Looking for a way out of a growing inter-hospital squabble, the American Hospital Association will convene a task force of state hospital executives to decide what to do about proposed changes to the way Medicare accounts for differences in labor costs.
The issue dates to 1994 when a HCFA task force, which included the AHA, recommended a series of changes to the hospital wage index. The index is used to adjust Medicare payments for differences in labor costs between markets. To give hospitals time to adapt, the changes were not slated to take effect until fiscal 1999, which begins Oct. 1.
The proposed changes would not increase total Medicare payments. Instead, they would add to the reimbursements for hospitals in some states at the expense of facilities in other states.
Early this year, lobbying efforts by several state hospital associations and the AHA convinced HCFA not to implement the changes. The state associations stood to lose millions in Medicare reimbursements under the plan.
That angered the hospital groups that would have benefited if the changes had gone through. For example, industry estimates show California hospitals will lose $50 million in extra Medicare fiscal 1999 reimbursements they would have received from the changes.
During a meeting last week in Washington, state hospital association executives decided to convene a task force to seek a compromise that would satisfy both sides.
"There was a feeling in the meeting of `oh, not again,'*" said Richard Wade, AHA senior vice president for communications. "This puts a lot of strain on the field."
Earlier this month, in its proposed regulation updating the hospital prospective payment system for fiscal 1999 (May 11, p. 8), HCFA said it would not implement the wage index changes. Instead, the agency said it would make a small fix recommended by the AHA in an attempt to even out reimbursements among states.
HCFA also is considering another change that would take effect in fiscal 2000. The AHA has concerns that the data needed to implement the second change are not available.