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Tuesday, October 1st 2002

Senator Max Baucus
Senate Finance Committee
219 Dirksen Senate Office Building
Washington D.C. 20510

Dear Chairman Baucus:

On behalf of the American Hospital Association's (AHA) more than 5,000 hospitals, health systems, networks, and other providers of care, I am writing to express our support for the Beneficiary Access to Care and Medicare Equity Act of 2002.   We believe this legislation will take another step forward in addressing the unintended consequences of the Balanced Budget Act (BBA), as well as improve payments for rural hospitals.

The legislation includes a number of provisions that provide relief to hospitals, and therefore begins to address the serious pressures America’s hospitals are experiencing today.  These provisions include:

  • An increase of market basket minus .25% in Fiscal Year 2003 for all hospitals except for Sole Community Hospitals, who will receive full market basket in Fiscal Year 2003;
  • Adjustments for Indirect Medical Education (IME) of 6.5% in Fiscal Year 2003, 6.5% in Fiscal Year 2004, and 6.0% in Fiscal Year 2005;
  • Equalization of the standardized amount for rural and other urban hospitals, phased in over a two-year period;
  • Wage index relief to certain areas by adjusting the methodology used to determine the proportion of hospitals’ costs that is attributable to wages, while holding other hospitals harmless;
  • Preventing reductions in payments under Medicaid DSH for the next three years, and allowing the program to increase by the CPI;
  • An increase in the floor, from 1% to 3% for treatment of low-DSH states;
  • Increases in Medicare DSH payments to rural hospitals and other hospitals of fewer than 100 beds;
  • A one-year extension of the hold harmless provision for rural hospitals for outpatient services;
  • A 5% increase in payments to rural hospitals for clinic and emergency room visits for a period of three years; and
  • Improvements in the Critical Access Hospital program, including permitting hospitals the flexibility to allocate swing beds and inpatient acute care beds.

In addition, the bill will provide relief for skilled nursing facilities, permanently eliminate the upcoming 15% reduction in home health payments, continue the 10% add-on for rural home health agencies, and accelerate the buy-down of beneficiary coinsurance for Medicare outpatient hospital services.

We look forward to working with you to secure Senate passage of this legislation, and appreciate your efforts to address the concerns of the nation’s hospitals and the patients and communities we serve.


Rick Pollack
Executive Vice President

This letter was also sent to Senator Charles Grassley

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