Written Testimony of the American Nurses Association
Before the U.S. House of Representatives
Committee on Ways and Means Subcommittee on Health
on
Medicare Balanced Budget Act Revisions
October 1, 1999
ANA is the only full-service professional organization representing the nation's 2.6 million Registered Nurses through its 53 constituent associations. ANA advances the nursing profession by fostering high standards of nursing practice, promoting the economic and general welfare of nurses in the workplace, projecting a positive and realistic view of nursing, and by lobbying the Congress and regulatory agencies on health care issues affecting nurses and the public.
ANA believes that there are many instances in which the BBA 97 made cuts to Medicare programs that were too severe and have resulted in a reduction of quality of health care and a reduction in access to health care. It has also resulted in financial hardship to many who have dedicated their lives to caring for our nation's elderly and disabled. ANA calls on Congress and the Administration to take immediate action to remedy this situation.
The legislation that most comprehensively addresses the multitude of problems caused by the BBA 97 is S. 1678, the "Medicare Beneficiary Access to Care Act." Although this is a Senate bill and not before this panel, ANA calls on this subcommittee to enact legislation similar to S. 1678.
ANA believes that the underlying problem was a mind set that allowed arbitrary budgetary targets to override genuine health care considerations. In 1997, Congress established a goal of how much it wanted to cut from Medicare. Meeting these cuts was the overriding goal. Health care consequences were secondary. As it turned out, the cuts in the BBA 97 were more severe than anticipated. Some estimates project that the BBA 97 has, in actuality, cut as much as twice as much as anticipated.
Nurses all across the nation are seeing the consequences of these cuts in both acute care settings and post-acute care settings. Some of the chief areas of concern are outlined below.
Home Health Care
The Interim Payment System (IPS) implemented by the BBA 97 has caused severe problems for home health providers and the patients they serve. Among the impacts of the IPS for home health care are: approximately 550,000 fewer Medicare beneficiaries receiving home health services in 1998 than in 1996; the closing of nearly 25 percent of all home health agencies in the United States; and average home health agency reimbursement decreasing 29 percent since 1996.ANA calls on Congress to take action to:
- Eliminate the 15 percent cut scheduled for October 1, 2000;
- Provide resources for an outlier provision for high-cost patients;
- Increase the IPS per-visit cost; and provide relief from financially disabling overpayments; and
- Eliminate the 15 minute billing requirement.
Skilled Nursing Facilities
The implementation of a prospective payment system (PPS) for skilled nursing facilities (SNFs) has resulted in greater reductions in payments than originally intended. While we do not argue that the SNF PPS needs to be eliminated altogether, we believe that it needs to be modified.The BBA 97 intended to reduce Medicare SNF payments from $248 billion to $232 billion. It has been estimated by the Congressional Budget Office, however, that the reductions will be to $210 billion — a $22 billion shortfall.
ANA calls on Congress to:
- Create payment add-ons for certain RUG categories; and
- Update the current SNF market basket; and allow providers to transition to the federal rate effective October 1, 1999.
Acute Care
The BBA 97 has had severe impacts on many hospitals. This has resulted in a decrease in both quality of care and access to care. In acute care, as in other areas, we see that the impact of the BBA 97 cuts has been more severe than originally anticipated. While the BBA 97 intended to cut hospital payments by $53 billion over five years, the actual cuts are $71 billion— an $18 billion shortfall.ANA calls on Congress to:
- Pass legislation that would limit payment losses created by the move to outpatient PPS;
- Adopt MedPAC's recommendation for a modest PPS update to compensate hospitals for Y2K readiness activities;
- Provide relief for rural health care providers— particularly sole community providers, critical access hospitals, and Medicare-dependant hospitals;
- Provide relief for hospitals serving the uninsured by carving out disproportionate share payments from Medicare managed care payments; and
- Fully fund Medicare managed care payment blend to provide fair payment in all parts of the country.
Conclusion
ANA believes that Congress and the Administration need to take immediate action to reduce the harm done by BBA 97 by enacting S. 1678 or similar legislation. We believe that future decisions about health care need to be made with the focus on health care needs rather than on arbitrary budgetary goals. We look forward to continuing to work with Congress and the Administration, as well as our colleagues in the health care community, as our nation deals with theses issues. 
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