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Advocate the Medicare Interests of Urban Safety-Net Hospitals
NAUH will continue to advocate better, more appropriate Medicare payments to urban hospitals based on the special role these hospitals play in the American health care system. At the same time, NAUH will work vigorously to defend safety-net hospitals against any attempts to revise current reimbursement systems in ways that would hurt those hospitals.
Among the challenges NAUH envisions in 2008 are the following:
- Proposed reductions in Medicare payments. Urban hospitals have become accustomed to proposals to reduce various types of Medicare payments - the administration's budget proposal last year called for more than $75 billion in such cuts - and some such proposals are likely to be offered in 2008. As Congress looks for savings to offset spending increases elsewhere and the administration looks for savings in general, NAUH will oppose any proposals to reduce Medicare inpatient and outpatient payments, cuts in disproportionate share hospital (DSH) and indirect medical education (IME) payments, reimbursement for bad debt, and capital payments. NAUH also will advocate full market basket updates in these categories. Federal officials could pursue these and other cuts through the federal budget, proposed legislation, or regulations; NAUH will monitor all of these areas and respond to perceived threats to the financial health of the nation's private, non-profit urban hospitals.
- Regulatory attacks on Medicare payments. In 2007, the administration adopted a new approach to pursuing Medicare spending cuts: seeking to implement cuts through regulations when it became clear that Congress would not support legislation. The annual Medicare inpatient prospective payment system regulation, for example, is supposed to be budget-neutral, but in 2007 it was not: it resulted in a reduction in Medicare spending - a reduction achieved in part at the expense of urban hospitals. In addition, annual modifications of the Medicare DRG system may not necessarily be budget-neutral. NAUH will monitor proposed regulations in 2008, analyze and model them carefully, and respond forcefully to any proposals that would hurt urban hospitals.
- Addressing the physician payment problem. Late last year, Congress enacted a six-month solution to the now-annual problem of scheduled decreases in Medicare payments to physicians. The most recent “solution” expires at the end of June of 2008, and while NAUH will support efforts to address this problem, it will do so only insofar as those solutions do not come at the expense of urban hospitals.
- Changes in the area wage index system. In 2005, Congress directed the Medicare Payment Advisory Commission (MedPAC) to recommend changes in the Medicare area wage index system. MedPAC's recommendations are expected in April, and the administration is required by law to act on those recommendations. NAUH will monitor any proposals that result from this effort - whether those proposals are made through legislation or regulations. In addition, NAUH will oppose any effort to reduce the labor-related share of the wage index.
- Development of a “pay for performance” program. The Centers for Medicare & Medicaid Services (CMS) is eager to introduce a “pay for performance” component into the Medicare program and is expected to propose such an initiative in 2008. NAUH will evaluate any such proposals for their potential effect on urban safety-net hospitals and respond appropriately.
- Expansion of “RAC” audits. For the past two years, Medicare has conducted a demonstration program in three states - California, New York, and Florida - in which the agency awarded “recovery audit contracts.” In this program, auditors perform medical reviews of selected Medicare claims to determine the appropriateness of the services provided. Payments for services deemed inappropriate or unnecessary are then withheld from future Medicare payments to individual hospitals. While this program has proceeded fairly uneventfully in New York and Florida, RAC contractors in California have rejected massive numbers of Medicare claims. With the RAC program scheduled to expand to half of the country in mid-2008, NAUH will advocate a delay in that expansion until concerns about how RAC audits are conducted are satisfactorily addressed.
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