Home health providers wanted higher payments. The 1997 law called for a prospective
payment system to take effect in Oct. 2000. The new system would limit payments to agencies
based on the amount of care they provided for patients with categories of need. Provider
lobbyists also complained that the temporary payment system forced some agencies to close.
MedPAC urged speedy development of regulations. The amount they wanted in 2000 was $8
billion (Carey 2000a)).
The health plans wanted more money for Medicare+Choice, a Medicare managed care
plan established in the BBA that Congress hoped would encourage more plans to offer coverage
to Medicare beneficiaries. Association spokesmen noted that the reimbursement was too low to
entice plans to join the new program, even though the General Accounting Office reported that
HMOs were overpaid by $1.3 billion in 1998 (Carey2000b).
The initial “restoration bill” was estimated to cost $9.4 billion over five years. By the
time it was adopted in late December 1999 as part of an omnibus spending bill (PL 106-113), it
had ballooned to $16 billion over five years. Hospitals saw a boost of $7.2 billion over five
years. Health plans got $4.8 billion for Medicare+Choice and bonus payments for plans that
agreed to serve counties not currently covered by a Medicare managed care plan. Home health
got an additional $1.3 billion, mostly from another postponement of the 15 percent reduction.
Nursing homes and therapy services garnered $2.7 billion over five years (1999 CQ Almanac).
2000
In spite of additional funding provided in 1998 and 1999, in 2000 the providers were
back. The health plans argued that after initially attracting a substantial number of plans to
participate, by 2000 nearly 100 plans had reduced services or left the program altogether (Carey
2000b) expecting to strand as many as 934,000 seniors by Jan. 2001 (Carey 2000c). At issue was
Convention