AHA meeting focuses on payment adequacy - includes related information on Healthcare Financial Management Association briefing

Healthcare Financial Management, April, 1990

For the second year, concerns with the adequacy of payments to hospitals provided in Federal budget legislation dominated discussions at the American Hospital Association's (AHA's) annual meeting, held jan. 29-31 in Washington, D.C.

In addition, AHA provided attendees with information and recommendations on equity in payments among different types of hospitals and on Medicaid, mandated employee coverage, and care for the medically indigent.

The four-day meeting, the centerpiece of AHA's grass-roots lobbying program, provided an opportunity for HFMA members and hospital executives to discuss with their senators and representatives health issues that will be considered by Congress during the year.

Several Congressional leaders made presentations on the Washington political scene and the outlook for this year's Medicare budget debate. The meeting also featured state hospital association-coordinated visits to Capitol Hill and a meeting on Washington issues by AHA's board of trustees.

Medicare cuts protested

President George Bush's proposed budget for FY91 once again targets hospitals for deep cuts. Proposed Medicare reductions total $5.5 billion-$3.4 billion for Part A and $2.1 billion for Part B.

AHA emphasized that strong lobbying efforts are needed to prevent these deep cuts from being included in the final budget passed by Congress. Once again, AHA's grass-roots lobbying campaign, "Protect Medicare," is the focal point of these efforts. In support of Protect Medicare, HFMA last fall urged its members to write President Bush, requesting that the Administration's FY91 budget provide sufficient Medicare funding to ensure access and provide needed refinements in payments to hospitals. Eighteen HFMA chapters responded to a chapter task force assignment on the issue.

AHA also asked participants in the annual meeting to urge their senators and congressmen to co-sign letters to Sen. Jim Sasser (D-Tenn.), chairman of the Senate Budget Committee, and Rep. Leon E. Panetta (D-Calif.), chairman of the House Budget Committee, expressing concern over the administration's proposed hospital cuts. The Senate letter sponsor is Sen. Carl Levin (D-Mich.) and the House sponsor is Rep. Nita Lowey (D-N.Y.).

In a related move on Capitol Hill, 27 Republican senators co-signed a letter by Sen. Nancy L. Kassebaum (R-Kan.) to President Bush asking that Medicare be protected from further cuts. One hundred Republican representatives co-signed and sent a similar letter by Rep. Bill Archer (R-Texas).

AHA has created a "Medicare improvement plan" and is working for implementation of various aspects of the plan that were not included in the FY90 budget legislation. These aspects include:

* Periodic recalculation of prices based on costs defined to include elements of uncompensated care expenses and a return on investment;

* A single payment rate under the prospective payment system (PPS), eliminating the urban-rural differential;

* A revised hospital market basket, basing the labor component solely on hospital wage inflationary trends;

* Refinement of problem diagnosis related groups to improve PPS sensitivity to differences in patient characteristics;

* An index reflecting variation in prices faced by hospitals for all goods and services;

* Expansion of swing-bed opportunities to all urban and rural hospitals; and

* Altered budget treatment of the Hospital Insurance Trust Fund to exclude programs covered under it from budget totals, sequestration, and budget reconciliation cuts.

Medicaid benefits

AHA stressed that state Medicaid programs must not be allowed to cut provider payments to accommodate new Federally mandated benefits. Further, states should not be allowed to apply "upper limits" that tie Medicaid reimbursement to Medicare payment levels. Over the long term, AHA supports restructuring of Medicaid into three programs:

* Acute care coverage for the medically indigent not eligible for Medicare; * Supplementary acute care coverage for Medicare beneficiaries; and * Long-term care coverage for low income individuals.

AHA expressed support for a mandated employer coverage approach that would include appropriate incentives for employers. A briefing paper distributed at the meeting endorsed aspects of a bill sponsored by Sen. Edward Kennedy (D-Mass.) and Rep. Henry Waxman (D-Calif.) that "couples Federal mandates with incentives to ease compliance burdens and includes phased-in expansion of public coverage for low-income individuals."

AHA's position is based on a view that any changes should be built upon the existing system and rely upon strong economic incentives and joint public and private-sector action. Through these methods, AHA believes employers will be induced to offer insurance to their employees.

AHA urged that Congress expand traditional incentives, such as tax supports and public subsidies, to encourage individuals and small employers to obtain health insurance coverage and to encourage insurers to make such coverage affordable.