Several state hospital groups are pressuring the American Hospital Association and their congressional delegations to oppose giving extra Medicare money to compensate for-profit hospitals for taxes paid.
The groups want the AHA to back off its support of additional Medicare capital payments to hospitals that have paid taxes or made payments in lieu of taxes. The additional funds would come at the expense of not-for-profits.
In a letter sent late last month to the Michigan congressional delegation and the AHA, the Michigan Hospital Association said it "opposes any attempt to establish a special subsidy to compensate tax-paying hospitals for the taxes they pay," said Patrick Foley, an MHA spokesman.
Only one of Michigan's 169 acute-care hospitals is a for-profit facility, and that hospital converted just last month (March 24, p. 21).
The Hospital Association of Pennsylvania has also come out against the change in Medicare payments. Other state hospital groups, including Wisconsin, also are considering opposing the measure, said Richard Wade, AHA senior vice president for communications.
While the opposition to the plan hasn't reached a critical mass yet, Wade said the AHA has received a number of letters from its members suggesting it reverse its position supporting a change in the Medicare capital payment methodology.
According to HCFA, the change in payment policy would result in a shift of about $80 million annually to mostly investor-owned hospitals from mostly not-for-profit hospitals. Some of the estimated 1,250 hospitals that would receive extra money would include about 550 not-for-profit hospitals that have entered into property-tax settlements with municipalities.
HCFA estimates that the hospitals benefiting from the change would gain more than $70 per Medicare discharge, while everyone else would see their payments per discharge drop about $5. Federal law prohibits any such change from adding to total Medicare payments.
Such a proposal was included in the 1995 Republican balanced-budget plan, and GOP lawmakers have suggested they will push for the change again this year. HCFA included it in its draft 1996 prospective payment system regulations but abandoned the plan after complaints from the Catholic Health Association.
A number of Catholic health systems around the country are putting pressure on their state associations to oppose the plan.
In Illinois, Catholic Health Partners is pushing the Illinois Hospital Association to oppose the measure and has threatened to pull out of the IHA if the state group doesn't at least push the AHA to stay neutral.
In recent testimony before the House Ways and Means Committee, AHA officials reaffirmed their support for the measure, but Wade acknowledged that the association is feeling the heat.
Thomas Scully, president of the Federation of American Health System, which represents for-profit hospitals, said when hospital groups and the White House negotiated the new rules governing Medicare capital payments in 1991, taxes paid were to be reimbursed at a future date.