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Thursday, June 5th 2003

The Honorable Jim Ramstad
United States House of Representatives
103 Cannon House Office Building
Washington, DC 20515

Dear Representative Ramstad:

On behalf of America's hospitals, health care systems, networks, and other providers, we are writing with regard to H.R.941, the Medicare Innovation Responsiveness Act of 2003.  Specifically, we are writing to inform you of our objections to Title III of that bill and of our intent to oppose the bill unless that Title is removed or substantially modified.  While we share your desire to stimulate medical innovation and the appropriate diffusion of medical technology, as drafted, H.R.941 is in the best interests of neither hospitals, nor the patients we serve.  Regrettably, rural hospitals would suffer the most under this bill.

Our chief concern is that, under your bill, enhanced payments for new technology are budget neutral, and therefore, by definition, redistributive.  Medicare payments for most services provided by hospitals would necessarily be cut to subsidize the additional payments for high cost, high tech products and services.  Rural hospitals, which are typically the last to adopt technological innovations, largely because there are few specialists and tertiary facilities in rural areas, would experience the biggest cuts.  That is the conundrum.

Unfortunately, your bill does not address this part of the payment equation.  It focuses solely on higher payments for newer technologies, but is silent on the fact that hospitals must absorb the shortfall in other payments for more routine services that would result under the bill's budget neutral methodology.

As you know, hospitals today lose money serving Medicare patients.  H.R.941 does not change that dynamic; it merely redistributes the winners and losers, with rural hospitals once again suffering the greatest losses.  Hospitals are very dependent on technology and know full well the importance of maintaining access to the best, life-saving tools available.  But at the same time, we must not sacrifice the wide array of medical services that hospitals deliver to millions of Americans across the country every day.

We are hopeful that we can work with you to find better ways of enhancing the approval process and the payments to hospitals for all services, including the newest life-saving, and life-enhancing technologies.  Thank you for your continuing interest in this critically important area.


Rick Pollack 
Executive Vice President
American Hospital Association

Charles N. "Chip" Kahn III
Federation of American Hospitals                                                                 

cc: House Ways and Means Committee Members


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