A number of hospital groups, state hospital associations and other coalitions began a lobbying blitz on Capitol Hill last week to overturn a budget provision that could redistribute as much as $1 billion in Medicare capital payments to large urban hospitals.
And by week's end, it appeared they were making some headway. According to several sources familiar with the negotiations, lobbyists for hospitals supporting the measure were willing to cap the amount of money transferred to make the change more palatable to lawmakers. But some of the hospitals opposed to the change say anything short of its elimination will not be acceptable.
The provision is included in federal balanced-budget legislation the House and Senate passed separately last month. Lawmakers began meeting this week to hash out differences in the two budget plans.
Among the groups opposing the Medicare capital provision are the Federation of American Health Systems, the Rural Referral Center/Sole Community Hospital Coalition, the Association of Iowa Hospitals and Health Systems, and a coalition of Chicago-area hospitals.
"In a year when hospitals are getting hammered in the budget, this kind of transfer is indefensible," said Thomas Scully, president of the federation, which represents for-profit hospitals.
The American Hospital Association has stayed neutral on the provision.
With slight variations in the House and Senate, the provision would expand the existing "special exceptions" Medicare capital rules to all urban hospitals with more than 100 beds, regardless of how many Medicare or Medicaid patients they treat.
The rules, which funnel extra Medicare payments to hospitals with big capital projects, took effect in 1994 but were limited to those qualifying urban hospitals that treated a disproportionate share of the elderly and the poor. Twenty-five hospitals qualified for the extra Medicare capital payments under the 1994 rules.
The Congressional Budget Office estimates the Senate version of the provision would redistribute about $350 million in Medicare capital payments to hospitals from fiscal 1998 through 2002. The Senate version includes a cap on how much of that money could be distributed each year.
The House version, which doesn't have an annual cap, could redistribute as much as $1 billion annually in Medicare capital payments, according to some estimates.
Under a complex formula that took effect in 1992, Medicare pays hospitals for its share of their capital costs. Those payments are estimated to total $8.9 billion for fiscal 1997, which ends Sept. 30.
The shift of more than 10% of that money to some hospitals at the expense of others has mobilized a number of have-not hospitals.
A coalition of four Chicago-area hospitals, led by Rush-Presbyterian-St. Luke's Medical Center, has hired the lobbying firm headed by former Sen. Dave Durenberger (R-Minn.) to attack the change.
Stephen Brenton, president of the Association of Iowa Hospitals and Health Systems, told Sen. Charles Grassley (R-Iowa) in a letter last week the provision was a "classic example of `robbing Peter to pay Paul' with rural hospitals once again facing a disproportionate share of the burden."
Despite criticism from some of its hospital members, AHA executives said the association would continue to avoid taking a position in what is an interhospital squabble.
One hospital executive, who asked not to be identified, attacked the AHA for not flagging the special exceptions provision as an issue for members.
"They knew this had a redistributive effect in advance," the executive said. "I understand why they don't want to get in the middle when their members are having a food fight, but they did not inform the field."