Medicare beneficiaries with lower incomes and limited savings would be eligible to receive extra assistance under the benefit outlined in the Medicare legislation. Those with the lowest incomes would receive the most generous help. In North Dakota, it is projected that nearly 34,000 beneficiaries will be eligible for this assistance. These subsidies are outlined below.

• Seniors and disabled beneficiaries with annual incomes below 100 percent of the federal poverty level ($8,980 for singles/$12,120 for couples). Seniors in this category would pay only $1 when buying generic drugs and $3 for most brand-name drugs. They would not be charged a premium, and there would be no deductible and no coverage gap.

• Seniors and disabled beneficiaries with incomes up to 135% of the poverty level ($12,123 for an individual/$16,362 for a couple) and countable assets – that is, excluding the value of a house, car, etc. -- of less than $6,000 ($9,000 for a couple). Seniors in this category would pay just $2 when buying generic drugs and $5 for brand name drugs. They would not be charged a premium, and there would be no deductible and no coverage gap.

• Seniors and disabled beneficiaries with incomes up to 150% of the poverty level ($13,470 for a single person/$18,180 for a couple) and countable assets of less than $10,000 ($20,000 for a couple). Seniors in this category would pay a $50 annual deductible. After the deductible, the plan would pay 85 percent of their costs up to $3,600 in drug spending. After reaching this spending level, enrollees in this category would pay just $2 when buying generic drugs $5 for brand name drugs. Enrollees in this income category would be charged a discounted premium that depends on their level of income.

By June of 2004, all Medicare beneficiaries will be provided access to a new, Medicare-approved drug discount card. Some estimate this new card will save beneficiaries between 10 to 25 percent off the retail price of most drugs. When the discount card becomes available, seniors with incomes below $12,123 ($16,362 for couples) who lack other drug coverage will receive up to $600 in new, annual assistance to help them afford their medications until the full Medicare drug benefit is available in 2006.

Under current law, Medicare underpays rural health care providers. Earlier this year, Senator Conrad authored the Health Care Access and Rural Equity Act (H-CARE), which takes steps to close the funding gaps between urban and rural medical providers. The Medicare bill includes many provisions from Conrads H-CARE legislation and will bring $170 million to North Dakota health care providers over the next ten years. Key provisions from H-CARE that were included in the Medicare bill are outlined below.

Before last year, urban hospitals received basic payments under Medicare that were 1.6 percent higher than those in rural communities. This year, Congress temporarily equalized the “standard payment,” bringing the rural level up to the urban level for one year. The new Medicare bill includes Conrads proposal to make the fix permanent, so that all North Dakota hospitals start out with the same basic Medicare payment. This will bring roughly $33 million to North Dakota hospitals over the next ten years.

Based on measures in Senator Conrads H-CARE bill, the Medicare legislation changes the Medicare “wage index” rules to reflect the higher labor costs rural states have experienced, and increase payments to rural hospitals to better reflect those costs. This will bring nearly $50 million to North Dakota hospitals over the next ten years.

The new Medicare legislation includes Senator Conrads “add-on” payment for rural hospitals that serve less than 800 patients per year. It gives the very smallest hospitals the highest payment, 25 percent of total inpatient costs. Larger hospitals will receive reduced payments pegged to admissions. This new payment adjustment would provide about $2.7 million to the smallest North Dakota hospitals over the next ten years.

So-called “DSH” hospitals that serve a disproportionate share of uninsured and low-income patients in urban areas receive unlimited add-on payments to help cover those costs. Yet DSH payments to rural hospitals are capped at 5.25 percent of inpatient payments. The Medicare bill raises the cap on rural providers to 12 percent to help North Dakota hospitals cover the costs of treating the uninsured. This measure will improve payments for North Dakota hospitals by nearly $1 million over ten years.

The Medicare bill also makes a number of changes from H-CARE that will strengthen the Critical Access Hospital program. These include providing critical access hospitals more flexibility to attain the designation and ensuring that Medicare reimburses the nurses, physician assistants and clinical nurse specialists on call at these hospitals, just as on-call doctors are reimbursed today. The legislation also improves reimbursement for these hospitals by increasing payments to 101 percent of costs. These changes will bring nearly $3.5 million to Critical Access Hospitals in North Dakota.

The Medicare legislation also includes several new provisions, supported by Senator Conrad, which were not originally included in the H-CARE bill. These new provisions include:

The Medicare bill extends a 5 percent add-on payment to Medicare reimbursement for home health services in rural areas. The law that provided the add-on expired earlier this year.

Under this legislation, rural ambulance services would get a 2 percent increase in their Medicare payments and urban ambulance providers would receive a 1 percent adjustment. North Dakota ambulance providers and incur higher per-trip costs due to longer travel distances and fewer transports. This provision ensures that ambulance services are more appropriately reimbursed.

The Medicare bill takes steps to eliminate a pending cut to physician payments and instead provides a 1.5 payment increase for the next two years. Also, it includes measures to address geographic inequities in physician payment. These adjustments will provide at least an additional $40 million for physician services in North Dakota.

Bonus Reimbursement for Rural Doctors

Doctors who practice in rural areas will receive a 10 percent Medicare add-on payment as an incentive to maintain their service to rural Medicare beneficiaries. Under current law, doctors are required to apply for the bonus payment. This provision makes the payment automatic, which will provide about $3 million to physicians serving the most rural areas in the state.

The Medicare bill includes a number of other provisions championed by Senator Conrad to improve Medicare for seniors and the disabled.

Treatment for five percent of Medicare-covered seniors who suffer from chronic diseases uses fully 50 percent of the Medicare budget nationwide. The Medicare legislation includes a pilot project supported by Senator Conrad to improve treatment and prevention of chronic diseases, such as diabetes, congestive heart failure, and hypertension, which will improve the health of patients and reduce costs to the Medicare program.

Most medical experts agree that a key component to staying healthy is access to preventive care. To date, the Medicare program has fallen short on providing coverage of needed preventive services. The Medicare legislation takes steps to address these shortfalls by providing coverage of a physical examination for beneficiaries and covering screening services for diabetes and cardiovascular disease. Also, the legislation will improve payments for mammography services.

The legislation includes measures pushed by Senator Conrad that will provide drug coverage under Medicare for up to 50,000 patients nationwide who self-inject drugs at home to treat chronic diseases, such as multiple sclerosis or rheumatoid arthritis. Currently, such drugs are only covered if they are administered to a patient in a doctors office. This measure would allow certain Medicare beneficiaries to receive help covering the costs of these products, rather than waiting until 2006 when the full drug benefit is in place.

The bill also includes measures to increase reimbursement for dialysis services by 1.6 percent in 2005, which will help dialysis providers catch up with increases in their costs. This provision builds on legislation authored by Senator Conrad and will be particularly helpful for rural dialysis providers, who have been historically underfunded compared to their urban counterparts.