November 29, 1999

Last week, Congress moved closer to passage of a Balanced Budget Act (BBA) relief package that could provide up to $17 billion worth of relief nationally. Approximately $8.75 billion of the total relief package will go to hospitals. The Senate approved the relief package Nov. 19, and it now heads to President Clinton for his signature.

To balance the federal budget, Congress in 1997 reduced Medicare spending by $115 billion over five years. The goal was to save money by cutting what Medicare pays providers to take care of patients in hospitals and sub-acute settings. Since the BBA passed, hospitals and health systems across the country have had to make drastic cuts in services for all patients, not just those on Medicare.

For the MGH, the relief package provides at least $2.9 million in restored indirect medical education funding for this fiscal year (FY00) and at least another $4 million in FY01. The relief package eliminates the BBA-mandated 5.7 percent cut in Medicare payments to reimburse outpatient services, limits hospital losses during a transition period and allows higher reimbursement for certain medical devices and drugs.