Hospitals' battle for $2 billion in Medicare bad-debt reimbursements got more complicated last week as a top White House adviser said federal legislation might be needed to make up for their loss.
Hospitals contend that a reinterpretation of the law by HCFA could solve their problems. If legislation is necessary, their lobbying job would be a lot tougher in the face of lawmakers' reluctance to reopen the budget agreement.
At issue is a provision in the 1997 balanced-budget law that changed the reimbursement rules for low-income Medicare beneficiaries also eligible for Medicaid. The nearly 500,000 people who qualify are known as "qualified Medicare beneficiaries," or QMBs. Under the QMB program, Medicaid pays the Medicare premiums, copayments and deductibles for eligible seniors.
Before the balanced-budget law took effect, hospitals were reimbursed at the Medicare rate for the hospital deductible. As of Jan. 1, the new law allows states to pay either Medicare or Medicaid reimbursement rates, whichever is lower. That usually is the Medicaid rate. And the law exempts QMBs from the liability for the difference.
What's more, hospitals can't claim the difference as bad debt in their Medicare reports, according to a HCFA letter late last year. HCFA's decision to disallow those bad-debt claims should save it $2 billion over the next five years, according to the Congressional Budget Office.
Hospitals say that's unfair. They "are being asked to absorb another $2 billion cut that wasn't even discussed during the (negotiations)," according to Stephen Ubl, vice president for legislation at the Federation of American Health Systems. The federation is leading hospitals' lobbying on the issue.
Last week a number of mostly Democratic lawmakers sent letters to HCFA asking for a reversal of the decision.
White House healthcare adviser Chris Jennings has said HCFA is following the law in its interpretation and that legislation might be needed for a change. Jennings said the issue is being discussed within the administration.