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Hospitals and health care systems get $11.5 billion over five years in the Medicare, Medicaid, SCHIP Benefits Improvement, and Protection Act of 2000 (BIPA), passed by Congress late last year. Among other benefits, BIPA restores Medicare funds cut in the 1997 Balanced Budget Act (BBA). The funds are broken down as follows.
• $3.7 billion: Medicare payments will rise 3.4% in 2001, up from 2.3% from BBA. Estimates show prices rising by 3.05% in FY 2002, up from an estimated 2.5% under BBA.
• $900 million: Medicare outpatient payments will rise 4.4% in 2001, up from 2.5% under BBA.
• $700 million: Payment reductions for indirect medical education have been frozen at 6.5% for FY 2001 and FY 2002.
• $100 million: An additional 1% reduction in Medicare Disproportionate Share Hospital (DSH) has been eliminated in FY 2001 and FY 2002.
• $700 million: 55% to 70% increase in Medicare payments for bad debt.
• $300 million: Increase in floor payments for direct graduate medical education payments to 85% of the national average.
• $1.25 billion: Elimination of Medicaid DSH cut under BBA for FY 2001 and FY 2002 along with an increase in allotments in low-DSH states.
• $200 million: Removal of the 2% payment reduction for rehabilitation hospitals in FY 2002; they can move immediately to the prospective payment system (PPS).
• $1.35 billion: Medicare DSH payment eligibility equalized between rural and urban hospitals.
• $350 million: 3.2% rise in skilled nursing facility (SNF) payments in FY 2001, with additional payments for nursing costs.
• $200 million: Change in rules for provider-based status by grandfathering existing provider-based entities for two years and adding geographic market area option.
• $625 million: Rural hospital improvements, including making the Medicare-dependent hospital program more equitable, updating the target amounts for sole community hospitals, increasing critical access hospital payments, and improving rural ambulance payments.
• $300 million: Long-term care hospital payments increase.
• $125 million: 5% increase in hospice payments for FY 2001.
• $525 million: One-year delay of 15% reduction in home health payments, full market basket for FY 2001.
• $150 million: 10% increase in rural home health agency payments.
• $25 million: Increased incentives for psychiatric hospitals.
• $50 million: Increased renal dialysis composite rate.