Late last week, President Clinton and Congressional leaders prepared themselves for negotiations over a bill to provide relief from the cuts in the Balanced Budget Act of 1997 (BBA) for hospitals, nursing homes, home health care providers, and Medicare managed care plans. During the week, both sides staked out positions, with President Clinton backing a package that would provide more relief for teaching hospitals, nursing homes, and home health providers, and Congressional leaders backing a package that provides much more than the President wants for Medicare HMOs. On October 11, 2000, Congressional Republicans settled on a package that would provide approximately $28 billion in Medicare and Medicaid changes over five years. As Skyline News went to press, the Congressional GOP plan had not yet been released; however, through conversations with officials on Capitol Hill and in the White House, GNYHA learned that the GOP plan contains the following provisions.

Hospitals: For teaching hospitals, there would be a one-year postponement in further cuts to the Medicare indirect medical education (IME) adjustment, and a lesser cut than scheduled in 2002. Specifically, the IME adjustment would remain at 6.5% in 2001, would be reduced to 6.375% in 2002, and would be cut to 5.5% in 2003. This is less than contained in the Senate Finance Committee proposal, and much less than provided by bills sponsored by Senator Daniel Patrick Moynihan and Congressman Charles Rangel. The plan would also increase the floor on the per resident amount used to calculate Medicare direct graduate medical education (GME) payments from 70% to 85%. In addition, the Congressional plan would provide for a full market basket update for hospitals in 2001, and an update of market basket minus 0.55% in 2002 and 2003 -- again, a retreat from the Senate Finance plan, which would have provided no market basket cuts in 2001 and 2002, and a cut of market basket minus 1% in 2003. The plan would also eliminate the 3% Medicare disproportionate share hospital (DSH) cut in 2001 and would allow hospitals to gain reimbursement for 70% of bad debt costs, rather than 55%, as under current law.

Continuing Care: For skilled nursing facilities (SNFs), the Congressional plan would provide a full market basket update in 2001, with market basket reductions of 0.55% in both 2002 and 2003. This provision is not nearly as generous as that in the Senate Finance proposal, which would have provided market basket plus 1% in 2001 and 2002. The proposal would also provide a 10% increase in the nursing component of the SNF prospective payment system (PPS) rates for the period April 1, 2001-October 1, 2002. An audit would then be conducted to determine whether this additional funding helped increase staffing. The proposal would also limit consolidated billing requirements to Part B services provided pursuant to a Part A covered stay and to therapy services furnished in Part A and Part B covered stays. For home health providers, the proposal would provide a full market basket update in 2001, and would postpone the scheduled 15% cut in home health PPS rates for an additional year.

Medicaid, SCHIP Issues: The Congressional GOP plan does not contain two Medicaid proposals of importance to New York. First, it does not include legislation to ensure that New York will be able to continue to gain access to critical Federal Medicaid funding under new regulations (see story on page 1). Second, it does not include a state option, approved by the Commerce Committee, to allow states to enroll legal immigrant pregnant women and children in Medicaid and the State Children's Health Insurance Program. The bill does freeze, but for only one year, reductions in statewide Medicaid DSH allotments, which were included in the BBA.

GNYHA Response: In conversations with White House staff last week, GNYHA learned that President Clinton has threatened to veto the Congressional GOP plan because it does not contain enough relief for teaching and DSH hospitals and continuing care providers, and does not contain the Medicaid language needed to protect New York's Medicaid program from new cuts due to the new U.S. Health Care Financing Administration regulations. GNYHA has expressed its deep disappointment in the plan to the New York delegation, and has urged them to work with Congressional leaders and the White House to improve the plan. In response, Senator Moynihan has been working with Senator William Roth, Chairman of the Senate Finance Committee, and Senator Schumer has spoken personally with President Clinton to encourage him to make sure that GNYHA's priorities are included in a compromise plan. GOP members of the New York delegation are working with House leaders, Democrats with the White House. The President's veto threat ensures that the President and his staff will now sit down with Congressional Republicans to craft a compromise plan. GNYHA will continue to work with the White House and our bipartisan Congressional delegation to ensure that as much BBA relief is provided to GNYHA members as possible.

Fiscal Impact of Discussed GOP Provisions on NYC Hospitals and Nursing Homes
Provision	2001	2001-05
HOSPITALS ($ in millions) Inpatient PPS:    Update: MB in 2001; MB-.55% in 2002 and 2003	$34.6	$198.7
IME: 6.5% in 2001; 6.375% in 2002; 5.5% in 2003	21.1	100.8
DSH: No cut in 2001	16.3	16.3
Total	72.0	315.8
Direct GME: PRA floor at 85%	1.3	7.1
Bad debt: coverage at 70%	5.8	31.3
Total	79.2	354.2
NURSING HOMES (actual $ amounts) Update: MB in 2001; MB-.55% in 2002 and 2003
Average per day	$3.60	$18.30
Average per facility	48,700.00	246,300.00
10% add-on to nursing component from 4/1/01 to 10/1/02
Average per day	15.10	29.40
Average per facility	203,000.00	396,500.00
Total
Average per day	18.70	47.70
Average per facility	251,700.00	642,800.00

Notes: MB = market basket; IME = indirect medical education; DSH = disproportionate share hospital; PRA = per resident amount. Numbers may not total due to rounding.