For the second time in as many weeks, a congressional committee has rejected a plan to increase Medicare payments to tax-paying investor-owned hospitals at the expense of most tax-exempt hospitals.
The rejections represent a major lobbying victory by the Catholic Health Association, which represents Roman Catholic not-for-profit hospitals, over the Federation of American Health Systems, which represents for-profit hospitals.
The American Hospital Association was aligned with the federation on the issue, angering many of its not-for-profit hospital constituents.
Last week, the Senate Finance Committee voted 14-6 to strip a provision from its original draft balanced-budget plan that would have increased Medicare payments for hospitals' capital costs to compensate for-profit hospitals for taxes paid and some not-for-profit hospitals for payments they're making in lieu of taxes because of local property-tax disputes.
Sens. Frank Mur-kowski (R-Alaska) and Kent Conrad (D-N.D.) introduced the amendment to kill the extra Medicare payments.
The move came a week after the House Ways and Means Committee voted 20-19 on a similar measure.
Ways and Means Committee Chairman Bill Archer (R-Texas) cast the deciding vote against the for-profit hospitals (June 16, p. 23).
Several steps remain in the balanced-budget process, but according to Thomas Scully, the federation's president, there is little chance the issue of extra Medicare payments will be revisited.
"This is a dead issue," he said. "There has already been too much time and effort spent on this. There are a lot of other cuts in the budget that are much larger that we need to be worrying about."
As in the budget battles of 1995 and 1996, the fight centered on a GOP-backed plan that would increase Medicare capital payments to about 700 investor-owned hospitals by more than $70 per discharge to compensate them for taxes paid. The measure would also compensate about 550 not-for-profit hospitals for payments made in lieu of taxes. Those not-for-profits would see only about an $8-per-discharge increase.
However, because federal law requires that such changes don't increase total Medicare payments, reimbursements for the majority of not-for-profits hospitals would be reduced by between $5 and $8 per discharge.
In total, about $80 million in annual Medicare capital payments would have to be reallocated under the plan.