title i—deficit reduction procedures
Sec. 107. Special Rules for Medicare Program.
(a) Temporary Extension of Payment Policies For Inpatient Hospital Services.—
(1) In general.—Notwithstanding any other provision of law, with respect to payment for inpatient hospital services under section 1886 of the Social Security Act:
(A) Temporary freeze in pps hospital rates.—For purposes of subsection (d) of such section for discharges occurring during the period beginning on October 1, 1987, and ending on November 20, 1987 (in this paragraph referred to as the “extension period”), the applicable percentage increase under subsection (b)(3)(B) of such section with respect to fiscal year 1988is deemed to be O percent.
(B) Temporary freeze in payment basis.—
(i) Extension of blended drg rate.—For purposes of subsection (d)(1) of such section, the “applicable combined adjusted DRG prospective payment rate” for discharges occurring—
(I) during the extension period is the rate specified in subsection (d)(1)(D)(ii) of such section, or
(II) after such period is the national adjusted prospective payment rate determined under subsection (d)(3) of such section.
(ii) Extension of hospital specific payment.—For the first 51 days of a hospital cost reporting period beginning during fiscal year 1988, payment shall be made under clause (ii) (rather than clause (iii)) of subsection (d)(1)(A) of such section (subject to clause (i) of this subparagraph).
(C) Temporary freeze in amounts of payment for capital.—For payments attributable to portions of cost reporting periods occurring during the extension period, the percent specified in subsection (g)(3)(A)(ii) of such section is deemed to be 3.5 percent.
(D) Temporary freeze in return on equity reductions.—For the first 51 days of a cost reporting period beginning during fiscal year 1988, subsection (g)(2) of such section shall be applied as though the applicable percentage were 75 percent.
(E) Temporary freeze in payments rates for pps exempt hospitals.—For purposes of payment under subsection (b) of such section for cost reporting periods beginning during fiscal year 1988, with respect to the first 51 days of such a period the applicable percentage increase under paragraph (3)(B) of such subsection is deemed to be 0 percent.
(2) Continuation of capital policy.—Section 9321(c) of the Omnibus Budget Reconciliation Act of 1986 is amended—
(A) by striking “SEPTEMBER 1” in the heading of paragraph (1) and inserting NOVEMBER 21”,
(B) in paragraph (1), by striking “September 1, 1987” and inserting “November 21, 1987”,
(C) in the second sentence of paragraph (1), by striking “before the date of the enactment of this Act”, and
(D) in paragraph (4), by striking “second sentence” and all that follows through “operating costs” and inserting “second sentence of section 1886(a)(4) of the Social Security Act, from the term ‘operating costs”.
(b) Freezing Certain Changes in Medicare Payment Regulations and Policies.—
(1) In general.—Notwithstanding any other provision of law, the Secretary of Health and Human Services is not authorized to issue after September 18, 1987, and before November 21, 1987—
(A) any final regulation that changes the policy with respect to payment under title XVIII of the Social Security Act to providers of service for reasonable costs relating to unrecovered costs associated with unpaid deductible and coinsurance amounts incurred under such title;
(B) any final regulation, instruction, or other policy change which is primarily intended to have the effect of slowing down claims processing, or delaying payment of claims, under such title; or
(C) any final regulation that changes the policy under such title with respect to payment for a return on equity capital for outpatient hospital services.
The final regulation of the Health Care Financing Administration published on September 1, 1987 (52 Federal Register 32920) and relating to changes to the return on equity capital provisions for outpatient hospital services is void and of no effect.
(2) Other cost savings policies.—Notwithstanding any other provision of law, except as required to implement specific provisions required under statute, the Secretary of Health and Human Services is not authorized to issue in final form, after September 18, 1987, and before November 21, 1987, any regulation, instruction. or other policy which is estimated by the Secretary to result in a net reduction in expenditures under title XVIIl of the Social Security Act in fiscal year 1988 of more than $50,000,000. Any regulation, instruction, or policy which is issued in violation of this paragraph is void and of no effect.
(3) Exception.—Paragraphs (1) and (2) shall not be construed to apply to any regulation, instruction, or policy required to implement the amendment made by section 931l(a) of the Omnibus Budget Reconciliation Act of 1986 (relating to periodic interim payments).
(c) Delay in Organ Procurement Requirements.—Section 9318(b) of the Omnibus Budget Reconciliation Act of 1986 is amended by striking “October 1, 1987” each place it appears and inserting “November 21, 1987”.
This section is not classified to the U.S. Code.
Joint Explanatory Statement (BBEDCRA 1987)
The Joint Explanatory Statement of the Managers of Conference on the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 included this description:
6. Special Rules for Medicare for Fiscal Year 1988
At the beginning of FY 1988, several changes pursuant to law or regulation will take effect which have an impact on the operations and costs of the Medicare programs established under Title XVIII of the Social Security Act.
The provisions of the Senate amendment relating to Medicare do not specifically address these changes.
The conference agreement includes a provision which freezes certain Medicare payment rules, and which prohibits the Secretary of Health and Human Services from promulgating certain regulations, during an extension period beginning on October 1, 1987 and ending on November 20, 1987.
The provision modifies changes that would otherwise become effective on October 1, 1987 for payments to hospitals for inpatient services as follows:
(A) The applicable percentage increase or update factor which increases hospital payments on an annual basis would be frozen at zero percent for all Prospective Payment System (PPS) hospitals for discharges occurring during the extension period.
(B) The transition from a blended payment based upon regional and national rates to a wholly national rate in the nonhospital-specific or Federal portion of a hospital’s payment would be delayed for all discharges for all PPS hospitals until November 21, 1987. As of that date the Federal portion of the payments would be based solely on national rates.
(C) The current blend of a 25 percent hospital-specific rate and a seventy-five percent Federal rate would be extended to include the first 51 days of each PPS hospital’s cost reporting period beginning in FY 1988.
(D) The current 3.5 percent reduction in payments for capital would be extended through November 20, 1987, rather than changing to seven percent on October 1, 1987.
(E) The current policy of paying 75 percent of inpatient hospital return on equity to investor-owned hospitals would be extended to include the first 51 days of any hospital cost reporting period beginning in FY 1988.
(F) The applicable percentage increase or update factor that applies to hospitals that are exempt from PPS would be zero percent for the first 51 days of any hospital cost reporting period beginning in FY 1988. The conferees wish to make clear that in applying the target amount to PPS-exempt hospitals for cost reporting periods beginning during FY 1988 the Secretary would be authorized to use a prorated applicable percentage increase in order to take the effect of this provision into account.
The provision would prohibit the Secretary of Health and Human Services from promulgating any final regulation after September 18, 1987 and before November 21, 1987 relating to payments to hospitals for bad debt resulting from uncollected deductibles or coinsurance of Medicare beneficiaries.
The Secretary would be prohibited from implementing the final regulation issued September 1, 1987 which changes the payment policy for return on equity capital relating to hospital outpatient services.
The Secretary would be prohibited from promulgating any final regulation, instruction, or policy change after September 18, 1987 and before November 21, 1987 which would be primarily intended to slow down claims processing or the payment of claims. The conferees are aware that some regulations, instructions, or policies, such as the secondary payer and medical review requirements, may have a marginal effect on the average time between receipt and payment of claims by intermediaries and carriers. The conferees do not intend this prohibition to apply where the delay in processing or payment is a minor side effect of a policy change.
The Secretary would also be prohibited from implementing any final regulation, instruction, or other policy after September 18, 1987 and before November 21, 1987, unless specifically required by statute (including the requirements of this section) which would result in a net deficit reduction in Medicare expenditures in FY 1988 of more than $50 million.
These prohibitions would not apply to regulations necessary to implement the policies relating to periodic interim payments required by the Omnibus Budget Reconciliation Act of 1986.
The provision also delays until November 21, 1987 the effective date of Section 1138 of the Social Security Act relating to hospital protocols for organ procurement, requirements for transplant programs, and standards for organ procurement agencies.
The conferees intend that the net Federal budgetary savings which occur as a result of the temporary extension of Medicare payment policies in this legislation will be credited toward deficit reduction totals for the Medicare program during the consideration of the FY 1988 reconciliation legislation, to the extent that they are not altered for this period of subsequent legislation.
U.S. House of Representatives, Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987: Conference Report to Accompany H. J. Res. 324, House Ways and Means Committee (H. Rept. 100-313) September 21, 1987.