Medicare and Medicaid are holding their own as revenue sources for the nation's hospitals, according to government figures released this month.
Those figures, along with a second report that revealed high Medicare profits for hospitals, could spell trouble for hospital lobbyists trying to minimize reductions in federal Medicare and Medicaid spending as lawmakers look for ways to balance the federal budget (See story, opposite page).
According to the U.S. Labor Department's Producer Price Index, hospitals' net inpatient revenues from Medicare rose 1.2% last year, matching the growth in similar revenues from privately insured patients. It's the second consecutive year that increases in hospitals' inpatient revenues from Medicare matched or exceeded increases in inpatient revenues from the private sector.
The PPI measures wholesale prices, or changes in hospitals' net revenues per episode of care. Overall last year, wholesale prices for acute-care services rose 1.4%, down substantially from 1995, when hospital prices rose 3.7% (Jan. 13, p. 16).
The Labor Department breaks that revenue change down into dozens of subcategories, including by payer source. The figures are based on monthly surveys of a representative sample of more than 400 hospitals. Although inpatient revenues from Medicare and the private sector grew at the same rate, they both were down from last year, when they rose 4.1% and 2.9%, respectively.
Inpatient revenues grew the fastest from an unlikely source-Medicaid, which hospitals have long accused of shortchanging them on care for the poor. The Labor Department said inpatient revenues from Medicaid rose 1.8% last year, up from 1.4% in 1995.
On the outpatient side, Medicaid wasn't so generous. Hospital revenues from treating Medicaid outpatients dropped 1.3% last year, vs. a 2.9% increase in 1995.
Recently, a federal appeals court ruled that California's Medicaid outpatient payment rates were so low they violated federal law (See story, p. 18).