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(Office of the Press Secretary)

For Immediate Release June 20, 2000
                  Proposes New $40 Billion Investment in 
               Medicare Health Care Provider Payment Rates

Today, President Clinton will endorse Vice President Gore's proposal to ensure that all Medicare funds are spent on Medicare by taking the program off-budget. He will also unveil a new, $21 billion over five years ($40 billion over 10 years) Medicare and Medicaid health care provider payment restoration initiative designed to ensure adequate reimbursement to hospitals, rural providers, teaching facilities, nursing homes, home health care agencies, managed care plans, and other providers. The proposal, designed to continue access to high-quality care, clearly illustrates that adequate financing for provider payments need not conflict with needed funding for a long-overdue and voluntary Medicare prescription drug benefit. The President will underscore that the improved status of the Medicare Trust Fund makes it possible to pay for provider payment restorations and help offset the cost of a prescription drug benefit while still achieving the President's Medicare reform goal of extending the Trust Fund's life to past 2030. He will call on the Congress to pass these critically important Medicare reforms and, in so doing, assure the availability of an affordable, meaningful option to all elderly and disabled Medicare beneficiaries.

FINANCIAL DISTRESS OF PROVIDERS LINKED TO QUALITY OF CARE CONCERNS FOR MEDICARE BENEFICIARIES. In the aftermath of the Balanced Budget Act of 1997, actual and projected spending on health care providers has been lower than expected. This has contributed to significantly improving the financial health of the Medicare Trust Fund, which is now solvent for the next quarter-century. However, recent evidence suggests that some of this reduction in spending has the potential to undermine access to quality health care services. Specifically: hospitals' financial status has deteriorated significantly since 1997 and experts estimate that hospital Medicare inpatient margins will continue to fall; many hospital discharge planners reported increased difficulty in obtaining home health services for Medicare beneficiaries; and similarly, 58 percent of hospital discharge planners reported that Medicare patients requiring extensive services such as intravenous medications have become more difficult to place in nursing homes. The improved status of the Medicare Trust Fund enables the Administration to enhance provider payments as well as provide for a long-overdue prescription drug benefit. In combination with the President's Medicare reforms and surplus dedication to the Medicare Trust Fund, these investments work to strengthen the Medicare program while still achieving the President's Medicare reform goal of extending the solvency of the Medicare Trust Fund to 2030.

PRESIDENT CLINTON ENDORSES VICE PRESIDENT GORE'S PROPOSAL TO TAKE MEDICARE OFF-BUDGET. To ensure that revenue from Medicare payroll taxes are used solely for Medicare and to help buy down the national debt, the President will endorse the Vice President's proposal to take the Medicare Trust Fund off-budget. This fiscally prudent step also has the benefit of assuring that Medicare surplus dollars will only be used for debt reduction and to help to extend the solvency of the Medicare program. It will also ensure that future budget bills do not rely on arbitrary cuts to the program simply to finance non-Medicare budget priorities.

PRESIDENT CLINTON PROPOSES TO RESTORE PAYMENT TO CRITICALLY IMPORTANT MEDICARE PROVIDERS. To mitigate the access problems currently confronting Medicare beneficiaries, the President will propose to take new action to ensure that hospitals, teaching facilities, rural providers, home health agencies, nursing homes, and other providers receive adequate reimbursement. It provides $9 billion over 5 years ($19 billion over 10 years) for specific policies that mainly stop payment reductions scheduled to take place on October 1, 2000 and provides $11 billion over 5 years ($21 billion over 10) in unspecified funding to be used in developing additional targeted and / or permanent policy modifications for provider reimbursement. Highlights include:

ELIMINATES MEDICARE SAVINGS ASSUMED IN 2001 BUDGET. The President's proposal will drop more than $30 billion over 10 years in savings that were previously assumed in the Administration's Medicare reform initiative. These provisions were eliminated because of the reductions in the Medicare baseline. The President's proposal will continue to include, however, savings that would be achieved through the establishment of market-oriented reforms that adopt private sector purchasing tools to improve quality and efficiency, inject price competition into managed care payments, and combat fraud.

THE PRESIDENT URGED BIPARTISAN CONGRESSIONAL COOPERATION THAT MIRRORS THE BIPARTISAN ACHIEVEMENT IN DISTRICT OF COLUMBIA COLLEGE ACCESS. The President will challenge the Congress to work on prescription drug coverage and provider restoration policies in the same bipartisan fashion it did in the development of the DC College Access legislation, which he will highlight today, as well as the Kennedy-Kassenbaum legislation and the State Children's Health Insurance Program.

PRESIDENT CLINTON URGES THE CONGRESS TO PASS A REAL MEDICARE PRESCRIPTION DRUG PLAN, WITH AN AVAILABLE, AFFORDABLE BENEFIT. Today, President Clinton will underscore that the Republican proposal fails to meet his principles for a prescription drug benefit that he can support. The Republican plan: fails to assure the availability or stability of drug coverage options by building on the flawed private Medigap insurance market rather than adding a prescription drug benefit to Medicare; fails to ensure the affordability of coverage options, relying on a flawed "trickle-down theory" that would end up subsidizing insurers, not seniors; does not guarantee a meaningful benefit, allowing private insurers to define deductibles, copays and benefit limits, promoting competition on confusion rather than price and quality; and limit choice of drugs and pharmacies.