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Dueling letters on $275 million Medicare windfall for Mass. hospitals

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February 02, 2012|By Chelsea Conaboy

A group of state hospital associations from around the country last month asked the Obama administration to take a closer look at a provision of the Affordable Care Act that will land Massachusetts hospitals an extra $275 million or more in yearly Medicare reimbursements. The letter prompted Senator John Kerry and others in the Massachusetts congressional delegation to respond Tuesday, calling claims that the elected officials have manipulated the Medicare budget “completely false.”

Liz Kowalczyk of the Globe reported last summer that an amendment to the Affordable Care Act, introduced by Kerry, would require Medicare to reimburse employee wages at all hospitals in Massachusetts at the same rate it pays for those at Nantucket Cottage Hospital, where wages reflect the high cost of living on the island. The extra money for Massachusetts would mean less for other states.

The hospital associations said the change is “unfairly favoring one state’s hospitals and Medicare beneficiaries to the detriment of others.” The letter, sent to the White House on Jan. 18, reads:

If left uncorrected, hospitals in 49 states will experience reduced funding of more than $3.5 billion over the next ten years as a direct result of this manipulation of Medicare’s hospital wage index. Hospitals nationwide are already struggling with reduced government payments and the potential for cuts through the federal deficit reduction discussions and health care reform. Scarce Medicare funding should reward value and efficiency in health care, not be diverted based on artful manipulation of obscure payment formulas.

A letter to the White House from Kerry and others said the amendment prevented a reversal of a long-standing provision having to do with how the budget-neutrality of certain payments is determined -- nationally or within each state. Other states opposed the change from national to state budgeting, too, according to the letter’s authors:

Allegations that a Massachusetts-only “fix” was “slipped in” are clearly false and, we must conclude, are clearly motivated by a desire not to reform Medicare payment policy, but to attack the Affordable Care Act. Our conclusion of political motivation is underscored by the fact that although some 1,200 hospitals nationwide benefit from AWI provisions that provide them additional Medicare reimbursements, the letter you received refers only to one provision, and one state, Massachusetts. This is clearly an attack on health reform and the state that pioneered health reform.