Medicare Prescription Drug, Improvement, and Modernization Act of 2003
On December 8, President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("Prescription Drug Act") into law. The Prescription Drug Act included the largest expansion of the Medicare program since its inception. The prescription drug benefit mandated by the new law will become effective in 2006 for approximately 41 million Medicare beneficiaries. The new law also makes fundamental changes to the structure of the Medicare program and changes payment methodologies for most types of providers.
Affect of Act on Medicare Payment Schedule: Provider-Related Provisions
The Prescription Drug Act included numerous provisions affecting physicians, hospitals and other providers.
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Physicians and Other Individual Providers: CMS published a final rule that will increase payments to physicians, physician assistants, nurse practitioners, occupational therapists, physical therapist and other providers paid under the Medicare physician fee schedule by an average of more than 1.5% for calendar year 2004. The final rule replaces the 4.5% decrease published by CMS last November. The change was mandated by the Prescription Drug Act which blocked the cut and required a 1.5% increase for 2004. The new rates became effective on January 1st. An additional 1.5% increase will replace another projected cut in 2005. |
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Skilled Nursing Facilities: Payments will be adjusted to reflect the high cost of treating patients with AIDS. |
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DME: Durable medical equipment rates will be frozen for 3 years. Rates for the top 5 codes will be adjusted. |
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Hospital Inpatient Services: Hospitals under PPS will receive a full market-basket update for inpatient services in 2004. Hospitals must submit data on 10 quality of care indicators to CMS in order to receive the full market basket in 2005-2007. Hospitals that do not submit the information will receive a payment update of market-basket minus 0.4%. |
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Hospital ER Care: Hospitals will receive approximately $1 billion over the next 4 years to cover the cost of emergency care for undocumented immigrants. |
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Hospital Medical Education Compensation: Hospitals will receive a 6% increase in the indirect medical education adjustment to PPS hospital payments. |
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Hospital Outpatient Services: Payment policies for certain radiopharmaceuticals, drugs, and biologicals have been revised. |
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Specialty Hospitals: An 18 month moratorium will be imposed on the self-referral whole hospital exemption for new physician-owned "specialty hospitals" devoted to certain specialties. (Specialty hospitals in operation or under development as of 11/18/2003 are exempt.) |
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Rural Healthcare Providers: Changes in payment rates will increase payments to these facilities by $25 billion. |
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