On March 30, 2000, the Trustees of the Medicare Hospital Insurance ("Part A") Trust Fund projected that the fund will remain solvent until 2023, eight years longer than projected last year and 15 years longer than projected after the enactment of the Balanced Budget Act (BBA) of 1997. President Clinton, Health and Human Services Secretary Donna Shalala, and the Medicare Trustees attributed the Trust Fund's health to several factors, including Medicare payment reductions and other reforms contained in the BBA; more aggressive Federal efforts to wring fraud and abuse out of the Medicare program; and a low unemployment rate, which has increased payroll tax revenues. The Trustees' report confirms that the BBA reduced Medicare spending to providers far more than Congress and the President intended at the time. The Trustees' report is welcome. It argues forcefully for fixing the Medicare cuts in the BBA that went too far and are causing providers to cut back on critical services and personnel that are vital to the care of Medicare beneficiaries. GNYHA will continue to advocate forcefully to amend several of the BBA's provisions, including the proposal by the American Hospital Association to repeal further cuts in inflation updates for inpatient hospital services, GNYHA's proposal to repeal further cuts to teaching hospitals through reductions in the indirect medical education adjustment, and targeted improvements to the prospective payment system for skilled nursing facilities and home health agencies.

President's Plan: Despite the good news, President Clinton continues to call for Medicare reforms. On March 20, 2000, he formally submitted to Congress his Medicare Modernization Act of 2000, which contains the Medicare reform proposals announced last June, which the President now estimates would extend Trust Fund solvency "beyond 2030." In addition to the proposed Medicare prescription drug benefit and a significant transfer of surplus funds into the Part A Trust Fund, the Act contains provisions designed to reduce Medicare spending through price negotiation and competition. Included are proposals to subject Medicare+Choice premiums to a competitive bidding process; to create a new "Preferred Participants" program, similar to a preferred provider option; to expand the Centers of Excellence program, under which health care providers would provide bundled items and services related to specified surgical procedures for an all-inclusive, negotiated rate; to create "provider and physician collaborations," under which health care providers would enter into agreements with the Medicare program to furnish all items and services related to an episode of care at an all-inclusive, negotiated rate; to allow for competitive acquisition of Part B items and services; to reform the contracting process with Medicare's fiscal intermediaries; to add care coordination and disease management as optional services for Medicare beneficiaries; and to eliminate cost-sharing requirements for some preventive health care benefits. Congress has shown little interest in the President's Medicare reform package; however, if Congress acts on Medicare legislation in this session, it is possible that some of the President's proposals could become part of Medicare negotiations later this year. The Senate budget resolution sets aside $20 billion over five years for prescription drugs and other Medicare reforms; the House budget resolution sets aside $40 billion.