Push, pull

Hos­pi­tals, law­mak­ers dis­agree on Medi­care rates

Modern Healthcare - - The Week In Healthcare - Matthew DoBias

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.

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