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Shift in Medicare Pay Policies Could Hit Safety Net Facilities

Almost everyone can agree that effective health care reform should improve the quality of care while also making the health care system operate more efficiently.  Stakeholders of all ideological persuasions have argued in favor of changes to the health care payment system, and as a result, proposals to cut Medicare reimbursements to hospitals that have patients readmitted soon after being discharged made it into both the House and Senate overhaul bills.

Will this approach advance the quality and efficiency of the health care system, or will it exacerbate existing disparities among facilities?

A pair of researchers from Montefiore Medical Center in the Bronx, New York, argue that adopting reimbursement cuts across the board could unfairly penalize facilities that cater to vulnerable populations, including low-income communities and those without ready access to health care services. 

Writing in the Annals of Internal Medicine, the authors cite research from the federal Agency for Healthcare Research and Quality, the Robert Wood Johnson Foundation and other sources suggesting that demographic and socioeconomic factors can result in the same poor outcomes that also can call into question clinical quality.

The researchers agree that reimbursement policy changes can help push the health care system to be more efficient and boost the quality of care, but they say that special considerations need to be carved out of the larger policy to protect facilities that serve vulnerable populations. Moreover, they warn that safety net facilities would be put in financial “double jeopardy” if reimbursement cuts for readmissions are adopted at the same time that such hospitals lose disproportionate share payments.

The House bill (HR 3962) specifically directs the HHS secretary to provide funding for safety net facilities to adopt transitional care services in hopes of cutting readmission rates. 

The Congressional Budget Office estimates that the House proposal to reduce payments for preventable hospital readmissions would cut federal spending by $7.1 billion from 2013 to 2019.

By comparison, CBO projects $9.3 billion in savings under the Senate plan (HR 3590), which would take effect a year earlier and does not provide special assistance for hospitals caring for vulnerable communities. 

Given the precarious finances of safety net facilities in Los Angeles County and other parts of California, efforts to scale back Medicare payments for readmissions could have significant ripple effects throughout the state’s vulnerable communities.

Updates on the status of health care reform talks in Congress are provided below.

Administration News

  • In an interview with ABC News, President Obama conceded that health reform negotiations were not as transparent as he would have liked and admitted that it was a “mistake” to hold some discussions out of public view, Politico reports. “We had to make so many decisions quickly in a very difficult set of circumstances that after a while, we started worrying more about getting the policy right than getting the process right,” Obama said (Gerstein, Politico, 1/25).

Reform Supporters’ Weigh Options

  • Last week, advocacy groups — including AARP, Consumers Union and the Service Employees International Union — sent a letter to Democratic congressional leaders noting that although the legislation before Congress “is not perfect,” the nation is relying on Congress for health care reform, CQ HealthBeat reports (Norman, CQ HealthBeat, 1/25).
  • During an appearance on CBS’ “The Early Show” on Jan. 22, Howard Dean, the former governor of Vermont and a former chair of the Democratic National Committee, said he favored the House Democrats’ plans for passing a series of scaled-back health reform bills that draw some Republican support, rather than a single comprehensive bill, The Hill‘s “Blog Briefing Room” reports. He said Democrats should use the reconciliation process to address provisions in health reform legislation that have drawn Republican opposition (Fabian, “Blog Briefing Room,” The Hill, 1/22).
  • On Jan. 21, Ron Pollack, executive director of Families USA, urged lawmakers to show “political courage, vision and leadership” and not “abandon” those who lack health coverage by ending efforts to pass health reform legislation, CQ HealthBeat reports. Pollack also advocated against a scaled-back version of reform legislation that many lawmakers have begun considering (Reichard, CQ HealthBeat, 1/21).
  • In mid-January, a group of nearly 50 health policy experts and economists sent a letter to House Democratic leaders and committee chairs warning that “[a]bandoning health care reform — the signature political issue of this administration — would send a message that Democrats are incapable of governing and lead to massive losses in the 2010 election, possibly even in 2012,” CongressDaily reports. The experts also urged the House to pass the Senate health reform bill (HR 3590) (Edney, CongressDaily, 1/22).
  • The Progressive Change Campaign Committee and Democracy for America recently sent a strategy memo to top Senate aides encouraging them to use the reconciliation process to revive a public option, which was dropped from the Senate bill, the New York Times‘ “Prescriptions” reports. In addition, the groups released a poll that showed how politically vulnerable House Democrats would do better in November’s midterm elections if they pushed harder for a public plan (Herszenhorn, “Prescriptions,” New York Times, 1/26).

Republicans Urge ‘Do-Over’

  • Although Sen.-elect Scott Brown (R-Mass.) made opposition to Democrats’ health care reform bills a centerpiece of his election campaign and pledged to provide the 41st vote in the Senate needed to defeat the legislation (HR 3590), during a tour of the Capitol he offered to work with Democrats to start anew on health care reform, CQ Today reports (Hunter, CQ Today, 1/21).
  • In an interview on CBS’ “The Early Show” on Jan. 21, Sen. John McCain (R-Ariz.) said that Brown’s victory demonstrated that reform legislation “obviously has been rejected by voters,” the AP/Boston Globe reports.  McCain added that Republicans would be “happy to sit down and start over” on health reform legislation but that they would not simply accept a pared-down version of the current reform bills (AP/Boston Globe, 1/21).
  • In a floor speech on Jan. 21, Senate Republican Conference Chair Lamar Alexander (R-Tenn.) criticized Sen. Ben Nelson (D-Neb.) for soliciting a provision in the bill exempting his state from paying for a Medicaid expansion in exchange for his vote, Roll Call reports (Stanton, Roll Call, 1/21).
  • House Minority Leader John Boehner (R-Ohio) said that Republicans are willing to work with Democrats on a “vastly scaled-back” health care reform bill that primarily targets high health care costs, the New York Times‘ “Prescriptions” reports. However, Boehner noted that Republicans would agree to negotiate with Democrats only if the majority fully abandoned its current legislation. Boehner also pledged to oppose any mandates requiring U.S. residents to purchase insurance, a provision that Democrats consider critical (Herszenhorn, “Prescriptions,” New York Times, 1/21).

Dollars and Cents

  • On Jan. 21, the Congressional Budget Office released a report finding that it would cost the federal government $35 billion over 10 years to extend to all states the same deal Nebraska received in the Senate’s health care reform bill (HR 3590), CQ HealthBeat reports. Currently, the legislation would vastly expand Medicaid eligibility, with the government picking up the bulk of the cost. However, a deal procured by Sen. Ben Nelson (D-Neb.) in exchange for his vote would have the federal government cover the entire cost of the expansion in Nebraska (CQ HealthBeat, 1/21).

Shaping the Debate

  • In 2009, insurance companies and America’s Health Insurance Plans, the industry’s main lobbying group, spent an average of 24% more on lobbying efforts compared with 2008, according to an analysis of lobbying disclosure records released last week, The Hill reports. Kentucky-based Humana reported the highest increase in lobbying expenses — almost 80% — by increasing spending to $3.2 million in 2009 from $1.8 million in 2008. Indiana-based WellPoint spent the most among the insurers — about $4.7 million, up 21% from its lobbying spending in 2008 (Bogardus, The Hill, 1/24).
  • On Jan. 25, multiple religious organizations staged a national “call-in” to urge Democrats to continue the push for reform, CQ HealthBeat reports (Norman, CQ HealthBeat, 1/25).  
  • On Jan. 19, the American Society of News Editors called for more transparency in health care reform negotiations, citing “an inexcusable level of secrecy surrounding this landmark legislation,” the Washington Times reports (Harper, Washington Times, 1/20).


  • A Washington Post poll released on Friday found that 68% of 880 Massachusetts residents who said they voted in the Jan. 19 special election support the state’s universal health insurance plan but that just 43% said they support health reform proposals in Congress, the AP/Atlanta Journal-Constitution reports. Among supporters of Sen.-elect Scott Brown (R-Mass.), slightly more than 50% supported Massachusetts’ 2006 health insurance overhaul, but about 80% oppose current congressional efforts, according to the poll (LeBlanc, AP/Atlanta Journal-Constitution, 1/22).
  • Support for health care reform has remained at about 44% since August, while 51% of U.S. residents oppose such legislation, according to an ABC News/Washington Post poll, Reuters‘ “Front Row Washington reports. The poll also found that about 24% of U.S. residents would vote against a lawmaker who supported health reform, compared with 12% who said they would vote for a candidate who supported an overhaul (“Front Row Washington,” Reuters, 1/19).

Related Topics

Road to Reform The Health Law