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Last Updated on:
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Status of Medicare Cliff -
September 20, 2002
The proposed Medicare cuts are scheduled to take effect in just 10 days. This morning WHCA received the following update from AHCA President Chip Roadman on the current and future prospects for relief, the nature and scope of the effort that AHCA is making to stop the cuts, and what the WHCA membership can to assist in that effort. This is crunch time - Please read and take action! "We are writing to give you an update on where we are on Capitol Hill on the Medicare Issue as we approach October 1st. The short answer is that the environment on Capitol Hill is intense. As you know, our legislative goal is to retain the current 16.6% add-on to the nursing component of pertinent RUG categories and a second 4% add-on to every RUG category. These add-ons expire on October 1st. If they expire, a "Medicare cliff" will occur that will reduce the provider per diem Medicare reimbursement rate, on average, by $35 per patient per day. The national aggregate revenue loss is estimated to be $1.6 billion for the 2003 federal fiscal year. We remain optimistic that Congress will fix the Medicare cliff for at least one year (through September 30, 2003). However, no relief will be forthcoming by October 1st. Therefore, the important questions presented are: What is the impact upon providers if the Medicare cliff is not fixed by October 1st and what is AHCA doing about it? Clearly the impact upon providers will be a period of lower payments until Congress and the President act to fix the Medicare cliff. Generally, providers bill their intermediaries for October services at the end of the month. They will then receive payment for these services at the end of November. Accordingly, providers will begin to feel the direct financial impact of Congress' delay in action by the end of November. Here's what AHCA is doing about this situation: 1. We continue to lobby Congress aggressively to fix the Medicare cliff. Our message is two-fold: Fix the Medicare cliff. Make any fix effective October 1, 2002 so that providers remain whole. You and your members continue to be a big part of the effort. We greatly appreciate all of the help! 2. By October 1st, Congress also will not pass a 2003 fiscal year budget. However, they will have to pass a Continuing Budget Resolution to keep the federal government in business until a new budget is passed. We are currently working intensely to have two provisions inserted into the Resolution: 1) Direction to CMS to maintain the status quo until Congress acts on the Medicare cliff issue. 2) Direction to CMS to construct an interim payment mechanism to ensure that providers remain whole until Congress acts and CMS can adjust its provider payment software to conform to Congressional action. In some states, Medicare providers have already received from their fiscal intermediaries notification of their 2003 rates. The rates do not include the 16.6% and 4% add-ons because of Congress' inaction. Thus, the critical nature of point 2 above. We will continue to keep you closely apprised of events on Capitol Hill. We urge you to share this memorandum with your members. Thank you for your continued assistance and support"
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