The Honorable William Roth, Jr.
Chair, Finance Committee
U.S. Senate
Washington, DC 20510

Dear Chairman Roth:

It has come to our attention that the Health Care Financing Administration (HCFA) is requesting that Congress include technical language in the Medicare Balance Budget Refinement Act of 1999, which would specify that skilled nursing facilities (SNF) should bill Medicare directly for services provided by outside suppliers, such as clinical laboratories. We strongly object to the inclusion of this language.

Section 4432(b) of Balanced Budget Act of 1997 (BBA'97), otherwise know as consolidated billing, states that Medicare will pay SNFs for services provided by outside suppliers. The SNF, in turn, must pay the contractor. This provision of the 1997 statute, however, conflicts with a previous congressional directive that requires health care providers to bill Medicare directly for their services [Social Security Act, Section 1833(h)(5)(A)]. We agree with HCFA that Congress must, at some point, resolve this conflict. However, the complexity of this issue requires more discussion between Congress, HCFA, SNFs and the provider community than time permits at the moment.

This conflict is more than a mere "technical" issue. If implemented, SNFs may overutilize provider services to increase their profits (HCFA would permit SNFs to keep the difference between the Medicare rate and the amount the SNF pays the outside provider). Also, consolidated billing would unnecessarily add to overall health care costs by requiring both outside suppliers, such as laboratories, and SNFs to bill for the same services. We believe the current system whereby the laboratory bills Medicare directly for their services should be retained.

Our purpose for contacting you now, however, is not to debate the merits of the issue, but to point out that this issue needs more thoughtful deliberation and should not be addressed as a "technical" issue in the BBA'97 relief package.

By way of background, AACC is the principal association of professional laboratory scientists--including MDs, PhDs and medical technologists. AACC's members develop and use chemical concepts, procedures, techniques and instrumentation in health-related investigations and work in hospitals, independent laboratories and the diagnostics industry nationwide. The AACC's objectives are to further the public interest and educational activities and to help maintain high professional standards.

If you have any questions or we may be of any assistance, please call me at (405) 271-3571 or Vince Stine, Director, Government Affairs, at (202) 835-8721.



K. Michael Parker, PhD

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