PSYCHIATRIC HOSPITALS: Fear Latest Medicare Cuts
Psychiatric hospitals and units will be hit hard in 1998 by financial cuts in the Medicare payment system instituted under last year's balanced budget amendment, according to the National Association of Psychiatric Health Systems. Because these "deep and sudden cuts" put patient care at risk and threaten cost-effective care, the NAPHS says it will be "seeking short-term relief as a transition to a prospective payment system." According to a study conducted by Health Economics Research Inc. for NAPHS, 84% of psychiatric hospitals and psychiatric units of general hospitals will "suffer actual payment reductions" in 1998 under the new Medicare system. Overall, the hospitals' profit margins will decrease to a negative 8.7% as the Medicare average reimbursements decrease by 5.5%. Some facilities (6%) will experience payment cuts of greater than 20%. "The cuts mandated in the Balanced Budget Act were immediate, sudden and provided no transition period for facilities to adjust their services," said NAPHS Executive Director Mark Covall. He said, "Patient care is at risk when providers must make drastic changes in operations -- literally overnight -- to adjust to these dramatically lower Medicare payments." NAPHS said it will be seeking short-term relief for those facilities hit hardest by the Medicare payment changes and will also be looking at moving to a prospective payment system. "We want to move toward a more effective payment system that will be more efficient, allow for better planning and lead to improved patient care," Covall said (NAPHS release, 3/9).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.