Statement of the Hon. Jim Nussle, a Representative in Congress from the State of Iowa

I appreciate this opportunity to express my continued views to the Subcommittee about the need to address the disparities in federal health policy for rural beneficiaries and health care providers.

My home state of Iowa ranks 8th best in the nation for health quality. However, Iowa ranks 48th worst in the nation for overall Medicare reimbursements. The reimbursement levels are not fair to Iowa seniors who rely on Medicare for health coverage, to Iowa taxpayers who pay as much into the system as taxpayers in other states, and to Iowa health care providers who are forced to provide quality care with less than adequate resources.

The disparities in Medicare reimbursement across the country are a result of outdated, complex and burdensome Medicare policies that when written, did not take into consideration the uniqueness of delivering health care in rural states such as Iowa. There lies a distinct rural-urban disparity in the Medicare reimbursement system that has been in existence since the program was created in 1965. The Medicare program has not kept pace with modern medicine and it needs to be modernized.

As Co-chairman of the House Rural Health Care Coalition during the 105th and 106th Congresses, I worked with the Committee to address the unintended consequences of the Balanced Budget Act of 1997 (BBA) on rural health care providers. The Balanced Budget Refinement Act of 1999 (BBRA) and the Medicare, Medicaid, SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) included several provisions for rural beneficiaries and providers such as improved the Critical Access Hospital (CAH) program, provided increased payments to Sole Community hospitals, equalized eligibility under the Medicare Disproportionate Share Hospital (DSH) program, and expanded access to telemedicine services.

The BBRA and BIPA provided much needed, immediate relief to beneficiaries and providers across the country. Congress now needs to address overall access to benefits for rural seniors and policy disparities for rural providers within comprehensive Medicare modernization.

I recently had an opportunity to host a forum with health care providers in my congressional district and representatives from the Health Care Financing Administration (HCFA). The forum proved to be constructive and beneficial to all participants. The health providers pointed to specific areas in Medicare policy that need to be modernized.

First of all, the Medicare hospital inpatient wage index needs to be reformed. It is unfair to all hospitals that the current wage index for fiscal year (FY) 2001 be calculated according to FY 1997 data. I do not know any other labor market that has to compete for qualified professionals with wages based on the market four years prior. Coupled with the questionable calculation that states that 71% of all hospitals’ budgets are comprised of wage expenses and outdated methodology for arbitrarily defining hospital labor market areas, hospitals in rural states like Iowa are struggling to obtain and retain qualified professionals.

BIPA required HCFA to collect occupational mix data every three years by FY 2004 and implement a new methodology for using this data by FY 2005. While this is a step in the right direction, there needs to be action taken now to ensure hospitals have the resources available to employ qualified health professionals while keeping their doors open for our seniors until a new methodology can implemented.

Secondly, the national standardized payment rate for hospital inpatient services needs to be reformed. I do not believe there should be two separate inpatient payment base rates - - one for rural hospitals and one for urban hospitals that is 1.3% higher. The playing field should be level for the Medicare national standardized payment rate.

Additionally, the CAH program needs to be refined and expanded to include those rural hospitals over 25 beds that are ineligible for the program but need the safety net in order to keep their doors open. I am very pleased with the progress and results of the CAH thus far. I believe rural beneficiaries can continue to have access to their hometown hospital by expanding CAH eligibility.

Lastly, health providers continue to be bogged down with paperwork and regulatory burdens. During the forum, I was presented with the paperwork requirement for one Medicare beneficiary's home health care incident that, when taped end to end, was 52 feet long. It was a very striking example of the federal government over medicating our health providers with paperwork.

I look forward to continuing to work with Chairwoman Johnson and the Committee to ensure our rural seniors have access to local, quality health care as Congress considers Medicare modernization.