MEDICARE GIVEBACK: California Hospitals May Help
California's "cash-strapped hospitals" could receive a significant share of the federal Medicare giveback legislation, sponsored by U.S. Rep. Bill Thomas (R-Bakersfield). Medicare cuts mandated under the 1997 Balanced Budget Act have created severe financial problems for California teaching hospitals and were a prime contributor to the failed UCSF-Stanford merger, the San Francisco Chronicle reports. But how much aid the giveback bill -- up for final vote next week -- would provide California hospitals is uncertain. A significant measure in the bill revises the formula used to calculate subsidies for teaching hospitals: under this new formula, California hospitals will receive 47% of the $110 million being restored to teaching institutions, a gain of $52 million over five years. Previously, teaching facilities in New York received about 40% more in Medicare subsidies than did similar institutions in California. California Healthcare Association lobbyist Anne Nicoll said of the new formula, "This is a long-overdue recognition of the disparity. New York, as you would imagine, put up a pretty good fight." She continued, "It is real money for a lot of hospitals." Among the Bay Area's potential big winners are UCSF and San Francisco General Hospital. Eleven smaller teaching hospitals across the state, which had been receiving subsidies similar to New York institutions, would lose under the revision.
The Big Question
Although members of Congress have reached consensus on most of the giveback package, the decision to erase the BBA's $4 billion in cut for outpatient care remains a point of contention. Nicoll said, "Everything is agreed upon but the $4 billion, and that $4 billion is a priority for California hospitals." Restoring the outpatient cuts would award an additional $90 million to California institutions over five years. But most administrators note that it is too soon to tell exactly how well California hospitals would make out under the giveback package. Larry Horton, Stanford director of government and community relations, states, "We just don't know what the outcome will be. It's still very cloudy" (Russell, 11/12).