On tour of area hospitals, Congressman Byrne gets earful on Obamacare, Medicare rates
al.com, Aug. 7, 2014
"The problem the governor and the Legislature face is they don't have money to expand (Medicaid)." -- U.S. Rep. Bradley Byrne
U.S. Rep. Bradley Byrne kicked off a monthlong tour of hospitals in southwest Alabama this week, getting an earful about two of their biggest concerns – Obamacare and Medicare.
Hospital administrators told Byrne, R-Fairhope, that they are nervous about the impact of looming government cuts in payments to compensate for treating uninsured patients. Congress included the cuts in the Affordable Care Act under the rationale that subsidies combined with expanded Medicaid eligibility would reduce emergency room use by the uninsured.
But Alabama has chosen not to expand its Medicaid program, and hospital executives say have not noticed fewer uninsured patients.
"We're looking at expansion, if it ever comes, being a big boost," said AlaPointe Health Systems CEO Tuerk Schlesinger, after escorting Byrne through the halls of BayPointe Hospital in Mobile on Tuesday.
BayPointe is not a traditional hospital. It treats the mentally ill and, therefore, does not have an emergency room or get federal funds to treat the uninsured. Instead, Schlesinger told Byrne, the mental health system relies on funds for the Alabama Department of Mental Health to pay for the care of indigent patients in Mobile, Baldwin and Washington counties.
But Schlesinger said those funds are not keeping up with demand. Expanding Medicaid would help pay the bills, he said.
Support for Medicaid expansion
Schlesinger is not alone. The Alabama Hospital Association has lobbied the state to accept additional Medicaid funding under the health law. The federal government will pay 100 percent of the beneficiary costs through 2016 for enrollees who are not currently eligible. After that, the federal share will gradually decline to 90 percent.
Alabama Gov. Robert Bentley repeatedly has resisted calls to expand Medicaid, and Byrne said he could not fault him for that decision.
"That's one of the flaws of the program," he said in an interview. "The problem the governor and the Legislature face is they don't have money to expand."
The Affordable Care Act mandated a $14.1 billion cut in payment from Medicaid to hospitals across the country from 2014 through 2019. Medicare cuts during the same period were supposed to total $22.1 billion.
Those reductions are on hold until 2016, thanks to a budget deal reached at the end of last year. But Danne Howard, senior vice president of government relations for the hospital trade group, said hospitals will face a greater impact when the cuts do come.
She could not immediately answer how much money Alabama hospitals stand to lose but said hospitals – especially in rural areas – already are teetering on the edge of insolvency. The state has seen 10 hospitals close over the past three years, the most in the country during that time span. Howard said the state risks losing another 10 to 15 hospitals over the next few years.
"When you don't have (Medicaid) rolls increasing and we start getting costs and yet we're heavy with uncompensated care," she said.
Douglas Tanner, the CEO of Washington County Hospital & Nursing Home, said Medicaid patients make up about 25 percent to 30 percent of the total treated in the emergency room, and about 12 percent overall.
He said cuts in indigent care compensation to hospitals will hurt his institution but not has badly as many other rural hospitals.
"If we don't expand, it could be tragic for them ... because if we don't expand the Medicaid program, those uninsured patients will continue to be uninsured," he said.
Tanner said he took time during Byrne's tour Tuesday to show off his hospital's new "telemedicine" capabilities allowing doctors to treat patients long distance. He said he also shared his perspective of Obamacare's unintended consequences.
"I'm fairly certain the federal government isn't going to get out of the health care business," he said, adding that the challenge is how to fix what is broken. "That's longer than an hour tour."
Howard noted that some states, including those with Republican governors, have accepted additional federal funds to create hybrid Medicaid systems that incorporate new reforms. She urged Bentley to do the same.
"Let's come up with an Alabama-specific solution," she said.
Attacking the 'Bay State boondoggle'
Also high on hospitals' wish list is a legislative fix for what Alabama health administrators contend is an unfair formula for determining how much the federal government's old-age health program pays hospitals for services.
A key component is the so-called "area wage index," which accounts for the different cost-of-living rates and different salaries of health care workers in different regions. Howard said the formula creates a "horribly flawed, inequitable system."
Although cost undeniably are higher elsewhere, Howard said, the formula rewards hospitals that do a poor job of controlling costs. She said it results in unfairly high reimbursements for hospitals in Massachusetts, New York, California and a handful of other states.
"It doesn't come out practically to what the theory is," she said. "We are penalized for being cost-efficient. .. It's a viscous cycle."
Added Byrne: "We've got a perverse system."
Tanner said his hospital is "very Medicare-dependent" and struggles with low reimbursement rates. He said he has explained the situation to a friend who owns an auto dealership in Chatom this way: Suppose car buyers used Medicare to purchase vehicles and the agency paid only $28,000 for $30,000 Chevrolet Silverados. And, Tanner added, the auto dealer was required to sell to anyone who walked through the door.
"He wouldn't stay in business very long," Tanner said.
Byrne said he is working with other lawmakers to figure out a solution, although not legislation has been drafted. There is a bill to change a particularly egregious quirk in Medicare funding, a special arrangement slipped into the Affordable Care Act by then-Sen. John Kerry, D-Mass.
Called the "Bay State boondoggle" by critics, the provision mandates that all hospitals be reimbursed at a rate at least as generous as a state's lowest-cost rural hospital. In Massachusetts, that would be Nantucket Cottage Hospital, an expensive, boutique facility that caters to a rich clientele. The provision boosts federal funding of the state's other hospitals by hundreds of millions of dollars a year.
Howard the Alabama Hospital Association supports the bill but wants to make sure that Congress moves quickly to reform the entire reimbursement system.
"We don't want them to repeal Bay State and then do nothing," she said.