October 12, 1978
Page 36028
Mr. MUSKIE. Mr. President, I ask unanimous consent to have printed in the RECORD a statement by Senator HATHAWAY.
The PRESIDING OFFICER. Without objection, it is so ordered.
STATEMENT BY SENATOR HATHAWAY
The Senate is about to consider H.R. 5285, the Medicare-Medicaid Administrative and Reimbursement Reform Act. This bill would vastly improve the administration of these federal health programs for elderly, poor, and disabled individuals. It provides incentives for hospitals which keep costs down and disincentives for inefficient hospitals. Further in determining allowable hospitals costs, the bill classifies hospitals with those of similar size, type and location.
It also exempts from computation of routine costs variable expenses such as those related to energy, capital construction, education and training programs, and malpractice insurance. In addition, exceptions are provided for institutions with high routine costs due to under-utilization of beds in under-served areas, unusual patient mix, changes in services, and start up of a new hospital. I cosponsored this bill because its approach represents a great step forward in making the medicare reimbursement system more equitable, particularly with respect to hospitals in less populated rural areas.
I am also pleased that the bill includes a number of amendments which I offered in the Finance Committee. These include, among others, measures to eliminate the restriction on the number of home health visits reimbursable under Medicare and the three day prior hospitalization requirement for Part A home health care; and to provide for a common audit of Medicare, Medicaid and Maternal and Child Health Programs at an estimated cost savings of $30 million.
Although I am pleased with the Medicare reform bill as a beginning, it does not go far enough to curb skyrocketing hospital costs. The protected savings from this bill are $400-$500 million over the next five years. While this is by no means a small sum, the savings could in fact be far greater.
Given the facts that inflation is our number 1 domestic problem and health care costs contribute substantially to inflation. I believe we must take advantage of the opportunity to save billions of dollars now. That is why I have joined my colleagues in supporting hospital cost containment measures.
The Kennedy proposal is the legislation which was approved by the Senate Human Resources Committee on which I also serve. It would save an estimated $60 billion over 5 years, including about $20 billion in Federal Medicare and Medicaid money and $2.3 billion in state money. The measure includes an amendment which I offered in Committee to exempt all hospitals with fewer than 2,000 admissions annually and those hospitals which are the sole community provider with fewer than 4,000 annual admissions. It also provides for a mandatory pass through of non-supervisory personnel wage increases.
The Nelson amendment is a compromise that would save more than $30 billion over 5 years, including $11.6 billion in Medicare and Medicaid costs, and $1.5 billion in state money. It would recognize in statute, with some changes, the voluntary effort which was designed by, and has been implemented by, the hospital industry itself since 1977. Under the amendment, mandatory cost controls would not go into effect unless the voluntary goals were not achieved on the national average.
If the voluntary effort succeeds, there would be a savings of $31.3 billion. If the national goal under the voluntary effort is not achieved by July 1, 1979 or thereafter, however, Federal mandatory controls would be triggered based on the approach in H.R. 5285. In that event, states with programs meeting or exceeding the national mandatory goals would be exempt from the Federal controls, and would be allowed to measure their hospitals' performance on a state aggregate.
In this regard, I might mention that I intend to offer an amendment to the Nelson proposal to exempt for one year, those states which have already enacted state cost control programs, but have not yet had a full year of operation to demonstrate that their programs work.
Under the Nelson amendment, hospitals with fewer than 4,000 admissions annually would be exempt from both the voluntary and mandatory goals. Although that amounts to more than half of the nation's hospitals, it represents less than 10 percent of total hospital costs. In addition, there are specific exceptions allowed on a hospital-by-hospital basis.
No arbitrary or single "cap"would be imposed on hospitals. The formula in H.R. 5285, on which the compromise is based, allows higher increases to low-cost hospitals, and lower increases to high-cost hospitals. Therefore, efficient hospitals would be rewarded while inefficient ones would not be.
I believe that it is both necessary and possible to curb hospital. costs. As we all know, the hospital industry itself recognizes this fact and has achieved reductions in the years that Congress has been considering cost containment legislation. It is important to continue this trend, but, to guarantee that it will work, it is also vital to have in place, at a minimum, standby methods to ensure that costs are in fact contained.