to the period of board eligibility for pediatrics plus two years. MedPAC is charged with including in its 2001 report to Congress recommendations regarding the appropriateness of initial residency periods for other combined residency training programs.
Graduate medical education in rural areas received unique support as part of a larger package of BBA relief for rural health providers. In enacting the BBA Congress expected the resident ceilings to limit the growth of new or expanded residency programs. Recognizing the adverse impact the caps may have on the number of available rural health providers, Congress expected the Secretary to give special consideration to rural and frontier residency programs in implementing GME regulations. Based on criticism that the final rule did not provide rural residency programs with any specific protections, the Act attempts to promote residency opportunities in rural areas by allowing hospitals to include up to three additional full-time equivalents within its count of primary care residents base year limit if such residents are on an approved leave of absence, permitting urban hospitals with accredited rural medicine training programs to receive direct and indirect medical education payment for cost reporting periods beginning on or after April 1, 2000, and authorizing certain previously uncounted residency slots in the Veteran226128153s Hospital system to be included in the residency limits established under the BBA.
8. Rural Provider Provisions
As noted above, the Act contains a separate set of provisions relating to rural providers. This component of the Act is a clear reflection the growing focus on rural health care issues in federal health care policy, a fact attributable, at least in part, to the rural interests of many of the members of the Senate Finance Committee. The consequence of this increase focus for providers of rural health, particularly rural hospitals, was significant relief from some BBA burdens.
Some of the most important BBA reforms to Medicare beneficiaries in rural and frontier America are the improvements in the Critical Access Hospital (226128156CAH226128157) Program. Under the BBA, in order for a small, rural, limited service hospital to be classified as a CAH it must be geographically remote, a rural nonprofit or public hospital certified by the state as a necessary provider, and provide lengths of stays of no more than 96 hours with some specific exceptions.
The Act amends the BBA and adds new modifications to strengthen and broaden the CAH program. Significantly, the Act applies the 96 hour limit on hospital stays as an annual average, rather than a strict 96 hour per patient limit; expands the program to for-profit entities and hospitals that closed within ten years of the enactment of the Act or downsized to a clinic to obtain CAH status; authorizes CAHs outpatient departments to be reimbursed facility fees on a cost basis and more than the physician fee schedule for professional services; eliminates beneficiary co-payments for clinical diagnostic laboratory tests furnished in CAH outpatient departments; and grants CAH participation in the skilled nursing facility swing bed program.
Other changes made to the BBA include extending the Medicare Dependent Hospital Program for an additional five years, rebasing for Sole Community Hospitals on the basis of their 1996 fiscal year costs and granting them a market basket update for one-year, and making grants of up to $50,000 available to rural hospitals with less than fifty beds to offset the administrative costs of moving to the prospective payment system.
In keeping with the Act226128153s tremendous emphasis on studies and reports, the Act also commissions a GAO report on geographic reclassifications. A further MedPAC study of rural providers is designed to access Medicare payments and how they affect patient access and quality of care.
9. DSH Changes
Responding to the increase in the number of uninsured Americans in need of medical care and the angry protests of disproportionate share hospitals who serve that population, the Act also eases, somewhat, the BBA226128153s planned cuts in disproportionate share hospital support. The BBA provided for cuts in the DSH formula of one percent per year for the fiscal years 1998 through 2002, in which year the cut would have reached five percent. The Act adds a percentage point back into the DSH formula for fiscal 2001 and 2002.
Decried by many DSH institutions as too little and too late in the face of expected disproportionate outpatient hospital service cuts stemming from the planned roll-out of the HOPD PPS, the Act is significant for its adoption of a new methodology for DSH calculations. Where, under prior law, DSH payments were based solely on care provided to Medicaid patients and Medicare patients who also qualify for Supplemental Security Income assistance, the Act will tie DSH payments to 226128156inpatient and outpatient costs associated with services provided to low-income patients, defined broadly to include all care to the poor,226128157 as previously recommended by MedPAC.
10. More Prospective Payment Systems
In a move that some Congress watchers found to be a bit ironic, Congress pushed forward with several prospective payment systems in the Act, even though much of the Act was designed to deal with problems created by other prospective payment systems.
The Act, for instance, requires the Secretary of HHS to report to Congress by October 1, 2001 on a 226128156per diem-based226128157 PPS for psychiatric hospitals with an 226128156adequate226128157 patient classification system. The proposal must be budget neutral and apply to distinct-part units. Implementation is supposed to occur for cost report periods beginning on or after October 1, 2002.
In another move reflecting increased sensitivity to the impact on rural areas of federal policy changes, the psychiatric hospital PPS provision asks MedPAC to evaluate the PPS system and to specifically address its effect on the ability of rural providers to provide behavioral health services.
Essentially giving the Secretary of HHS an additional year on the BBA-imposed deadline to 226128156develop a legislative proposal for a PPS for long-term care,226128157 the Act requires a report by October 1, 2001, with instructions that the proposal must be 226128156discharge-based226128157 and 226128156budget-neutral.226128157 The planned implementation date is October 1, 2002. Some have speculated that the expanded time line may be a tacit nod by Congress to HCFA complaints of inadequate time and an opportunity to collect data in collection with other PPS systems. In a departure from prior practice and a step that is reflective of Congress226128153 increased concern about issues affecting quality, the Conference Report specifically requests the Secretary of HHS to 226128156measure the quality of outcomes.226128157
11. PPS Exempt Facilities
PPS exempt facilities were also affected by the Act. For TEFRA facilities, the Act adjusts the labor-related portions of the 75 percent cap in an effort to 226128156reflect wage-related costs226128157 that vary from area to area. Bonus payments were increased for eligible long-term care and psychiatric providers from 1 percent to 1.5 percent, for cost report periods beginning after September 30, 2001, and two percent, for cost report periods beginning after October 1, 2001 and before September 30, 2002.
12. Hospice Changes
In one of the relatively few provisions that is attributable to the Senate report, the Act provides for a 0.5 percent increase in the hospice payment update for fiscal year 2001 and 0.75 percent for fiscal 2002. In a reflection of Congress226128153 appetite for hard data, another provision of the Act also requires the GAO to conduct a study of the need for further hospice rate updates, with the report to be due in one year226128153s time.
13. Home Care
The Act brings some relief to providers of home health care services. Among other things, the Act (1) delays the fifteen percent cut in Medicare payments to home health agencies (226128156HHAs226128157) scheduled for October 1, 2000 until one year after the implementation of the home health prospective payment system, (2) requires the Secretary of HHS to a report to Congress within six months after the implementation of the PPS whether the fifteen percent or any other reduction in reimbursement rates is necessary, (3) provides for an interim administrative payment to HHAs of ten dollars per beneficiary to offset the costs of collecting OASIS data during 2000, (4) increases the per beneficiary limit two percent under the interim payment system for HHAs below the national median payment level for cost reporting periods beginning or after fiscal year 2000, (5) eliminates the BBA requirement that HHA226128153s bill durable medical equipment, including oxygen and oxygen supplies, under consolidated billing, and (6) relaxes HHA226128153s surety bond requirements. Specifically, HHAs will be mandated only to provide a surety bond for four years (unless there is a change in ownership) in the amount of the lesser of $50,000 or ten percent of the aggregate Medicare and Medicaid payments received by the HHA for that year. In addition, HHAs only need to post one surety bond to satisfy both Medicare and Medicaid requirements.
14. Update in Renal Dialysis Composite Rate
The Act calls for an increase in the composite rate of 1.2 percent in fiscal 2000 and 2001. The provision also calls for a MedPAC study on home dialysis services.
15. Inherent Reasonableness Restrictions
Reacting to HCFA226128153s controversial January 7, 1998 interim final rule-making on its power to restrict reimbursements through the exercise of inherent reasonableness, the Act flatly prohibits HCFA from any further exercise of this authority until such time as the GAO releases a report on HCFA226128153s 226128156recent use226128157 of this authority and the Secretary has issued a final rule-making. In another indication of the primacy of data related concerns in the eyes of Congress, the Act requires the Secretary to base its final rule on 226128156valid and reliable226128157 data. The Act also requires the Secretary to 226128156reevaluate226128157 the interim rule.
16. Pap Smears and Certain Cancer Provisions
In a testament to the growing importance of women226128153s health and cancer issues, as well as the Act226128153s approach, at times, to engage in unusually detailed policy-making, the Act sets a minimum payment for the technical component of a Pap smear at $14.60 and includes a 226128156Sense of Congress226128157 that HCFA should institute appropriate increases for new cervical cancer screening technologies approved by the Food and Drug Administration.
17. Medicare+Choice Refinements
The Act makes a series of important changes to the Medicare+Choice program. Responding to managed care226128153s withdrawals and dire predictions for the future of managed care under existing payment methodologies, the Act alters HCFA226128153s proposed phase-in of a risk-adjusted payment mechanism, telescoping the phase-in to end by 2002. In a rebuke to HCFA226128153s proposed regulations, Congress declared in the Conference Report that it was not its intention that the BBA mandated implementation of a risk adjuster should 226128156reduce aggregate Medicare+Choice payments,226128157 leading Congress to urge HCFA to revise its proposed regulations. As part of its effort to induce M+C plans to enter areas that currently have no plans, the Act provides for 226128156bonus payments226128157 in the amount of 5 percent in year one and 3 percent in year two following a plan226128153s entry into the previously unserved area. Reacting to anger among plans that the BBA 226128156blended226128157 rates have effectively not been funded, the Act calls for a 0.2 percent growth increase in 2002. Congress took these positions despite the angry objections of the Clinton Administration, which agreed to the Act only after stressing its adamant objection to this portion of the law.
In addition to changes meant to ameliorate some of the problems caused by Medicare+Choice plan withdrawals, the Act, interestingly, actually reduces the current restrictions on reentry into the M+C program in a given area where a plan has previously withdrawn from the program in that same area. It also extends cost-based Medicare managed care contracting authority until the end of 2002.
The Act further requires the Secretary of HHS to study whether fee-for-service providers should be required to comply with quality standards and reporting requirements like those that M+C plans are required to meet. Building on a Congressional policy of 226128156opening up226128157 the government to the public, the Act requires the Secretary of HHS to publish adjusted annual per capita cost data. The Act also delays the implementation of the M+C competitive bidding demonstration project until at least January 1, 2002.
18. GAO Oversight of DOJ Use of Civil False Claims Act
The Act also sends a strong signal that the significant efforts by health care providers to have Congress contain the Department of Justice226128153s (226128152DOJ226128157) unyielding use of the Civil False Claims Act (226128156FCA226128157) in health care matters is producing some result. Section 229 requires continued oversight by the Government Accounting Office of DOJ226128153s use of its guidelines (226128156Guidance on the Use of the False Claims Act in Civil Health Care Matters226128157) regarding the Justice Department226128153s application of the FCA in health care investigations. GAO is mandated to submit an annual report for the next three years regarding DOJ226128153s compliance with the guidance provisions.
C. Medicaid Provisions
Although not nearly as comprehensive as the Medicare provisions, there are some relatively important Medicaid provisions contained in the Act. The Act imposes a two year moratorium on the sunset of the cost-based reimbursement system addressed in the BBA for federally-qualified health centers and rural health clinics. The Act also provides for a GAO study of this issue. The law further provides additional funds to the States for making Medicaid eligibility determinations. The Act raises the ceiling on the federal share of DSH payments for the District of Columbia, Minnesota, New Mexico, and Wyoming. Federal funds are made available to fund 75 percent of 226128156peer review organization-like226128157 entities that conduct fee-for-service Medicaid utilization reviews. The Act also extends indefinitely the pre-existing increases for hospital-specific disproportionate share payments for the State of California.
D. State Children226128153s Health Insurance Program (226128156SCHIP226128157)
Finally, the Act includes several provisions to stabilize allotments under the State Children226128153s Health Insurance Program and improve data collection regarding the use of SCHIP funds and the number of children benefitting from the program.
States are permitted to spend their Title XXI allocations through Medicaid, a SCHIP, or both. Under the BBA, States and the District of Columbia are allotted funds for SCHIP for fiscal years 1998 through 2000 using a distribution formula based on the product of the three-year average of uninsured children in a state living below 200 percent of poverty adjusted to account for differing costs of health care services across the states. Thereafter, the number of eligible children will include a combination of low-income children with or without insurance. The Act amends the BBA, to accelerate the inclusion of low-income children in the state allotment calculation. In addition, the legislation changes the dataset used to determine the number of children eligible for SCHIP assistance and implements a new method for establishing floors and ceilings on allotments for fiscal year 2000 and thereafter as well as requires increased SCHIP allotments for territories through 2007.
* * *
With implications in both the near and the long-term, the Act is likely to set the stage for several years worth of additional legislative and regulatory developments in almost every facet of the Medicare program. It will be interesting to see what the new year holds.