Gun to the head

Debt-ceil­ing law re­minds providers who runs the health­care show

Modern Healthcare - - Opinions Editorials - DAVID BURDA Edi­tor

It just doesn’t get any eas­ier, does it? Like a weary sol­dier be­ing called up for an­other tour, health­care providers are be­ing asked to pick up arms again to battle the Medi­care pay­ment cuts called for in the Bud­get Con­trol Act of 2011 that be­came law last week. The Pa­tient Pro­tec­tion and Affordable Care Act. The fi­nal value-based pur­chas­ing reg­u­la­tions. The In­de­pen­dent Pay­ment Ad­vi­sory Board. And now this.

If providers hadn’t re­al­ized it be­fore, they should know now that they no longer are in con­trol of their own in­dus­try. It’s in the hands of those who pay the bills, and the big­gest hands of all are the fed­eral gov­ern­ment. That’s why we smile in our Chicago news­room ev­ery time we hear some­one say the gov­ern­ment should keep its hands off health­care. It’s way, way too late for that. The hands are at health­care’s throat.

In July, the CMS re­leased a re­port on health­care costs that es­ti­mated that the nation spent about $2.6 tril­lion on health­care in 2010. Of that amount, the gov­ern­ment—both state and fed­eral—cov­ered about 45%. By 2020, na­tional health­care spend­ing will hit a lit­tle over $4.6 tril­lion, the re­port said. By then, state and fed­eral gov­ern­ments will be on the hook for more than 49% of that tab. That’s a price the gov­ern­ment can no longer af­ford to pay, and it wants to rene­go­ti­ate its bill.

One way the gov­ern­ment wants to do that is with last week’s debt-ceil­ing leg­is­la­tion. Un­der the law, a 12-mem­ber bi­par­ti­san con­gres­sional panel is charged with find­ing by Nov. 23 up to $1.5 tril­lion in sav­ings over the next 10 years. The panel must have its sav­ings plan en­acted a month later by Congress. Provider groups are con­cerned that the panel may go af­ter Medi­care re­im­burse­ment rates to help meet its sav­ings tar­get. If the panel can’t de­cide or if its pro­posed sav­ings plan fails to be­come law, an au­to­matic 2% across-the-board re­duc­tion in Medi­care re­im­burse­ment rates will take ef­fect next year. That’s the out­come providers should hope for.

Pas­sage of the law brought out the usual cry­ing tow­els from the health­care in­dus­try. Alarmist rhetoric filled the air­waves and in­boxes across the coun­try: The plan will dev­as­tate the Medi­care pro­gram and take the en­tire in­dus­try down with it was the mes­sage. Well, not re­ally. For most, it will be a pinch, not a punch, if the 2% trig­ger is pulled.

A day be­fore Pres­i­dent Barack Obama signed the debt-ceil­ing bill into law, the CMS is­sued a set of fi­nal reg­u­la­tions on Medi­care pay­ment rates to in­pa­tient hos­pi­tals. Un­der the reg­u­la­tions, Medi­care pay­ment rates will go up 1% in fis­cal 2012, which starts Oct. 1. That will mean an ad­di­tional $1.13 bil­lion for hos­pi­tals from Medi­care in the com­ing year. The same reg­u­la­tions gave long-term acute-care hos­pi­tals a 1.8% bump worth an ad­di­tional $126 mil­lion. A few days be­fore that, the CMS is­sued other reg­u­la­tions that will in­crease Medi­care pay­ment rates to hos­pices and re­ha­bil­i­ta­tion hos­pi­tals by 2.5% and 2.2%, re­spec­tively. (Skilled nurs­ing fa­cil­i­ties took an 11.1% hit in fis­cal 2012 equal to nearly $4 bil­lion.)

So, the net ef­fect of the au­to­matic 2% cut in fis­cal 2012 if the com­mis­sion’s sav­ings plan fails would be a 1% hit on hos­pi­tals, with LTACs, hos­pices and re­hab fa­cil­i­ties still get­ting more money. It could be a lot worse. Just ask nurs­ing homes. Or ask physi­cians, who are fac­ing a nearly 30% cut in Medi­care pay Jan. 1.

Some in­sti­tu­tional health­care providers haven’t made it eas­ier on them­selves, ei­ther. Sto­ries about multi­bil­lion-dol­lar ac­qui­si­tions, multi­bil­lion­dol­lar con­struc­tion and ren­o­va­tion projects, ex­or­bi­tant charges for ser­vices and seven-and eight-fig­ure salaries for health­care ex­ec­u­tives splash across news­pa­pers, mag­a­zines, web­sites and smart­phones daily. At the same time, many of the same or­ga­ni­za­tions and ex­ec­u­tives are balk­ing at some of the re­form law’s strong-arm tac­tics to pro­vide more cost-ef­fec­tive care.

What Congress and Obama did last week was to gen­tly yet firmly re­mind the health­care in­dus­try who’s in charge.

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