Private inner-city hospitals are protesting a congressional advisory panel's recommendation that would redirect some of their Medicare payments to public and rural hospitals treating large numbers of poor patients.
Medicare adds an extra payment to some hospitals' inpatient fees, called disproportionate-share hospital payments, or DSH, to buttress their care for the poor.
The federal government bases eligibility for Medicare DSH on the percentage of a hospital's admissions that comes from poor Medicare and Medicaid beneficiaries. The qualifying percentage, however, varies from area to area.
Medicare DSH payments equaled about $4.5 billion in federal fiscal 1997.
The Medicare Payment Advisory Commission, which advises Congress on payment changes, recommended a series of revisions that would increase DSH payments to rural and public hospitals. The recommendations were made in a meeting earlier this month.
Those changes aim to create a single DSH payment formula, equalize rural and urban rates, and improve measurement of hospitals' low-income admissions.
The panel recommends that uncompensated care and treatment paid under state and local indigent-care programs be added to the current measures, which account for Medicaid and low-income Medicare admissions.
MedPAC recommends a payment threshold under which 50% to 60% of hospitals would qualify for DSH payments. Now 49% of urban hospitals and 19% of rural hospitals receive the payments.
To reach 50% to 60% of hospitals with DSH payments, Congress would have to require that between 16.6% and 19.1% of hospitals' costs be attributable to treating those low-income patients.
The redistribution would increase aggregate hospital inpatient payments to rural hospitals by 5% and to urban public hospitals by 0.6%. Aggregate inpatient payments to private urban hospitals would shrink by 1%, offsetting the payment increases to rural and urban public hospitals.
MedPAC said 1.7% of urban hospitals would lose 10% or more of their Medicare inpatient payments if Congress sets a threshold under which 60% of hospitals would be eligible for DSH.
The National Association of Urban Critical Access Hospitals is arguing, however, that such a redistribution could affect hospitals in different ways. The proposal would result in a "wild redistribution of money in unknown and unplanned ways," said Charles DeBrunner, executive director of the group, which represents private urban hospitals.
Public hospitals supported the proposal. "The recommendation better gets at high-volume providers of care to low-income patients," said Jennifer Tolbert, senior policy analyst for the National Association of Public Hospitals.