Panel Advises Against New Medicare Increases for Hospitals
Because profit margins for hospitals across the country "improved substantially" last year, a new Medicare Payment Advisory Commission report is recommending that Congress should not increase Medicare payments to hospitals this year, the New York Times reports. In December, lawmakers passed a $35 billion "Medicare relief package" that included $14 billion for hospitals. The giveback package also gave hospitals a one-year inflation adjustment. The New York Times reports that the panel judged found "no compelling reason" for Congress to give back additional funds next year since hospitals have managed to control costs and improve their financial health. The commission said the rise in reimbursements scheduled under current law, which is "somewhat less" than the expected increase in goods and services was "reasonable and adequate." If Congress does not raise Medicare reimbursements this year, it will have more money to fund other aspects of Medicare, such as adding a prescription drug benefit.
The Times reports that the panel's findings are "significant" because Congress "often heeds its advice" and because panel members have traditionally been "receptive to concerns of the health care industry." Some advocates were pleased with the group's recommendations. Tricia Smith, chief federal health lobbyist at AARP, said, "We have dedicated enough of the budget surplus to health care providers. We now need to focus on prescription drugs and the concerns of beneficiaries." Hospital officials, however, "took issue" with the report, saying that they have had to spend "large sums" on Medicare patients, prescription drugs, new technology to reduce medical errors and efforts to comply with federal privacy regulations. Thomas Nickels, senior vice president of the American Hospital Association, said, "More than one-third of hospitals are losing money on Medicare." Kenneth Raske, president of the Greater New York Hospital Association, said that the commission's analysis "inherently overstates the profitability of teaching hospitals" and that hospitals indeed need additional reimbursements for next year. "There's absolutely no doubt that we will seek more money from Congress this year," he added. Both Democratic and Republican lawmakers, however, have said that "this [is] not the year for further Medicare givebacks" (New York Times, 3/12). To view a copy of the panel's report, go to http://www.medpac.gov/march2001/march2001.pdf. Note: You will need Adobe Acrobat Reader to view the report.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.