Hospitals facing new payment squeezes

May 24 2010

News outlets report on payment issues for hospitals, including those stemming from the new health law.

The Boston Globe: "Massachusetts health insurers say they want to freeze or slash payments to some hospitals and large physician groups this year, setting up the toughest contract negotiations in memory and creating the potential for disruptions in where patients get their care," reports. "Other providers would get small increases, at most. Unlike in past years, insurers believe they have widespread backing from politicians, regulators, and employers to aggressively push back against large price increases, even if it means some unhappy providers drop out of insurers' networks, forcing patients to find new doctors and hospitals."

The Globe notes that "recently released data showed that some hospitals and doctors groups are paid vastly more than others for providing similar services, because of their market power. The lower-paid providers are demanding more equitable rates. Hospital executives ... said many hospitals are struggling and cannot withstand rate freezes or reductions, particularly since the state has cut Medicaid payments and they expect the federal government to reduce Medicare rates under the new national health insurance law" (Kowalczyk, 5/24).

Crain's New York Business: New York "Hospitals are fuming over a recent proposed rule by CMS [the Centers for Medicaid and Medicare Services] that would mean an estimated $250 million reduction in annual payments" beginning next year. "The rule aims to eliminate so-called upcoding, a practice that codes patients' conditions as more severe than they really are, according to CMS. The higher the severity, the higher the reimbursement from Medicare and Medicaid. Hospitals in New York say they are already at risk for $12 billion to $13 billion in cuts over 10 years because of health reform legislation. The higher severity in coding is a function of patient mix, not an attempt to get more money, they say" (5/24). 

Orlando Business Journal: "Central Florida hospitals stand to lose a combined $31.6 million in Medicaid money for fiscal year 2010-11, thanks to a 7 percent rate cut by the state Legislature slated to go into effect in July once the state budget is signed by Gov. Charlie Crist. Statewide, the Tallahassee-based Florida Hospital Association estimates a $287.3 million loss for the state's 190 hospitals."

"Because Medicaid reimbursement already was low before the new cut, hospital officials said Floridians should expect to see more cost-shifting and higher rates for insured patients. ... Adding even more fuel to the fire, the cut also comes as local hospitals are seeing more Medicaid patients due to the recession and high unemployment rates" (Azam, 5/24).