Healthcare Business News
Herb Kuhn, president and CEO of the Missouri Hospital Association

Support seen for ditching ACA shift on Medicare wage index

By Rich Daly
Posted: March 27, 2013 - 1:15 pm ET

Hospitals pushing to reverse a payment provision of the healthcare reform law scored two victories recently, but the war appears far from over.

The Coalition of America's Hospitals, a group of 20 state hospital associations, successfully pushed for an amendment to the Senate budget bill reversing a change to the hospital wage index by the Patient Protection and Affordable Care Act.

Federal law previously required that wage-index adjustments to Medicare payments produce no new net costs to the program within each state. The reform law expanded that budget-neutrality requirement nationwide. As a result, many hospitals in low-cost states are seeing lower payments in order to compensate for adjustments in high-cost states. Hospitals in negatively affected states blame the change for millions of dollars in cuts since the law's enactment in 2010.

The nonbinding amendment by Sen. Tom Coburn (R-Okla.) was easily adopted, 68-31, with bipartisan support.

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“While it is nonbinding, this strong showing provides a really good sign that hopefully in the not-too-distant future we can get some restoration of some fairness back in the wage index,” Herb Kuhn, president and CEO of the Missouri Hospital Association, said in an interview.

Supporters also cheered the narrow defeat, 49-50, of a competing amendment by Sen. Robert Menendez (D-N.J.). A small group of Democrats joined Republicans to kill that amendment, which called for studying broader questions regarding the wage index but was silent on the Affordable Care Act provision at issue. New Jersey hospitals stand to gain about $14.4 million this fiscal year under the rule, according to 2012 projections by the CMS.

Among the Democrats backing the amendment to reverse the health law provision was Sen. Claire McCaskill (D-Mo.), who introduced a bill in January to make the change. That bill has garnered bipartisan support—including from Coburn—but it has yet to move out of committee.

The inclusion of the matter in the budget bill “was a significant victory that will likely build momentum for a more permanent fix,” Coburn spokesman John Hart said.

But proponents of the McCaskill bill are likely noting that the relatively small number of opponents to the Coburn amendment included Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, where the legislation with the power to reverse the wage index provision sits untouched.

Other ways forward for the measure could come from in the House of Representatives.

“I have to feel confident that people in the Senate are evaluating the significance of this vote because it got 68 votes but also the House of Representatives has to take notice of this significant vote as well,” Kuhn said.

An expected companion bill in the House could advance quickly in that Republican-led chamber, given the party's continued antipathy toward the healthcare law.

Provisions with such bipartisan support sometimes circumvent opposition from party leaders by getting added to large must-pass funding bills.

Perhaps more significant than the Senate votes, the Obama administration has signaled that it may support reverting back to the old rules. Officials at the CMS have provided unusual technical assistance to help Coburn and House members write their repeal measures, according to Dan Boston, a healthcare lobbyist representing the hospital coalition. “That actually suggests that the administration is supportive of this,” he said.

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