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Tobacco settlement tops MHA's list of '99 issues

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The Missouri Hospital Association has announced its forecast of legislative issues that are likely to affect the health care industry in 1999. Following is a description of those issues and the hospital association's stance on them.

The tobacco settlement. The global tobacco settlement, negotiated between the states' attorneys general and the tobacco industry, calls for the tobacco industry to pay the state of Missouri about $4.5 billion over 25 years to compensate for Medicaid costs incurred by the state in treating tobacco-related illnesses.

The MHA proposes that the state's plan for spending the tobacco settlement proceeds be used to establish a firm financial foundation for Missouri's Medicaid program and restore its state financial support and to improve access to health care services for the uninsured and underinsured, such as establishing a trust fund that would ensure long-term financial support to the programs designed to improve access to health care services.

Options that MHA feels should be considered include:

?Making block grants to local projects, such as the proposal by St. Louis 2004, to provide health care coverage to the uninsured.

?Providing vouchers to the uninsured to purchase health care coverage.

?Expanding Medicaid to cover uninsured adults in order to gain federal financial participation.

?Permiting financial assistance to low-income working people enrolling in the state's high-risk insurance pool. Currently, only upper-income Missourians can afford to participate in the high-risk pool.

The tobacco settlement will also be an issue on the federal level. Although the settlement adopted by the states and the tobacco industry does not require congressional authorization, federal legislators will play an important role in influencing the use of settlement funds. Congress will consider legislation to keep the Health Care Financing Administration from attempting to recover from the states' settlements the federal share of Medicaid expenditures made for tobacco-related treatment. In Missouri, the federal share of Medicaid expenditures is about 60 percent of total spending.

In addressing whether to allow HCFA to recover the federal share of Medicaid expenditures from the states' tobacco settlement, Congress is expected to consider guidelines as to how states must spend the tobacco money if the federal share is not recouped. The outcome of that debate will be significant for the Missouri General Assembly and the health care industry.

Federal compliance. In 1998, legislation was introduced by the American Hospital Association to limit the ability of federal officials in the Department of Justice and the Department of Health and Human Services to inappropriately use the Civil False Claims Act to prosecute or force settlements on disputed health care billing claims. Based on the strength of legislative support for the measure, the two departments voluntarily adopted guidelines governing use of the Civil False Claims Act against hospitals. A priority for the hospital industry in 1999 is to monitor the departments' compliance with those guidelines.

The Balanced Budget Act of 1997. The Balanced Budget Act of 1997 made sweeping changes in the way Medicare pays hospitals and doctors. Now that some of those changes are being implemented, adverse consequences are being realized by hospitals.

For example, the patient transfer provision of the act penalizes hospitals for treating patients efficiently and effectively so that they are ready for transfer to a less expensive and intensive setting, such as a rehabilitation center or home health care.

Also, the act authorized a host of new and complicated payment methods for Medicare treatment in outpatient, home health and nursing home settings.

Long-term Medicare solvency. Missouri's hospitals are working to promote awareness of and possible solutions to problems of long-term Medicare solvency. Before the passage of the Balanced Budget Act, the Medicare Part A Trust Fund was scheduled to be bankrupt in the year 2002. The act pushed the anticipated date of insolvency to about 2010.

Even so, more perilous times are in store for the Medicare program as the baby boom generation retires after 2010, creating enormous demand for Medicare spending. At the same time, the number of working Americans paying payroll taxes to support Medicare is expected to drop because of demographic changes.

The federal Bipartisan Commission on the Future of Medicare is analyzing Medicare solvency issues and is slated to make recommendations to Congress in March 1999.

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