	Changes to Medicare's Fee for Service Program

The legislation contains extensive changes to Medicare's FFS program, including paymentincreases and, in certain instances, decreases; development of competitive acquisition programs;implementation or refinement of other prospective payment systems (notably, the development ofan end-stage renal disease (ESRD) basic payment system); expansion of covered preventive benefits;establishment of demonstration programs; and required studies. CBO estimates that these provisions will increase direct Medicare spending by $1.7 billion over the10-year period. Generally, Medicare payments to hospitals will increase under the conference report. The impact of the legislation on Medicare's spending for physician spending is difficult to determine. The follow provisions affecting other providers and practitioners are included in the legislation: 
Ambulatory Surgical Centers. Durable Medical Equipment (DME). Home Health. Selected Fee-for Service Demonstration Projects. The legislation establishes numerous demonstration projects for the Medicare program. Chronic Care Improvement under Fee-For-Service. The legislation requires the Secretary to establish and implement chronic care improvementprograms under fee-for-service Medicare to improve clinical quality and beneficiary satisfaction andachieve spending targets specified by the Secretary for Medicare for beneficiaries with certainchronic health conditions. CBO has estimated that thisdemonstration will increase direct Medicare spending by $500 million over the 10-year period. The Secretary is required to conduct a 2-year demonstrationwhere payment is made for certain drugs and biologicals that are currently provided as "incident to"a physician's services under Part B. Expansion of Covered Benefits. CBO estimates that this provision will increase directMedicare spending by $1.7 billion over the 10-year period. Beneficiary Payments

The bill contains two provisions which change the beneficiary premiums and deductibles. Income-Relating the Part B Premium. CBO estimates the Medicaid and other provisions included in the bill to increase direct spending by $5.7 billion between FY2004 and FY2013. This report contains a detailed side-by-side comparison of the relevant provisions of the legislation, S. 1 , as passed the Senate, and H.R. 1 , as passed the House. Beneficiary Issues: Cost-Sharing Amounts and Provision of Information

		Other Health-Related Studies, Commissions or Committees

		Medicaid and State Children's Health Insurance Program (SCHIP) Provisions

		Cost Containment and Miscellaneous Financial Provisions
On November 22, the House of Representatives voted 220 to 215 to approve the conference report on H.R. 1 , the Medicare Prescription Drug, Improvement, and Modernization Actof 2003. The Senate, on November 24, voted 54 to 44 to approve the conference report. Earlier, theconferees of the Medicare prescription drug and modernization legislation announced an agreementon November 16 and the legislative text was released November 20. The legislative language canbe downloaded from the House Committee on Ways and Means website at: http://waysandmeans.house.gov . The bill was signed into law by the President on December 8,2003.
As well as establishing a prescription drug benefit for Medicare beneficiaries, the legislation contains provisions that involving significant payment increases, payment reductions, an expansionof covered benefits, new demonstration projects and new beneficiary cost-sharing provisions for thetraditional Medicare fee-for-service (FFS) program. The bill includes a measure that would requirecongressional consideration of legislation if general revenue funding for the entire Medicare programexceeds 45%. Provisions affecting the State Childrens' Health Insurance Program (SCHIP) andMedicaid programs are included in the legislation as well.
Earlier this year, under Congress' FY2004 budget resolution, $400 billion was reserved for Medicare modernization, creation of a prescription drug benefit, and, in the Senate, to promotegeographic equity payment. The Congressional Budget Office (CBO) has estimated that thelegislation for H.R. 1 would increase direct (or mandatory) spending by $394.3 billionfrom FY2004 through FY2013. Prescription drug spending is estimated at $409.8 billion over the10-year period and Medicare Advantage spending at $14.2 billion. Overall, the fee-for-serviceprovisions which change traditional Medicare are estimated to save $21.5 billion over the 10-yearperiod and adjusting the Part B premium to beneficiaries' income is estimated to save $13.3 billionover the period. Some fee-for-service provisions will increase spending over this 10-year periodincluding the provisions affecting hospitals and physician. Other fee-for-service provisions areprojected to save money over the period including those affecting durable medical equipment,clinical laboratories and home health agencies. The CBO estimate is available on the CBO websiteat ftp://ftp.cbo.gov/48xx/doc4808/11-20-MedicareLetter.pdf .