An Overview of H.R.1244 and S.980 Health Care Legislation

by Sheldon Weisgrau
Senior Consultant, Rural Health Consultants

Sheldon Weisgrau, M.H.S. is a
Senior Consultant with Rural
Health Consultants, Inc. of
Lawerence, Kansas. Prior to coming
to RHC,Sheldon worked for eight
years at HCFA as a project officer
and policy analyst for research and
demonstration projects in rural
health services delivery and financing.

Two years ago, as the culmination of a bi-partisan effort to reduce growth in spending and balance the federal budget, President Clinton signed the Balanced Budget Act of 1997 (BBA). This far-reaching legislation included the most sweeping reforms of the Medicare and Medicaid programs since their inception more than 30 years earlier (in California, the Medicaid program is known as Medi-Cal ). Among the changes enacted by the BBA were incentives for the development of managed care plans and beneficiary enrollment in these plans, reductions in payment to fee-for-service providers, and the phase-out of many safety-net programs that provide health services in underserved and rural areas (a comprehensive analysis of the health care provisions of the BBA was included in the Winter 1998 DRIS Newsletter).

Practically from the moment the President’s pen lifted from the page during the ceremonial signing of the BBA on Capitol Hill in August 1997, health care providers and analysts have predicted dire consequences. Patients rights advocates decried the emphasis on managed care, hospitals feared steep reimbursement declines, and rural providers questioned how they could continue to offer services in the face of lower reimbursement and the siphoning of patients by urban managed care giants. Over the past two years, data on the impact of the BBA has been thin, but anecdotes of its devastating effects are plentiful. It is clear however, that Congress and the President underestimated the negative impact of much of the legislation on rural providers, and because it is phased-in over a number of years, its most grave repercussions may be yet to come.

As a result, legislation has been introduced in the current Congress to address these concerns and ease the effects of the BBA. Both the Triple-A Rural Health Improvement Act of 1999 (H.R. 1344) and the Promoting Health in Rural Areas Act of 1999 (S. 980) will roll back many provisions of the BBA that are likely to harm providers of care to underserved and rural populations.

Included in the proposed legislation are:

provisions to expand eligibility for conversion to a Critical Access Hospital;
elimination of the phase-out of cost-based Medi-Cal reimbursement to Federally Qualified Health Centers;
requirement that Medi-Cal managed care organizations pay Rural Health Clinics at the same rate that they pay other providers;
enhanced payment to Medicare+Choice organizations that enroll beneficiaries in low cost rural areas;
increased payment to Nurse Practitioners and Physician Assistants;
reclassification of some urban providers to rural in order for them to take advantage of programs and payments normally limited to rural providers; (This is a very important provision for States such as California which have huge counties that encompass both large metropolitan and vast isolated rural areas within a single jurisdiction.)
restructured financing of health care for Indian Tribes and Tribal Organizations;
easement of the requirements for designation of Health Professional Shortage Areas;
enhanced payment for telemedicine services and expansion of the types of practitioners that are eligible for these payments; and
more. (See the matrix comparing the selected provisions of the House and Senate bills).

It is apparent that both the House and Senate bills are intended to please a broad number of constituency groups. Although the bills offer much needed relief from some of the more damaging provisions of the BBA, it is unlikely that they will be enacted in their current form. Instead, certain provisions of each bill will probably be attached to broader legislation that is more likely to pass, such as the annual budget reconciliation bill.

This issue of the DRIS Newsletter contains a series of articles that highlight the potential impact of certain provisions of H.R. 1344 and S. 980 on each of the DRIS sites. The fact that this impact will be felt primarily by individual providers highlights the greatest weakness of these measures — the absence of a coherent rural health policy vision that assists communities in creating local systems of care that ensure access to quality services at a reasonable cost. Despite its flaws and unintended consequences, the BBA encompassed a broad health policy vision, which centered on a market-driven managed care approach to cost containment and the development of health plan options for beneficiaries. The financial incentives in BBA forced providers toward integration as a means of survival. Whether one agrees with this approach or not and its applicability and relevance to rural California, the policy approach was consistent. However, H.R.1344 and S. 980 unlike the BBA, do not represent a broad policy approach but a chipping away at unfavorable aspects of the BBA reforms as well as the removal of some of the financial incentives which promote integration efforts.

Clearly, many provisions of the proposed legislation will aid particular providers and may even help some stave off financial ruin. However, by easing financial pressures and lessening the need for individual providers to reach beyond their own institutions and develop clinical and administrative linkages with others, the bills do not go far enough to assist rural communities or the DRIS sites in moving closer to integrated systems. To the extent that current trends in health care delivery and financing continue, and there is little evidence that system consolidation is slowing down, a more comprehensive approach to rural health policy that ensures access, quality, and reasonable cost through support of service integration and community involvement is necessary.

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