Today’s Managing Health Care Costs Indicator is $300 million
Massachusetts hospitals were paid between $256 and $367
million more in the last two years because of an obscure provision in Medicare
legislation that requires CMS to pay urban hospitals fees that would allow them
wages at least as high as wages at rural hospitals, according to today’s
Boston Globe. Nantucket Cottage Hospital,
a 19 bed facility on an island populated largely by wealthy New Englanders
during the summer, qualifies as a rural hospital. The cost of living in Nantucket is quite high
(unlike that in most rural areas, which are often agricultural areas suffering
from population loss.) Therefore,
across the state all but two hospitals are being paid more.
Prior to 2012, the Nantucket
Cottage Hospital was classified as a critical access hospital and therefore did
not figure into the computations for the states’ [Inpatient Prospective Payment
System (IPPS Hospital Wage Index (HWI)] rural floor. However, as a result of
being acquired by a large health system,
the Nantucket Cottage Hospital converted to IPPS status, becoming the only rural IPPS hospital in the
state of Massachusetts. This change resulted in the rural floor wage index
being applied to 60 urban hospitals in the state of Massachusetts, increasing
wage indexes for these hospitals from an average of 1.16 in FY 2011 to 1.35 in FY
2012.
This isn’t victimless.
Massachusetts, California, and 7 other states see increased hospital Medicare
reimbursements; at least 21 states see substantial decreases in reimbursement
since this legislative provision is ‘budget neutral,’ and increases to one
state have to be offset elsewhere. Those
21 states, not surprisingly, want the provision removed. They’d preferably like
their money back too!
This is another good reason supporting creating a
nonpartisan Independent Payment Advisory Board. This is part of the Affordable
Care Act, but has been maligned by the ACA’s detractors. The current system is just asking to be gamed
– and we have plenty of Congressmen willing to game it!
2 comments:
I always found the Independent Payment Advisory Board (IPAB) a cop-out solution. I mean isn't CMS supposed to be independent as well? After all CMS is an executive agency that is supposed to be making decisions on health care policy independent of politics (provided such decisions operate within the law). Also, MA had an independent, hospital rate-setting commission in the 70s and 80s. It's not clear to me that was any better at cost control.
The problem is that Congress inserts itself into the process, and undermines the integrity of the payment system. IPAB would make that more difficult.
Regulatory capture, where interested parties have so much influence over payment that they are overpaid, is a potential problem with any regulatory means of determining prices.
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