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Tuesday, July 16th 2002

Dear Senator:

As the Senate moves to consider prescription drug legislation, the American Hospital Association (AHA) strongly urges you to improve upon certain provisions of H.R. 4954, the House-passed Medicare Modernization and Prescription Drug Act, and include a number of provisions currently not part of the House bill.  The AHA represents nearly 5,000 hospitals, health systems, networks and other health care provider members, all of whom have an important stake in this critical debate.

America’s hospitals are keeping the promise of care – that they will be there 24 hours a day, seven days a week, providing the right care, at the right time, in the right place.  But they must have the financial resources necessary to meet patient and community needs.  We first urge you to improve upon the House bill by adopting the following provisions:

  • Inpatient update: The House improved the current law from an update of market basket  -.55% to market basket -.25%.  We ask that the Senate recognize the need to keep pace with inflation by providing a full market basket update for all hospitals.
  • Indirect Medical Education (IME): The House improved IME payments by moving to 6% in 2003 and 5.9% in 2004 from the current level of 5.5% for both years.  We ask that the Senate protect payments to teaching hospitals at the 2002 level of 6.5% permanently.
  • Medicaid disproportionate share payments (DSH): The House provided $400 million in relief in 2003 and an additional $1.9 billion through 2008.  We believe that, given the crisis in America’s Medicaid system, Congress should completely eliminate the massive reductions in payments scheduled to go into effect at the end of this fiscal year.
  • Standardized rate: The House increased base payments over a two-year period to bring rural and other-urban hospitals to the same level provided to large urban institutions.  We urge you to bring all hospitals up to the same fully standardized rate in 2003 rather than over the two-year transition passed by the House.

Further, we urge you to include in the Senate bill the following provisions that were not included in the House bill:

  • Area wage index relief, as included in S. 885, the Area Wage and Base Payment Improvement Act.
  • Outpatient payment improvements, as included in S. 2547, the Medicare Hospital Outpatient Department Fair Payment Act.
  • Payment increases for Medicaid low-DSH states, as included in S.776, the Medicaid Safety Net Improvement Act.

America's hospitals are coping with an unprecedented convergence of financial pressures, from workforce shortages and soaring professional liability insurance rates to disaster readiness demands and the high costs of technology, to name just a few.  These issues are affecting hospitals' ability to provide the health care services their communities and patients need.  We need your help to ease those pressures, so that Americans can continue to count on hospitals for the services they rely on.  We look forward to working with you.


Rick Pollack
Executive Vice President


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