The National Association of Public Hospitals and Health Systems is angrily denouncing the American Hospital Association for opposing a plan to funnel special Medicaid funds to public facilities.
AHA officials contend the proposal by the NAPH on Medicaid disproportionate-share funds was self-defeating for the industry. Ultimately, it would have financially undermined the NAPH's own members, the AHA argues.
At the NAPH's annual conference in Napa, Calif., late last month, executives made no attempt to conceal their displeasure with the AHA.
"We don't appreciate one bit their taking sides on an issue that divides the hospital industry," NAPH President Larry Gage told the assembly. Speaking under a slide projection that read: "There is always one more S.O.B. than you counted on," Gage said of the AHA: "We don't want to break our relations with them, which have been good over the years. We want to make their lives miserable for a little while, though."
The NAPH's executive committee is asking members to tell their state hospital associations and the AHA just how they feel.
At issue is the AHA's role in squelching a proposal to target billions of dollars in Medicaid disproportionate-share funds to public hospitals. The disproportionate-share hospital program, or DSH, channels extra Medicaid money to hospitals that treat large numbers of poor patients. The NAPH proposal would have preserved 1995 funding levels for certain hospitals that treat lots of poor people-whether they are NAPH*hospitals or not.
Pending legislation in Congress would trim such funds by as much as $19 billion over five years.
The AHA, contacted by MODERN HEALTHCARE, said the public hospitals are not taking into account how complicated Medicaid politics are on the state level. Targeting DSH money could erode overall support for Medicaid, the association reasons, so it's best to let the states decide how to pass out the checks. It made that pitch for state flexibility in a letter on DSH sent to House-Senate budget negotiators, a move that implicitly opposed the NAPH's plan and triggered the public hospital group's anger.
That argument is unlikely to mollify NAPH member hospitals, which took the AHA's position as an affront. Patricia Gabow, M.D., chief executive officer at Denver Health, isn't a member of the AHA, "but that won't stop me from talking to Dick Davidson," its president. "AHA taking a stand is hurting some of their members," she said. "That doesn't seem like a good position for a national association to take. Besides, if safety-net hospitals go down, that will have a domino effect on the non-safety-net hospitals."
The NAPH has 68 members, representing more than 100 hospitals. In exchange for treating vast numbers of uninsured Americans, these hospitals have come to expect government-federal, state and local-to pick up most of the tab, often through Medicaid. They are alarmed by what they see as a juggernaut in Washington, prepared to steamroller them in the name of balancing the budget.
The NAPH says Medicaid DSH payments to public hospitals total $1.4 billion annually and subsidize 40% of the uncompensated care its members provide.
This isn't the first time the AHA has caused a rift by taking sides on an issue that divides the industry.
For example, it endorsed a Medicare geographic reclassification plan that rewarded newly designated urban hospitals at the expense of suburban and rural hospitals.
In this case, AHA officials say, targeting could do more damage to the NAPH core constituency than not targeting. AHA policy, developed by a steering committee of state hospital association chiefs, recognizes that local politics dictate how Medicaid taxation and disbursement formulas work in each state.
At bottom, the issue is federalism, said James D. Bentley, the AHA's senior vice president for policy. Medicaid gives states wide latitude to decide who is eligible, what benefits to give, how to raise matching funds, and how to distribute the money.
If the federal government orders the majority of Medicaid DSH to be funneled to just certain hospitals, that might wipe out the political support for Medicaid in the state. The NAPH, Bentley said, shouldn't have been surprised by this AHA viewpoint.
"They have to recognize that state associations are major partners with the AHA. There are 54 Medicaid programs, and they're all different," he said. A one-size-fits-all approach won't work, he added.
Still, the frustration was palpable at the downbeat NAPH conference. NAPH staffers said they had expected the AHA to remain neutral when they informed it of the proposal they were developing. Although the public hospitals opposed cuts in DSH, they acknowledged that Congress and President Clinton were poised to cut it anyway.
The NAPH suggested that Congress preserve the 1995 DSH funding level for those hospitals treating the most poor patients. The NAPH maintains it was making progress until the AHA weighed in. Gage noted with irony that the NAPH has not opposed the AHA's pet project, provider-sponsored organizations, even though most of the NAPH's political allies oppose the idea.
Wording introduced by Rep. Henry Waxman (D-Calif.), a key House Commerce health subcommittee member, would have preserved the fiscal 1995 level of DSH funding for hospitals with a low-income utilization rate of 30% or more, or whose low-income utilization was two standard deviations more than the statewide average. Waxman would have targeted about 600 hospitals.
Waxman's bill was narrowed by Rep. Brian Bilbray (R-Calif.), whose measure would have targeted 190 hospitals. The proposal wasn't accepted by the Commerce Committee. Instead, some loose wording was inserted in a conference report saying states should "take into account the needs of these hospitals."
The NAPH's original proposal failed in the Senate. But Sen. Robert Kerrey (D-Neb.) added a requirement that states create a methodology to distribute DSH money to hospitals serving low-income and Medicaid patients.
In fiscal 1995, the federal government spent $10.2 billion on Medicaid DSH, and states matched that with $7.9 billion, for a total of $18.1 billion. Numbers for fiscal 1996, which ended Sept. 30, are not yet available.
It's very hard to nail down how much DSH is going to be cut because the budget figures are in flux. A spokesman for the Congressional Budget Office said the budget plan passed by the House would trim Medicaid DSH by $13.1 billion between 1998 and 2002. The bill would save $51.6 billion through 2007. The CBO hasn't published a number for the Senate, but NAPH staffers think the Senate wants to cut about $19 billion over five years.
The NAPH proposal wouldn't have eliminated those hospitals with low indigent-care loads from DSH, it just wouldn't have protected their existing funding levels. That's what caused the uprising among the state hospital associations.