Opening Statement of the Hon. Fortney Pete Stark, M.C., California

Hearing on Rural Health Care in Medicare

June 12, 2001

Madame Chairwoman, thank you for having this hearing today. Addressing the concerns of rural communities is always an important part of Medicare legislation, and MedPAC 's impartial analysis of rural issues makes a great contribution to our understanding of the Medicare payment system. It is unfortunate, however, that rural legislation is often highly political and rarely evidence based. I look forward to hearing more about the findings and recommendations included in the new MedPAC report.

My brief review of the report confirms what I have always thought to be the case-- and what MedPAC has reported in the past-- that there is no systemic access problem in rural areas. In fact, the report released today shows that there is no real difference in access to Medicare services between urban and rural populations. But, we continue to hear anecdotal evidence of rural area providers holding on by a thread and the potential negative impact on beneficiary access. To the extent that there are access problems in particular rural areas, we will need to continue refining the payment systems to better target these areas. But, we need to be careful not to put more money into boosting all rural providers--or providers across the board-- if there are more efficient ways to provide better quality care in those particular areas that are having trouble.

The results of the MedPAC report also reinforce the reality that some areas are unlikely to ever be able to sustain managed care. I hope that the new administrator of HCFA, Tom Scully, takes a careful look at this report when he develops his plan to increase Medicare+Choice enrollment to 30 percent. I don't understand why we would want to pour more money into managed care in rural areas when there is little evidence that the M+C plans can even be maintained there. According to the report, in more than 300 rural counties the 2001 floor payment rate exceeds the fee-for-service spending for the average beneficiary by $130 per month--or about 40 percent! There are simply not enough beneficiaries to spread risk and not enough providers to build up a sufficient network for M+C plans to realize profits in isolated rural areas.

The plight of rural providers is not solely a function of Medicare and Medicaid payments. There are market forces that disproportionally affect rural areas, and rural areas must work harder to recruit and retain providers. Medicare payments are only a piece of the puzzle in creating an efficient health infrastructure . I hope that the speakers on the second panel will help us better understand the problems of rural communities, and how federal programs can be refined and coordinated with local programs to help the communities in need.

Thank you all for testifying before us today.