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Medicare Compliance & Reimbursement

Reimbursement:

THE WINNERS: MONEY THROWN AT HOSPITALS, DOCS, EMPLOYERS

Published on Tue Dec 02, 2003

Increased reimbursement will help hospital and physicians.

One of the stories in the Medicare end-game was the massive lobbying campaign behind the bill. The Capitol Hill newspaper The Hill said the House Republicans' thrust, involving some 400 groups as far removed from Medicare as the Securities Industry Association, represents the largest such effort they have ever mounted.

While each of the groups backing the bill raise serious policy arguments, they also have big financial stakes in the bill. Below is a quick look at the skin some of the major players have in the game.

  • Hospitals. The American Hospital Association and the Federation of American Hospitals both came out strongly for the bill. One big reason: For only the second time in the history of the hospital inpatient prospective payment system, hospitals will get a full market basket update in 2004.

    Hospitals will also get a full market basket update in 2005, 2006, and 2007, although facilities will lose 0.4 percentage points off of that if they fail to report quality information to the Centers for Medicare & Medicaid Services on the 10 measures in CMS' voluntary hospital quality initiative.

    In vigorously defending this provision after the Nov. 20 Medicare conference meeting, conference chair Rep. Bill Thomas (R-CA) called it a way of requiring hospitals, "if they want their full benefit, to provide us with the beginning of a statistical base from which we can make comments about quality of care. So I think we're getting our money's worth for the first time."

    The conference agreement also puts an 18-month moratorium on the new "specialty" hospitals, which general hospitals say skim away the healthiest patients with the most profitable conditions. Specialty hospitals say the higher volumes in their focus areas translate to more cost-effective care.

  • Physicians. The American Medical Association also endorsed the bill. One big reason: The agreement gives physicians 1.5 percent boosts in Medicare reimbursement in 2004 and 2005, as opposed to the 4.5 percent cut in 2004, and subsequent negative update in 2005, that physicians would have received under current law.

    Last year, Congress promised $55 billion over ten years to turn a negative 2003 update into a positive one, only to have huge volume growth in physician services lead to the 2004 cut avoided by the conference agreement.

  • Employers. A long list of companies and business organizations came out in favor of the bill. One big reason: Facing growing concerns that employers would use a Medicare prescription drug benefit as an excuse to drop coverage for retirees, negotiators added $18 billion over 10 years in additional incentives for employers to continue coverage, making for an estimated $88 billion for employers.

    Under the bill, employers that continue coverage can receive a subsidy of 28 percent of drug costs between $250 and $5,000. The Congressional Budget Office estimates that the extra $18 billion, which came when conferees decided to exclude that subsidy from taxation, will cut roughly in half the third of retirees with employer-based coverage whom CBO predicted would lose that coverage under the original House and Senate Medicare bills.

  • Insurers. The American Association of Health Plans and the Health Insurance Association of America also have thrown their weight behind the reform bill.

    One big reason: A $10-billion dollar "stabilization fund" designed to entice regional preferred provider organizations to serve rural and other underserved areas. Between now and 2006, the agreement would also significantly increase payments to county-level Medicare+Choice plans, so that no plan would receive less than 100 percent of fee-for-service costs, and many would receive more, even without taking into account the frequent findings that beneficiaries in M+C plans tend to be healthier than their FFS counterparts.

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