Iowa To Ask HHS To End Disparity in States’ Medicare Rates

Iowa Gov. Tom Vilsack (D) and Attorney General Tom Miller (D) said yesterday that current Medicare reimbursement rates "shortchange" the state by $1 billion annually and announced plans to send a letter to HHS Secretary Tommy Thompson demanding that his department calculate states' Medicare payments "equivalently," the Des Moines Register reports. If HHS is unresponsive, Vilsack and Miller said they plan to file a lawsuit against the federal government to force a change (Leys, Des Moines Register, 8/20). The disputed rates stem from the Balanced Budget Act of 1997, which set payments to states based in part on data such as local wages and costs. The Medicare per-beneficiary reimbursement rate in Iowa is $3,053 per year -- the lowest of any state -- compared to the national average of $5,490 per year (Glover, AP/Washington Post, 8/20). If Iowa officials file a lawsuit, they would focus on language in federal laws regulating how HMOs contract with Medicare to provide coverage for beneficiaries in different states, according to John Shors, a lawyer who represents Des Moines-based Mercy Medical Center, which would join the state in its lawsuit. The guidelines state that Medicare must reimburse HMOs with "actuarial equivalence" among all states, Shors said. Currently, no Medicare HMOs operate in the state because they would receive lower reimbursement rates than they would in other states, the Register reports. Shors said that the letter to HHS is a "long shot" but must be tried before filing a lawsuit, which would not happen for at least several months.

Republicans accused Vilsack and Miller, who are both up for reelection this fall, of being motivated by political purposes rather than concern for Iowa seniors. "I think it would be best if we had a governor who cared and did something about Medicare every year, not just in an election year," Doug Gross, the Republican gubernatorial candidate, said. State Rep. David Millage (R), the candidate for state attorney general, said the letter and possible lawsuit are "being done for political purposes because both [Vilsack and Miller] face tough reelection races." He added, "It's obvious that this lawsuit is going to be thrown out of court, and it's going to be a waste of money" (Des Moines Register, 8/20).

The issue of changing Medicare reimbursement rates paid to the state "should be attacked on as many fronts as possible" in an attempt to stop the way Iowa "gets cheated" by the federal government, a Des Moines Register editorial states. Vilsack "has the ball rolling" with his letter to Thompson and a petition signed by 20,000 Iowans who oppose the current reimbursement system, but a lawsuit could be "another iron in the Medicare fire" and could encourage Congress to pass reforms before the courts make decisions about payments. Other states should be asked to join the lawsuit, the editorial states, concluding, "Iowa could end up being a leader in righting a wrong" (Des Moines Register, 8/20).