Hospital Ads Suggest Medicare Reimbursement Cuts Will Hurt Care Quality

Cheryl Clark, July 13, 2010

Hospital trade groups are buying 60-second TV spots implying that patients might expect compromised care if a proposed $3.7 billion cut in Medicare reimbursement takes effect starting Oct. 1 for fiscal 2011.

Somber piano notes play in the background of a busy hospital scene as an announcer says: "At this moment, your father is alive. Your son is safe. Your wife is recovering. And your baby is coming home.

"Is this really the moment to cut $4 billion from our hospitals? Cuts that could mean overcrowding, fewer nurses, and longer waits? Call Congress and tell them to stop the cuts."

The emotion-laden spots, and another 30-second version, are running in cities in 10 states from New York to California. They are paid for by the Coalition to Protect America's Health Care, a group comprised of the American Hospital Association, the Association of American Medical Colleges and the Federation of American Hospitals.

The proposed cut is actually 2.9% of what hospitals would receive in Medicare reimbursement in fiscal 2011. But it is intended to correct overpayments the Centers for Medicare and Medicaid Services believes it made to hospitals in 2008 and 2009 under the Inpatient Prospective Payment System (IPPS). The overpayments were the result, CMS says, from inaccurate coding by hospitals to categorize patients with multiple more complex diagnoses under a new policy CMS set forth in 2007.

CMS's proposed rule would retrieve about half of what CMS believes it overpaid. But the coalition believes CMS has made a terrible mistake in its calculations.

The group believes CMS is now punishing hospitals for accurately coding for the patients they see, patients that are increasingly sicker than they were several years ago. Hospitals modified their coding after CMS had changed the IPPS system in 2007 specifically to allow hospitals to more accurately describe a patient's multiple co-morbidities, something they previously were not able to do.

But when the hospitals coded according to the new rules, "The level of payment and level of case mix increased more than CMS expected," said Caroline Steinberg, the AHA's ( vice president for trends analysis. "CMS just wasn't able to anticipate how much of this was expected to occur."

"Patients truly are significantly more severely ill. They are more obese, with more heart disease and have an underlying increase in severity," she said.

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