Medicare: Changes to Balanced Budget Act of 1997 (BBA 97, P.L. 105-33) Provisions

Publication Date: November 1999

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

On August 5, 1997, the President signed into law the Balanced Budget Act of 1997 (BBA 97, P.L. 105-33). This legislation included a number of Medicare provisions. At the time of enactment, the Congressional Budget Office (CBO) estimated that Medicare spending would be reduced by $116.4 billion over 5 years (FY1998-FY2002) and $393.8 billion over 10 years (FY1998-FY2007). The BBA was expected to achieve the target savings both by slowing the rate of growth in payments to hospitals, physicians, and other providers and by establishing new prospective payment systems (PPSs) and other new payment methodologies for skilled nursing facilities, home health agencies, and other service categories. In addition, the measure established the Medicare+Choice program which expanded private plan options available to Medicare beneficiaries and modified the way payments are made to health maintenance organizations (HMOs).

In March 1999, and subsequently in July 1999, CBO lowered its Medicare spending estimates. The estimates made since enactment of BBA 97 reflect a number of factors, many of which are only indirectly related to the BBA provisions. These include an improved economic forecast, heightened anti-fraud and abuse initiatives, a slowdown in payments to providers, and lower projected enrollment in the Medicare+Choice program.

A number of health care provider groups have stated that actual Medicare payment reductions resulting from BBA 97 are larger than were intended when BBA 97 was enacted. Some groups further contend that beneficiary access to care has been adversely affected as a result. It is difficult to determine the actual impact of the legislation due to the limited data that are currently available and the fact that a number of the provisions have not been fully implemented. The Medicare Payment Advisory Commission (MedPAC) and the General Accounting Office (GAO) have reviewed existing information and find that, in general, BBA 97 provisions have not impeded beneficiary access to care. However, they caution that continued review of the implementation of the law is warranted.

Both the House and Senate considered bills to mitigate the impact of BBA provisions on Medicare providers. On November 5, 1999, the House passed the Medicare Balanced Budget Refinement Act of 1999 (H.R. 3075). On October 26, 1999, the Senate Finance Committee reported the Medicare and Medicaid Budget Correction and Refinement Act of 1999 (S. 1788). On November 18, 1999, the House passed the conference report on H.R. 3194 the District of Columbia appropriations bill. This measure incorporates the agreement reached by House and Senate negotiators on the Medicare provisions. This report summarizes the major provisions of the agreement. This report will be updated as additional legislative actions occur.