Hospitals, lawmakers disagree on Medicare rates
Lawmakers in Washington ratcheted up pressure on hospitals to support a public plan option that pays them based on Medicare rates even while the sector has continued to nix such proposals.
While the issue has played out primarily in the House, where three separate bills contain plans to establish government-backed health plans, the Senate, too, has put providers on notice, according to one healthcare lobbyist.
Indeed, two of the three bills in the House would use Medicare as a payment baseline. A third bill would allow for negotiated rates— a move favored by more-conservative Democrats who largely hail from rural districts.
An aide to House Speaker Nancy Pelosi (D-Calif.), however, downplayed the talk. “The reimbursement for hospitals is an idea that was being explored and nothing beyond that at all,” the aide said in an e-mail.
The American Hospital Association, through a spokeswoman, said it opposes a public program that bases its payments on Medicare.
Still, the topic gained renewed vigor after the Senate Finance Committee approved a broad health reform package last week, including one Republican vote from Sen. Olympia Snowe (R-Maine). The Finance Committee’s bill would require all U.S. residents to buy some level of health insurance, offering $461 billion over the next decade in federal subsidies to help them do so. It also expands Medicaid eligibility. Additionally, the legislation cuts Medicare payments to virtually every provider group while it establishes a number of programs aimed to improve and coordinate care from hospitals to physicians.
That bill will be melded to another one passed by the Senate Health, Education, Labor and Pensions Committee, which includes a public option. The Finance bill does not.
Over the past week, more and more senators have sought to structure a public plan that could win over all 58 Democrats in that chamber, as well as a few of the 40 Republicans and its two independents.
Under one scenario, hospitals would be paid a rate akin to Medicare plus 5%, roughly the same that physicians would earn. The formula refers to how much more the federal government reimburses over the cost of care. But hospital executives are quick to point out that it’s based on what’s called “allowable costs,” meaning that it ultimately falls to the CMS to determine what’s fully covered.
Talk of rates based on Medicare could
greatly hinder what has been somewhat tepid support for the health reform packages crafted in the House and Senate.
The higher-than-expected number of people who will remain uninsured under the Finance package has concerned the nation’s hospital groups, who have largely withheld any visible signs of support. And until those numbers are improved, lawmakers have increasingly narrower room to negotiate. Still all sides said they continue to work together.
Providers have long
that Medicare and Medicaid pay less than the actual cost it takes to treat a patient. So even with a 5% boost, the total package rarely meets the overall costs faced by hospitals and physicians.
Jerry Jurena, president of the North Dakota Healthcare Association, said that determinations by the CMS have not always factored in the real cost of providing care. If a public option were to emerge that paid Medicare rates, Jurena said it “would be devastating” for his state.
“Five percent doesn’t bring them up to being whole,” Jurena said. “Chances are, healthcare in North Dakota would become extinct.”
It’s a message that at least one key senator has carried with him to Capitol Hill. Sen. Kent Conrad (D-N.D.), who helped craft the Finance bill that passed last week with the slimmest of help from Republicans, said he is opposed to a public plan—in part because of its reimbursement structure.
Conrad has championed the creation of “cooperatives” over public health options even though the Congressional Budget Office said cooperatives would have a minimal impact on driving down costs. “A public option tied to the Medicare level of reimbursement would work an extreme hardship on my state,” he said.
Conrad opposes public plan tied to Medicare reimbursement.
Finance Committee Chairman Max Baucus (D-Mont.) shakes hands with Sen. Olympia Snowe (R-Maine), the only Republican to vote on the committee’s reform bill last week.