Hospitals optimistic about payment plan

Hospitals optimistic about payment plan

July 9th, 2009 by Emily Bregel in News

WHAT IS GOING ON?

On Wednesday, Vice President Joe Biden announced that hospital groups have agreed to accept $155 billion in payment reductions and other cuts over 10 years to help fund health care reform. The Obama administration's plan aims to insure 95 percent of the population. Hospitals hope broader insurance coverage will reduce the need for federal funding to cover the uninsured.

Hospital leaders in Georgia and Tennessee are tentatively optimistic about a plan announced Wednesday, hoping it will eventually lessen the financial burden on hospitals treating a significant number of patients who can't pay.

On Wednesday, White House officials announced a deal between the Obama administration, the Senate Finance Committee and four hospital industry groups. Hospitals agreed to accept $155 billion in payment reductions and other cuts over 10 years to help fund the administration's proposed health care reform plan, which aims to insure 95 percent of the population.

Hospital officials expect their contribution will ultimately pay off as more people are insured, meaning hospitals will treat far fewer patients who cannot pay for their care. The cuts would be phased in as more Americans became insured.

John Bowling, CEO of Hamilton Medical Center in Dalton, Ga., said in a statement that it is "encouraging" that the agreement could help expand health access to uninsured patients.

"It is, however, troubling that this access is being achieved by cutting funding to providers. To simply cut funding is not reform. We will have to see the specifics of the plan to determine whether true reform has been achieved," the statement said.

Officials with Hutcheson Medical Center in Fort Oglethorpe were unavailable for comment Wednesday.

The Georgia Hospital Association praised the agreement, noting that it caps the maximum amount of hospital spending cuts.

In an e-mail, Jeff Sunderland of the Georgia Hospital Association said that "as coverage expands, hospitals would see uncompensated care costs reduced at least $171 billion over 10 years. This will result in coverage for all, paid for by all."

The agreement with the hospital groups -- the American Hospital Association, Community Health Systems, the Catholic Health Association and the Federation of American Hospitals -- is tied to legislation under negotiation in the Senate Finance Committee, led by Sen. Max Baucus, D-Mont., The Associated Press reported.

About $100 billion of the hospital cuts would come from slower increases in planned Medicare payments, the AP reported. Between $40 billion and $50 billion would come from reducing federal payments to hospitals for treating uninsured and low-income patients, often at a deep loss, lobbyists told the AP.

Some savings are anticipated from cuts to funding for hospitals to prevent patients from being readmitted for additional care.

A stipulation of the agreement is that, if a public insurance plan is part of the final Baucus health reform bill -- one of the most controversial aspects of the reform debate -- the plan's payment to hospitals will be higher than what Medicare and Medicaid currently pay, the AP said. Hospitals have long complained that Medicare and Medicaid payments are too low to reimburse actual costs.

IN TENNESSEE

For Tennessee hospital industry officials, the deal reminds them of promises made about the TennCare program that left some Tennessee hospitals struggling in the 1990s.

"Until we see the details I'm going to keep my powder dry," said Craig Becker, president of the Tennessee Hospital Association. "It's kind of 'trust but verify,' as President Reagan used to say."

Mr. Becker recounted that, in the 1990s, the TennCare program -- a broad expansion of the state's Medicaid program that amounted to an experiment in universal health care -- wanted to cover such a wide expanse of the uninsured population that, to help fund the program, hospitals agreed to give up federal payments that help cover the uninsured.

The expected savings from reductions in uninsured patients did not materialize, a fact compounded by very low reimbursements for treatment that was provided, and hospitals were left without payment to support the care for a still-large uninsured population.

Under the White House deal, however, the cuts would be phased in over time as more and more Americans became insured.

"In this case, the agreement was that any cuts would be tied to actual achievement of expanded coverage," said Jim Brexler, president and CEO of Erlanger hospital. "If people have insurance coverage, then some of the subsidies, like disproportionate share funding, that cover uninsured would logically not be needed, or at least not at the levels that they're at," he said.

The Associated Press contributed to this story.