Hospital Deal on Health Reform Sparks Pushback in Some Circles
On Wednesday, Vice President Biden discussed an agreement between lawmakers and leading hospital groups that would reduce federal outlays to hospitals by $155 billion over 10 years to help fund health reform efforts, the Washington Post reports.
However, the announcement was met with warnings that such industry concessions would have to be written into overhaul legislation in order to take effect.
Biden said the deal was based on an understanding between the government and hospitals that expanding coverage to more U.S. residents would remove some of the financial burden on hospitals, allowing them to cut costs (Shear, Washington Post, 7/8).
Under the agreement with the American Hospital Association, the Federation of American Hospitals and the Catholic Health Association, about $40 billion to $50 billion would be saved through reducing Medicare and Medicaid payments to hospitals that treat uninsured and low-income patients.
About $100 billion in savings would come from reducing planned Medicare payments to hospitals, and a small amount would be saved by reducing the payments hospitals receive for reducing readmissions.
Hospitals won a concession stating that any public health insurance option included in the Senate Finance Committee overhaul bill would pay rates greater than Medicaid and Medicare (Alonso-Zaldivar, AP/Boston Globe, 7/8).
Biden said, "Our hospitals are cracking under the weight of providing quality health care for Americans who lack insurance."
AHA President and CEO Richard Umbdenstock said his organization is dedicated to "coverage for all, paid for by all." He added that "hospitals are ready to do our part," but "so must all the other stakeholders," including insurers, employers, doctors, the government and individuals (Washington Post, 7/8).
None of the hospital groups involved has signed a written agreement that the cuts will be implemented, and it is yet to be seen whether they will be included in congressional health reform legislation, the Los Angeles Times reports.
Umbdenstock said, "We have agreements on specific points, and the understanding is that if those points materialize, that's great," but if "they don't, we're back in discussions" (Levey, Los Angeles Times, 7/9).
According to CongressDaily, an Obama administration official said that the agreement and a similar deal with the pharmaceutical industry have been reached only by the Senate Finance Committee, and that the Obama administration and the House are not bound to those agreements (Edney, CongressDaily, 7/8).
House Energy and Commerce Committee Chair Henry Waxman (D-Calif.), whose panel is one of three developing the House overhaul proposal, noted there is no obligation for lawmakers to follow the guidelines of the agreement.
Waxman said, "The White House is not bound. They tell us they're not bound by that agreement," adding, "We're certainly not bound by that agreement. The White House was involved, and we were not" (Connolly/Shaw, Washington Post, 7/9).
However, he noted that health care industry stakeholders willing to make concessions to lawmakers crafting a health care overhaul bill will see benefits. Waxman said, "Each group is not going to get everything they want but they're going to see that after all is said and done, if they get a reduction in Medicare payments, they're going to still make more money because they're going to have more people that are going to be covered" (Young, The Hill, 7/8).
House Minority Leader John Boehner (R-Ohio) said, "Administration and congressional Democrats are literally bullying health care groups into cutting backroom deals to fund a government takeover of health care" (Hall, USA Today, 7/8).
Boehner spokesperson Michael Steel said, "They're clearly trying to create the impression that these 'deals' mean more than they do. The White House shouldn't be trying to hoodwink the American people on something this important" (CongressDaily, 7/8).
Senate Finance Committee ranking member Chuck Grassley (R-Iowa) also criticized the deal for failing to address Medicare and Medicaid payment inequities between rural and urban hospitals (Reichard, CQ HealthBeat, 7/8).
Meanwhile, a group of state hospital lobbyists seeking to avoid a deal that represents the entire hospital industry formed the "Value Coalition," which distributed a document to AHA's 50 state associations criticizing the proposal.
The document stated, "America's hospitals and the communities they serve are very concerned about any proposal that relies on payment cuts as the primary means by which to fund reform efforts."
The group also said that an "incentive" system should increase, not reduce, funding for hospitals that have already cut their costs.
Two not-for-profit hospital systems that were not included in the negotiations said the payment reductions "could severely damage" hospitals that serve low-income and uninsured patients (Washington Post, 7/9).
In addition, National Retail Federation chief health care lobbyist E. Neil Trautwein said, "We as private payers are first in line to take increased costs as hospitals and others who are playing 'Let's Make a Deal' try to make up these costs," adding, "So we are not a fan of these backroom deals" (Fram, AP/Atlanta Journal-Constitution, 7/9).
NPR's "All Things Considered" on Wednesday reported on the hospital savings deal and examined the potential impact of such arrangements between the health care industry and government. The segment includes comments from Health Care for America Now's Richard Kirsch and Pharmaceutical Research and Manufacturers of America President and CEO Billy Tauzin (Rovner, "All Things Considered," NPR, 7/8).PBS' "NewsHour w/ Jim Lehrer" on Wednesday also reported on the agreement. The segment includes comments from Biden and Umbdenstock announcing the deal (Bowser, "NewsHour w/ Jim Lehrer," PBS, 7/8). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.