House Members Call On CMS To Change Hospital Payment Reductions

In a letter sent Monday to new Centers for Medicare and Medicaid Services Administrator Donald Berwick, 242 House members are calling for the agency to review and change its current proposal to decrease Medicare payments to hospitals by 2.9% in fiscal 2011. The reduction initially was sought to offset earlier overpayments that resulted from changes in the use of new codes.

However, this coding offset assumes that hospital payments have "increased solely due to changes in coding or classification of patients," as opposed to "hospitals' treatment of more complex and more severely ill patients," said the letter, which received bipartisan support. This assertion "fails to take into consideration that hospital patients are indeed sicker."

Increasingly, as more patients are successfully treated in the outpatient hospital departments, many hospitals are reporting that those who are admitted are now "often times more severely ill," it said. If the proposed rule is enacted, the projected inflationary index for the next year (2.4%) would be eliminated, it added.

Overall, hospitals across the country could face $3.7 billion less in Medicare reimbursements in fiscal 2011—compared to what they would have received without this proposal, they said.

The letter also noted that the Medicare Payment Advisory Commission has projected a negative 5.9% overall Medicare margin for hospitals in fiscal 2010—and recommended a full inflation or marketbasket update for hospital payments in fiscal 2011. These costs include wages and benefits (about 70% of hospital costs), medical supplies, pharmaceuticals, medical devices, food, and utilities.

The cut proposed by CMS for fiscal 2011 would weaken hospitals' ability to provide high quality services to patients and their communities, the letter concluded.