Tennessee hospital industry leaders say a proposal to raise millions through a one-year fee on most hospitals is a short-term strategy to avoid pending TennCare program cuts that would wreak havoc on doctors and hospitals.
"We've been putting a Band-Aid on this program for so long. Now we're slapping a tourniquet on it because it's really in trouble," said Craig Becker, president of the Tennessee Hospital Association, in a meeting at the Times Free Press on Wednesday.
To forestall deep TennCare reductions that hospitals leaders say could put some hospitals out of business, the hospital association helped craft legislation to create the hospital fee plan. The plan would raise $229.5 million in state funds through a 3.5 percent tax on most hospitals' net patient revenues.
About 50 of Tennessee's 154 hospitals will be exempt from the fee, including critical access hospitals and government-funded hospitals like Erlanger in Chattanooga, said Jim Brexler, chairman of the hospital association and Erlanger CEO.
Mr. Becker said the legislation is being finalized for introduction in the House of Representatives.
The money would be put back into the Medicaid program to draw down millions more in federal matching funds, resulting in a total return of $659 million that would offset proposed TennCare cuts, Mr. Becker said. Such cuts, scheduled to go into effect July 1, include a 7 percent reimbursement rate reduction for providers and a $10,000 annual cap on inpatient hospital stays.
The fee plan will allow hospitals to stay afloat at least until more permanent and systemic reforms can take place at the state or federal level, Jim Brexler, chairman of the Tennessee Hospital Association and president and CEO of Erlanger hospital, said Wednesday.
"There needs to be fundamental reform," he said. "But we can't have meaningful discussion about reform if everybody's just in total survivalist mode. This was a lot about just trying to hold it together."
Twenty-five other states have some kind of hospital fee plan, but a similar plan in Georgia put forth by the Gov. Sonny Perdue's office has been met with strong opposition from the hospital industry and legislators.
So last week, Gov. Perdue proposed an alternative to the hospital fee that includes a 10.25 percent Medicaid rate cut for hospitals and doctors in Georgia.
SELLING THE PLAN
Mr. Becker said the Tennessee Hospital Association has taken the lead in structuring the hospital fee proposal to ensure it would be palatable to the group's members. The plan includes a provision to stop the fee after one year -- although it can be renewed -- and is designed to ensure that a maximum number of hospitals will have a net gain from the plan, he said.
Even hospitals that don't serve a large proportion of TennCare patients, and that likely will lose money under the hospital fee plan, are onboard, Mr. Brexler said.
"We either sink or swim together," Mr. Brexler said. "At the end of the day, it's (all) our emergency rooms that get inundated when the (public) programs fail to get people covered."
The U.S. Centers for Medicaid and Medicare Services will have to approve the fee plan, even if it passes the state Legislature, and that could take six to 12 months. Mr. Becker said the TennCare Bureau has expressed willingness to forestall the proposed cuts until the federal government makes a decision.
Between cuts implemented in the current fiscal year and those planned for July 1, TennCare reductions total $430 million in state funds alone and $1.22 billion if the loss of matching federal funds is included, said Carol Fite, spokeswoman for TennCare.
While TennCare officials have not reviewed the specifics of the legislation, "this is a proposal that we are willing to explore and are open to working with the stakeholders," she said in an e-mail statement.
The legislation, the Annual Coverage Assessment Act of 2010, has a good outlook in the Tennessee Legislature, some of its sponsors said Wednesday.
"I am cautiously optimistic," said Sen. Doug Overbey, R-Maryville. "I think my colleagues recognize that we cannot just sit by and not do anything."
Rep. Joe Armstrong, D-Knoxville, one of the bill's House sponsors, said two-thirds of House members have told him they will support the bill.
SKEPTICAL ON HEALTH REFORM EFFECTS
Craig Becker of the Tennessee Hospital Association said hopes appear dim for the kind of meaningful federal health care reform in the Congress that could really improve health care in the United States.
"A lot of it (reform discussion) centered around costs, as opposed to changing the system, how the system works, and that's what we've got to get our arms around," he said.
Two years ago, Mr. Becker and Jim Brexler were part of the Rolling Hills Group, a collaboration among Tennessee Hospital Association members, business leaders and a former insurance executive that came up with a reform plan. Elements of the plan included more regulation of the insurance industry -- upper and lower limits on premiums and guidelines on coverage -- and bundling of payments to doctors and hospitals, instead of paying providers for each service rendered, as a means to encourage more coordinated, cost-effective care, Mr. Becker said.
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