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Senate could still eye Medicare cuts to fund extension of unemployment benefits

January 24, 2014

Calling it a “dangerous precedent,” the AHA is urging senators to reject a proposal to extend the sequestration for mandatory spending – including Medicare spending – through 2024 to pay for an extension of unemployment benefits. The Senate could take up the proposal next week.

The AHA said it strongly opposes using Medicare reductions to pay for non-Medicare related spending.

“If hospitals don’t act now to let their federal legislators know that it’s completely unacceptable, they will think this is OK with you,” AHA President and CEO Rich Umbdenstock said in a recent message to the field. “Please get in touch with them and register your outrage at any proposal to use Medicare funding to fund other programs.”

The Senate earlier this month rejected a motion to vote on the proposal. But another vote could occur this week as Senate Majority Leader Harry Reid, D-NV, continues to look for ways to offset the cost of extending unemployment benefits, which expired Dec. 28.

In a Jan. 13 letter, the AHA and seven other national hospital organizations urged senators to reject the measure.

“While we do not oppose the extension of these benefits, we do oppose using Medicare reductions to pay for non-Medicare related spending,” the groups wrote. “Medicare is meant to assure seniors access to needed medical care, not serve as a piggybank for other programs. It is bad policy to further extend Medicare sequester cuts that could undermine care for seniors.”

The groups noted that hos­
pitals already face $113 billion in cuts that have been imposed over the past three years at a “time of enormous change and challenges.”

On that point, the AHA last week released a chart that shows the 10-year impact of legislative and regulatory actions on hospital payments since 2010, excluding cuts included in the “Affordable Care Act.” (See the chart on page 3).

For more on the hospital groups’ letter, click on:
http://tinyurl.com/lqmzumy.

The debate over extending unemployment benefits – and whether to use Medicare funds to do it – is the first of three fiscal flashpoints that have implications for hospitals during the first quarter of 2014.

The second flashpoint, the federal debt limit, is expected
to expire in early February, although the Treasury Department says it can use so-called “extraordinary measures” to allow the government to continuing borrowing possibly into

March. The third flashpoint is March 31, when the short-term physician payment fix and several Medicare “extender” provisions expire – setting the stage for new Medicare legislation.

Congressional health care leaders also have drafted similar pieces of bipartisan legislation that would repeal and replace the Medicare Sustainable Growth Rate or SGR formula for annual physician payment updates. While the Congressional Budget Office estimates that replacing the SGR will cost at least $116 billion over10 years, none of the bills specify the offsets needed as a funding source.

With hospital funding at risk in the weeks and months ahead, the AHA recently sent hospital leaders its legislative advocacy agenda. It lays out the AHA’s biggest concerns and priority issues in managing the three flashpoints.

The agenda seeks to protect hospital payments – always at risk for cuts as an offset to legislation restoring Medicare payments to physicians; provide relief from excessive and harmful policies, like the two midnight policy; and support rural health care by extending Medicare payment policies set to expire March 31. These include the Medicare-dependent hospital program, the low-volume adjustment and ambulance addon payments.

For more on the agenda, click on: http://tinyurl.com/p3lplzr.

To help amplify its message to Congress, the AHA is scheduling a series of Advocacy Day briefings. They kick off Jan.

28, with a briefing centered on the “two midnight” policy for hospital admission and review criteria. The meeting is designed to build congressional support for the “Two Midnight Rule Delay Act,” H.R. 3698, which would delay the policy until Oct. 1. The policy is slated to take effect in April.

For more on the Advocacy Day meetings, visit www.aha.

org. And hear more about the AHA’s legislative advocacy agenda by listening to the audio podcast on the right.

Meanwhile, the association last week released a factsheet that show Medicare and Medicaid underpayments to U.S.

hospitals reached $56 billion in 2012. Based on data from the AHA’s Annual Survey of Hospitals, Medicare reimbursed just 86 cents and Medicaid 89 cents for every dollar hospitals spent caring for these patients in 2012.

The AHA defined an underpayment as the difference between costs incurred and reimbursement received for delivering care to patients. Costs included personnel, technology and “other goods and services.”

Of the $56 billion in underpayments, Medicare represented $42.3 billion, and Medicaid was $13.7 billion. For more, click on: http://tinyurl.com/n6kpzpn.