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Health, Science, Environment

Hospitals are big losers in fiscal cliff deal

This article first appeared in the St. Louis Beacon, Jan. 8, 2013 - The so-called fiscal cliff debate involved a lot more than whose taxes would rise this year. On Jan. 1, when Congress reached a compromise to stave off widespread tax hikes, the legislative package included a measure that spared doctors from sharp reductions in Medicare reimbursements. That deal is expected to cost hospitals millions of dollars in federal payments for treating the needy.

As part of the fiscal cliff agreement, Medicare reimbursement rates will remain at the 2012 level for a year, heading off a 26.5 percent cut that was to take effect Jan. 1. Such cuts are mandated annually by a Medicare formula. But Congress heads them off at the last minute each year or shortly after the cuts supposedly take effect.

In spite of this year's relief for doctors, the Missouri State Medical Association is unhappy. It dislikes the way Congress chooses to resolve the reimbursement issue. Doctors want a permanent solution rather than an annual temporary fix to the “fatally flawed” Medicare reimbursement formula, says Tom Holloway, executive vice president of MSMA.

Annual threat to doctors

Each year, he says doctors face the “untenable” cut, which threatens to disrupt Medicare services in Missouri and elsewhere. He said it would be “catastrophic for everyone” if vulnerable, underserved patients in Missouri ended up having difficulty finding doctors willing and able to provide care if such cuts eventually prevail.

Hospitals are the big losers in the fiscal cliff deal. About half the money to circumvent the 26.5 percent Medicare payment cuts to doctors will be made up by reducing hospital disproportionate share payments and by reducing what federal health officials say have been overpayments to hospitals through improper documentation and coding for treating various illnesses. Disproportionate share payments are given to hospitals that tend to treat a higher percentage of poor patients suffering from chronic conditions. Hospitals argue that the higher medical bills for some care are not overpayments but are part of the cost of treating patients who tend to be sicker.

Dave Dillon, spokesperson for the Missouri Hospital Association, says the group has yet to project how many millions of dollars Missouri hospitals might lose. But he says the situation could become more complicated if the state refuses to expand Medicaid to help recoup some of the cost of treating needy patients. Under the health reform law, the federal government is willing to cover all costs of expanding the program for three years -- from 2014 through 2016. Eventually, the federal law calls for states to pick up a maximum of 10 percent of the cost of this care.

Medicaid's role

Dillon says reductions in disproportionate share payments would be less problematic for hospitals if Missouri chooses to expand Medicaid.

“If we do not expand Medicaid, then these are real cuts that will undermine hospitals' ability to provide care and (protect) the state’s safety net,” he said.

According to a recent study by the Hospital Association and the Missouri Foundation for Health, expanding Medicaid would not only provide care for more of the needy and working poor but would boost the economy. But several influential state lawmakers question the benefits and say they continue to oppose expansion either for financial or philosophical reasons.

Dillon says some tend to overlook the community investment that hospitals make, pointing to a report showing that hospitals provided more than $1 billion in uncompensated care in Missouri in 2011.

At any rate, he says debates about hospital and physician reimbursements underscore the need for better approaches.

“Reducing hospital reimbursements to support physician reimbursements isn’t a long-term solution and doesn’t add value to the quality of care,” he said.

In addition, he argues that if Missouri fails to expand Medicaid, “we not only lose the opportunity to improve the health of Missourians and the economy, we leave hospitals with" billions in Affordable Care Act cuts "and a mandate to provide the safety net without the resources.”

Robert Joiner Beacon staff

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