Federal 'doc fix' will bring millions to Tennessee hospitals

photo Lamar Alexander

Though Tennessee hospitals are still smarting from the failure of Gov. Bill Haslam's attempt to expand Medicaid, they have found some consolation in a congressional bill passed Tuesday night that will bring $80 million in federal and state funding to hospitals each year for the next decade.

"This doesn't take the sting out of Insure Tennessee, but it's still a major victory for Tennessee hospitals," said Craig Becker, president of the Tennessee Hospital Association.

For many safety-net hospitals in Tennessee, the funding "can mean the difference between them having anything on their bottom line or being in the negative," Becker explained. "For some of our smaller rural hospitals it can mean keeping their doors open."

The billions in funding, called Disproportionate Share Hospital payment, or DSH -- pronounced "dish" -- have been doled out to states for years in an effort to help hospitals manage the inevitable burden of uncompensated care from uninsured or underinsured patients.

In Tennessee, that amounts to more than $2 billion annually, Becker said. But Tennessee is the only state in the nation now left out of the annual DSH payment. That's because when Tennessee began the TennCare program in 1994, state leaders were so optimistic that hospitals would no longer have uncompensated care that they opted out of the federal program.

But when the need to become included in the funding pool became apparent, the quest to get the rest of Congress to agree was an uphill battle. The price tag was just too high.

While congressional leaders have managed to get a series of legislative "patches" passed, bringing in between $60 million and $80 million at a time, the amounts have paled in contrast to the hundreds of millions neighboring states get. Georgia hospitals, for example, received upwards of $434 million through their state and federal matching program in 2014.

And Tennessee's funding has never been reliable. When the Tennessee patch failed to make it through Congress last year, it was not long before Tennessee hospitals -- including Erlanger Health System -- were sounding alarm bells.

"The looming threat of a big gap in DSH funding creates a tremendous amount of instability and uncertainty," said Steve Johnson, Erlanger vice president of government relations, who said Erlanger's share of DSH money is about $8.5 million.

Republican Senators Lamar Alexander and Bob Corker ultimately had to lobby U.S. Health and Human Services officials to agree to an administrative patch to bring in the money last year.

"We laid in the railroad tracks last year to get DSH payments for our state," Corker said in an editorial board meeting with the Times Free Press last week.

Corker and Alexander, who is the chairman of the Senate health committee, have both said they have fought for years to bring a more permanent fix for the DSH problem. But this year, they had the opportunity to attach the fix to a major healthcare bill -- the Medicare Access and CHIP Reauthorization Act of 2015 -- and the DSH fix finally was able to pass.

Applauding the sweeping 98-2 Senate vote that allowed the Medicare bill and the Tennessee DSH fix to pass, Alexander said late Tuesday that he hopes it will lead to a solution that will transcend the decade.

"I look forward to continuing my work with members of the Tennessee delegation on a permanent solution for Tennessee hospitals that provide care for those who need help the most," he said in a statement.

Meanwhile, Tennessee doctors' groups are also applauding the passage of the major Medicare bill, known as the "doc fix" -- that they have been fighting to get passed for years.

The bill seeks to overhaul a 1997 formula known as the Sustainable Growth Rate that includes a funding cap that each year threatens to significantly cut physicians' Medicare payments. This year, that was tracking to be about 21 percent -- a potentially devastating amount for private physicians, Chattanooga Medical Society Executive Director Rae Bond said.

Congress has had to swoop in 17 times with legislative "patches" to keep that from happening, but the bill passed Tuesday will be more permanent. While Bond said she was celebrating the passage, she said it had been a frustrating battle.

"I can't tell you how many letters we've sent to our legislative delegation about this over the years. Every year the cuts loom again, and every year we have to fight for it again," Bond said. "This is long, long overdue."

Contact staff writer Kate Belz at kbelz@timesfreepress.com or 423-757-6673.