Opening Statement of the Hon. Nancy L. Johnson, M.C., Connecticut, and
Chairwoman, Subcommittee on Health

Hearing on Rural Health Care in Medicare

June 12, 2001

As I read through today's testimony, it is clear that the earlier hearings were also about the issues that are critical to the rural seniors. For example, in our hearing on cost sharing, we reported that the design of Medicare beneficiary cost sharing in the fee-for-service program reflects outdated 1965 insurance practices. As such, more than 35 years later, beneficiaries are confronted with irrational and confusing cost-sharing which does not reflect the current delivery of health care. Today, we will hear that as a result of this rural beneficiaries spend less but have higher cost sharing.

Similarly, at our prescription drug hearing, we found that many of the current supplemental prescription drug plans, such as Medigap, are expensive and generally inadequate. We also found that those without coverage have the least bargaining power and are therefore often paying the highest prescription drug prices. At the hearing today, we will hear that too many of the individuals with the least protection are rural.

Finally, we learned that health care providers spend a great deal of their time and energy on complying with Medicare rules. Earlier this Spring, Representative Stark and I sent HCFA a detailed list of recommendations to make Medicare more workable and to relieve the regulatory burden on the providers, particularly the small providers, that serve Medicare beneficiaries. Those recommendations, when implemented will create a more collaborative relationship between HCFA and providers and allow health care professionals to devote more time to patient care.

Over the past several years we have acted to solidify access to services in isolated areas. In the Balanced Budget Act of 1997, Congress created a new class of providers, Critical Access Hospitals, to ensure that emergency services are protected in the most isolated rural areas while retaining a limited capacity for inpatient care. Recently, we have made the qualifications for Critical Access Hospital designation more flexible. And last year this subcommittee acted in the Beneficiary Improvement and Protection Act to strengthen access to ambulance services and cover the costs of retaining physicians to provide on-call emergency services in the remote communities served by Critical Access providers.

There is also a need to make sure that rural seniors have access to hospital services when needed. In the Balanced Budget Refinement Act and the Beneficiary Improvement and Protection Act, we increased Medicare payments for rural hospitals. Sole Community hospitals will be able to be paid on their more recent information on costs - the first significant change in the program since 1989. Most important, by equalizing the eligibility for Medicare disproportionate share payments between urban and rural hospitals, we were able to pump more than $1 billion over five years into rural hospitals, which were legally being discriminated against under the law. Yet the payment formulas for DSH payments still are not fully equalized and more needs to be done.

Additionally, rural hospitals are often dependent on outpatient, skilled nursing and home health revenues. We added significant protections and additions for these services. So that these services will continue to be available for the seniors, rural hospitals are shielded from any negative impact of the outpatient prospective payment system, until we can determine how they are affected by the PPS. Skilled nursing units in rural hospitals benefit from the add-on payments to the resource utilization groups and from the 17 percent increase for the nursing component of the rate. The 15 percent reduction for home health services was also delayed. These changes equally aided free-standing home health agencies and skilled nursing facilities in rural areas.

Finally, Congress made significant progress in eliminating the payment disparities in Medicare+Choice by enacting two payment floors: $475 for rural counties and $525 for counties with populations greater than 250,000.

Our goal is to assure that all Medicare beneficiaries get the care they need. The dust has far from settled from the positive changes that we made - in fact some of these policies only began in April and others are to come. While we can count the dollars, it is too early to measure the difference we made for rural providers.

And it is even more difficult to know if we made a difference for rural beneficiaries.

I am concerned that the rural beneficiaries sometimes find cost a barrier and receive less preventive care such as pap smears and screening mammography. Clearly, we must act to modernize Medicare so that the inequities faced by rural beneficiaries do not continue. Today, we begin our examination of how rural beneficiaries as well as providers are surviving in the current disjointed and complex Medicare program.

I am happy to host the first hearing in which our new chairman of the Medicare Payment Advisory Commission will testify. Mr. Hackbarth thank you for accepting this important job and for being here today. We are eager to hear from you MedPAC's recommendations to strengthen rural health care. I would also like to thank Gail Wilensky for her distinguished years of service and wish her best in her future endeavors.