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LMHS meets with Mack to help prevent Medicaid cuts; Tighter rules passed during last year

By Staff | Apr 8, 2008

Facing a $24 million reduction in Medicaid reimbursement due to changes in how funding can be dispersed by the federal government, representatives from the Lee Memorial Health System held a round table discussion with Rep. Connie Mack to relay to him the health system’s stake in continuing a moratorium on more narrow rules passed last year.

In January 2007, the Centers for Medicare and Medicaid Services — the U.S. agency that administers Medicare, Medicaid and other insurance programs — released two rules that drastically limited the amount of Medicaid paid to public hospitals.

According to the Lee Memorial Health System, these rules would cripple the the health facility because approximately 60 percent of patients who use the system are using Medicare or Medicaid, while 30 percent are patients who have their own private insurance.

Shortly after the new rules were released, hospitals across the country demanded some relief from the possibility of losing federal funds. In reaction to their plea, Congress passed a moratorium on the rules expiring May 25, 2008. Later in 2007, the Centers for Medicare and Medicaid Services enacted five more rules during the moratorium that further limit coverage directed at children with disabilities and rehabilitative services.

A study conducted by the House Oversight Government Reform Committee found that all seven of the rules would result in a $50 billion loss for hospital systems across the United States.

Today, with the expiration date for the moratorium a month away, hospital officials are trying to work with Congress to intervene before they lose millions.

“I wanted to convey our strong support for what you are trying to accomplish,” said Mack, R-Fort Myers, on Monday. “And I certainly recognize the needs of the community and that we are effective in delaying this rule change.”

Mack, and more than 200 other congress members, are co-sponsoring a bill that would request an extension to the moratorium passed in 2007 for one more year. Another bill in the U.S. Senate, co-sponsored by Sens. Mel Martinez and Bill Nelson, is asking for a similar action.

While these two bills only apply to the two rules enacted in 2007, a more recent U.S. House bill would stop all seven of the rules from being applied to hospital systems.

Some local officials are concerned that Congress will not make a decision in time, and as a result there has been some discussion about adding language to the bills that would make them a “vehicle bill” presented directly to President George Bush.

Mack said he believes it is likely proponents of the bill could attempt to get it pushed directly to Bush if Congress does not intervene in time, although he also said that Congress may be roused to action if faced with a strict deadline.

“When you have a deadline like we are facing, it tends to make members of Congress act more swiftly and I don’t know that members of Congress or the president wants to see this happen,” said Mack. “They want to make sure we still have the reimbursement and support of Medicaid.”

If a large portion of Medicaid reimbursement is cut, hospital officials said, those costs would be put onto patients with private insurance who will experience higher medical costs or insurance premiums.

Historically, Medicare paid the way for the hospital to break even, but now the system is losing 18 cents for every $1, explained Ben Spence, system director of reimbursement. If federal reimbursement is cut, all of the people who are covered by Medicaid or Medicare would then be uninsured, posing an even greater challenge for the hospital system.

Mack said on Monday that there are a number of proposals circulating Congress that would address patients without insurance, including association health plans.

“It says that a restaurant in the service industry could have association health plans so members of the Florida Restaurant Association or National Restaurant Association would pool their resources and have a larger buying power and be in a position to offer health insurance to their part-time and full-time employees,” explained Mack.

He also discussed some free market approaches to lowering the number of uninsured through allowing doctors to ask patients to pay more out-of-pocket costs, but he said that is not something patients would necessarily favor.

The American Hospital Association, the National Association of Public Hospitals and Health Systems and the Association of American Medical Colleges have filed a lawsuit on behalf of many health systems, including Lee Memorial Health System, claiming that the Centers for Medicare and Medicaid Services overstepped its authority by issuing the rules. They are asking that the U.S. District Court for the District of Columbia reject the rules.

Jim Humphrey, counsel to Lee Memorial Health System’s board of directors and mayor of Fort Myers, said a hearing on the issue is scheduled for May 7 at the district court. The judge who agreed to hear the case is aware of the upcoming expiration date and the impact to hospitals across the country.