Investor-owned and not-for-profit hospitals are again locked in a bitter fight over a Republican plan to have Medicare compensate investor-owned hospitals for the taxes they pay.
Round one of the fight went to the investor-owned hospitals, which got the change inserted in the House Ways and Means health subcommittee budget plan and kept it there on a 7-6 vote.
But round two went to the not-for-profits last week when the full Ways and Means Committee stripped the measure from the budget plan by a 20-19 vote. Four Republicans, including Chairman Bill Archer (R-Texas), voted to ax the plan.
The next round will occur later this week when the Senate Finance Committee begins work on its own version of the budget plan. The change will be included in the plan, according to sources close to the deliberations, and the not-for-profits will again seek to take it out via an amendment.
As in the budget battles of 1995 and 1996, the fight centers on a GOP provision that would increase Medicare payments under the capital reimbursement program by more than $70 per discharge for about 700 investor-owned hospitals to compensate them for taxes paid. The measure would also compensate some 550 not-for-profit hospitals for payments made in lieu of taxes. Those not-for-profit hospitals would see a boost of only about $8 per discharge.
However, because federal law requires that such changes not increase total Medicare payments, reimbursements for other hospitals would be reduced by $5 to $8 per discharge.
In total, about $80 million in annual capital payments would be reallocated.
Investor-owned hospitals, through their trade group, the Federation of American Health Systems, argue that the current capital reimbursement system does not account for the higher costs incurred because of taxes or payments made in lieu of taxes.
Opposition to the measure is being led by the Catholic Health Association with the help of InterHealth, a largely Protestant healthcare association, and VHA.
The American Hospital Association has officially supported the plan, a move that has angered many not-for-profits. Earlier this year, several state hospital groups asked the AHA to drop its support (April 7, p. 6). So far, however, the AHA has continued to back the change.