December/January 2001

Legislative Watch

By George G. Olsen, JD

So Close Yet So Far Away

The fervor surrounding the presidential election is keeping Medicare "giveback" legislation stuck with an uncertain future.

If there was one sure bet in the second session of the 106th Congress, it was that the House and Senate would pass and the President would sign legislation restoring some of the Medicare funding cut by the Balanced Budget Act of 1997. Indeed, as Congress moved toward adjournment sine die, Congressional negotiators reached agreement on a package of "Medicare givebacks" entitled the Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Benefits Improvement and Protection Act of 2000 (BIPA). This legislation was combined with a proposal to increase the minimum wage and a tax relief measure and added to the conference report on the Small Business Reauthorization Act of 2000. The conference report was passed by the House on October 26. Then the music died.

As the conference report was being considered by the House, President Clinton threatened to veto the legislation on the grounds, among others, that the "Medicare givebacks" bill provided too much money for Medicare+Choice plans and that the tax relief provisions were excessive. The House, along largely party lines, ignored the veto threat and adopted the conference report. Thereafter, the legislation became more deeply entangled in end of the session, election year politics, stalling consideration by the Senate. Faced with the need to recess for the elections, Congress resigned itself to a lame duck session and passed a continuing resolution ensuring that the government would have funding to continue operating until November 14. Congress anticipated that it would return after the elections, and pass the remaining appropriations bills as well as the Medicare legislation.

The best-laid plans of Congress have, as of this writing, been thwarted by the confusion arising out of the presidential election. Recognizing that negotiations over the final legislative package would be fruitless while the outcome of the election was in dispute, Congress passed a continuing resolution until December 5 at which time Congress would reconvene to dispose of outstanding legislative issues, including the "Medicare givebacks" proposal. However, given the partisan acrimony that infected Congress before the elections, the uncertainty generated by the presidential contest, and the narrowing of the voting margins in both the House and Senate next year, the fate of the Medicare legislation is uncertain. What was once a very good bet is now a 50-50 proposition.

BIPA Provisions of Interest To Rehabilitation Providers

Among the numerous provisions of the BIPA are several of consequence to providers of rehabilitation services.

$1,500 caps on outpatient rehabilitation services. The legislation extends the existing moratorium on implementation of the $1,500 limitations on outpatient rehabilitation services for an additional year. Pursuant to this provision, the moratorium will be in place through calendar year 2002 and, unless there is further action by Congress, the caps will go into effect on January 1, 2003.

Study on "in the room" supervision. The bill includes a provision requiring the Secretary of HHS to conduct a study "of the implications—(A) of eliminating the 'in the room' supervision requirement for Medicare payment for services of physical therapy assistants who are supervised by physical therapists; and (B) of such requirement on the cap…on physical therapy services." This report must be submitted to Congress within 18 months of enactment of the legislation.

Provisions Concerning SNFs

The provisions in the legislation affecting skilled nursing facilities (SNFs) include: (1) elimination of the reduction in the SNF market basket update in 2001 and an update of market basket minus 0.5% in fiscal years 2002 and 2003; (2) an increase of 16.66% in the nursing component of the case-mix adjusted federal prospective payment rate; (3) a limitation on the application of the SNF consolidated billing requirement to Part A covered stays; and (4) a 6.7% increase in the adjusted federal per diem rate for covered SNF services for resource utlization group (RUG)-III rehabilitation groups furnished to an individual during the period in which that person is classified in a RUG-III category.

The proposal mandates several studies concerning SNFs. First, not later than July 1, 2002, the Government Accounting Office (GAO) must submit to Congress a report "on the adequacy of Medicare payment rates to SNFs and the extent to which Medicare contributes to the financial viability of such services." The report is required to take into account "the role of private payors, Medicaid, and case mix on the financial performance of these facilities, and shall include an analysis (by specific RUG classification) of the number and characteristics of such facilities." Another report, to be prepared by the Secretary of HHS and transmitted to Congress by January 1, 2005, is to examine "the different systems for categorizing patients in Medicare SNFs in a manner that accounts for the relative resource utilization of different patient types."

A third study, designed to accompany the consolidated billing provision, directs the HHS Office of Inspector General to "monitor payments under part B…for items and services furnished to residents of SNFs during a time in which the residents are not being provided Medicare covered post-hospitalization extended care services to ensure that there is not duplicate billing for services or excessive services provided."

In connection with the adjustment of the rehabilitation RUGs, the bill calls on the HHS Office of Inspector General to "review the Medicare payment structure for services classified within the resource utilization groups…to assess whether payment incentives exist for the delivery of inadequate care." This report is due by October 1, 2001.

George G. Olsen, JD, is a member of the firm Williams & Jensen, PC, Washington, DC, and is legal counsel for the National Association of Rehabilitation Agencies.

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