The new health insurance reform legislation approved by Congress appears to be a mixed bag of benefits and drawbacks for hospitals.
On the negative side of the ledger, it probably will not significantly reduce the number of uninsured people or hospitals' levels of uncompensated care, experts predict. It also contains new prohibitions and sanctions against hospitals that try to bilk government health programs.
On the positive side, the legislation should help hospitals looking to form networks.
"This is a good bill because it will help people retain their insurance, but I don't think they make up a significant percentage of the uninsured," said Charles DeBrunner, executive director of the National Association of Urban Critical Access Hospitals. "It doesn't even get close to dealing with the uncompensated-care problem."
As of late last week, White House officials said they didn't know when President Clinton would sign the bill. The measure was approved by the House 421-2 and the Senate 98-0.
It includes a limited demonstration program to spur the use of medical savings accounts by giving tax incentives to individuals and employers who make contributions to an MSA. Anyone enrolling in an MSA would be required to purchase a high-deductible catastrophic insurance policy. The program would be limited to 750,000 catastrophic policies, although anyone who currently lacks insurance could enroll in an MSA without counting toward the cap.
MSAs have been touted by Republican backers as a free-market solution to reining in healthcare costs because they would give consumers more control over their health spending.
The plan also would require insurers to offer individual coverage to people who lose their employer-sponsored insurance and would limit the ability of insurers to deny coverage because of pre-existing conditions.
A Congressional Budget Office estimate said as many as 24 million people could benefit from those measures, known respectively as the portability and guaranteed-issue provisions. Most estimates say the actual number affected would be about 1 million people. A GOP aide said no estimates were available on how many of the nation's estimated 40 million uninsured would get insurance as a result of the legislation.
"It is a step in the right direction, but in terms of (insurance) coverage and access, it is a small step," said Richard Pollack, executive vice president of federal relations at the American Hospital Association.
AHA officials said they conducted no special analysis of the financial impact of the bill on hospitals. Carmela Coyle, the AHA's vice president for policy in Washington, said the measure "will have little to no effect on hospitals' uncompensated-care costs and won't make a sizable dent in the number of uninsured."
Although the effect of the insurance provisions may not be felt by hospitals, stiffer fraud and abuse penalties almost certainly will affect most facilities. The plan makes two additions to the list of practices prohibited under federal law. The first is presenting a claim for an item or service based on a code the person knows or should know will result in greater payments than appropriate. The second is presenting a claim for an item or service not medically necessary.
Both would be subject to civil monetary penalties, which the statute also raises to $10,000 per incident from $2,000.
"The penalties for miscoding and the intensity of the enforcement have gone up significantly, so even though they have been worried in the past, hospitals had better be damn careful now," said Thomas Scully, president of the Federation of American Health Systems.
One group of hospitals that will benefit from the bill are those looking to form networks or any type of joint ventures. The bill requires the Justice Department to give providers a preliminary ruling, called an "advisory opinion," on whether a proposed transaction violates federal anti-kickback statutes. The advisory opinion wouldn't carry legal weight.
The Clinton administration opposed the measure, arguing that the provision would prove too taxing on federal resources and that it would be difficult to offer meaningful opinions on deals that hadn't been completed.
But providers countered that uncertainty over the anti-kickback regulations has stifled network formation. "It is important that hospitals be able to get straight answers and timely answers from law-enforcement entities as to whether what we want to do is legal," said Thomas Nickels, AHA vice president of federal relations.