Congress passed Oct. 21 the gargantuan Omnibus Consolidated and Emergency Supplemental Appropriations for fiscal year 1999. The 4,000-page agreement patches together 8 appropriation measures, tax changes and other provisions into one $550 billion spending bill for federal programs and services. Overall, hospitals and health systems escaped the deep spending cuts inflicted by last year's Balanced Budget Act (BBA). In fact, hospitals avoided $10 billion in Medicare and $12 billion in Medicaid reductions which were under consideration at one point. This year's agreement also provides some relief to home health care payments, and increases overall spending in FY 1999 on selected health care programs by $575 million (see chart). Outlined below are the key points of the Omnibus bill as it applies to AHA members.

The legislation provides a total of $211.6 billion in appropriations for the Department of Health and Human Services (HHS) programs for FY 1999. This amount is $16.3 billion more than was allotted for FY 1998 and $1.3 billion more than the president requested. Outlined below are appropriations highlights:

  • Medicare rural hospital flexibility grants program -- $25 million was appropriated to fully fund the Medicare Rural Hospital Flexibility Grants Program authorized in the BBA. The program will provide grants to states to help them improve access to essential health care services in rural communities by putting together a rural health plan; developing networks; designating critical access hospitals (CAHs) and improving rural emergency medical services and other activities. It will also support community efforts to identify health care needs and design a local system of care to address them. The program will give hospitals the technical assistance to develop integrated networks of care; examine conversion to CAH and improve information systems, quality assurance programs, and other activities.
  • Health professions -- Under the Public Health Services Act's newly consolidated Title VIII reauthorization, the measure appropriates $304.3 million for health professions, of which $65.5 million may be used for nursing education. Advanced nursing education, which includes nursing administration, may receive up to $12.9 million.
  • User fees -- None. Congress rejected the president's proposal for $660 million in user fees, which were strongly opposed by the AHA.
  • Health facilities construction -- $65 million is included for the construction and renovation of health care and other facilities.

Funding Levels for Selected Health Programs in FY 1999
(in millions of dollars)



FY 1998 Funding Level

AHA's Request

Final Conference Agreement

National Health Service Corps




Nursing Education




Ryan White AIDS Program




Rural Health Research




Rural Outreach Grants




Rural Hospital Flexibility Grants




Maternal Child Health Block Grants




Healthy Start




Agency for Health Care Policy/Research




Substance Abuse Mental Health




Medicare Survey and Certification




*Nursing education funds are included as part of the Public Health Services Act's consolidated Title VIII programs. Of the total $304.3 million earmarked for health professions, nursing education may receive up to $65.5 million.

Congress moderated the effects of the home health interim payment system (IPS) in the Omnibus bill. The final agreement reflects months of work by the AHA, its members and other home health providers to change the glaring inequities of the IPS on efficient home health agencies. Legislation took effect Oct. 1, 1998. The final version, while not as generous as we had hoped, represents a legislative success in getting Congress to recognize that the BBA took too much money from home health. The $1.7 billion put back into the home health system will be funded by reductions in home health care updates from FY 2000 - 2003, as well as through non-Medicare sources.

Highlights from the bill include:

  • Home care providers will get a one-year delay in the additional 15 percent across the board cut, which was to be imposed on Oct. 1, 1999. This cut was to coincide with the implementation of a home health prospective payment system, which HCFA has delayed due to efforts to fix the Year 2000 computer glitch.
  • Per visit limits increased from the BBA's 105 percent of the national median to 106 percent.
  • Per beneficiary limits were increased for those below the national median by one-third of the difference between the current agency rate and the national median, which is $3,357 for FY 1999.
  • Per beneficiary limits for new agencies -- those that opened since the FY 1994 base year -- will receive 100 percent of the national median as opposed to 98 percent of the median set by the BBA.
  • Agencies that opened after Oct. 1, 1998 will be paid 75 percent of the national median minus 2 percent.
  • Payment updates will equal market basket minus 1.1 for FY 2000 - FY 2003. (These limits on the updates are part of this bill's funding mechanism.)

Other home health provisions:

  • Periodic interim payment (PIP), which was scheduled to be eliminated Oct. 1, 1999, is extended for one year.
  • The HHS Secretary is required to report, along with oversight from the Medicare Payment Advisory Commission and the General Accounting Office (GAO), on the status of a prospective payment system for home health services.

GAO Study -- The GAO is required to monitor and prepare two reports for Congress on how U.S. attorneys are using the False Claims Act to investigate alleged cases of Medicare billing fraud by providers.

CHIP Correction -- The Omnibus bill makes a technical correction to the formula used to allocate federal dollars for the Children's Health Insurance Program each year. Part of the formula uses the number of low-income children in the state, which is currently calculated using a three-year average of the Current Population Survey data. However, this data can vary significantly from year to year because of small sample sizes in some states, and cause unpredictable funding fluctuations in the allocation of federal funds to the states. To prevent this fluctuation, the Omnibus bill provides a one-year temporary fix. The fix uses FY 1998 data to compute the FY 1999 federal CHIP allotments. It is expected that the authorizing committees will address this problem for future fiscal years.

H-1B Visas -- The Omnibus bill increases the annual U.S. quotas of H-1B temporary visas, which includes foreign health care professionals, from 65,000 annually to 115,000 in 1999 and 2000, and 107,500 in year 2001.

Organ Transplant Allocation -- The final bill delays the implementation of the April 1998 Organ Procurement and Transplantation Network final regulation until Oct. 21, 1999. This regulation would have altered the current allocation system for organ transplants. The Omnibus bill does require the Institute of Medicine to review existing federal policies and the effect that the proposed regulation would have on the allocation of organs for transplant.

MedPAC -- The bill increases the number of commissioners on the Medicare Payment Advisory Commission from 15 to 17.


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