Trying to reverse Medicare payment restraints has turned out to be far more expensive for hospitals than trying to stop the federal government from trimming fee updates in the first place.
That's the lesson for the top two hospital groups in Washington. The American Hospital Association and the Federation of American Health Systems saw their combined annual lobbying expenses spike upward by more than 45% in 1999 as they advocated for increased payments under the Balanced Budget Refinement Act. That is compared with the groups' expenditures in 1997 as they fought reduced reimbursement updates called for in the Balanced Budget Act.
"No one believed (the budget law) was going to happen," said Thomas Scully, president and chief executive officer of the Federation of American Health Systems. "People are much more serious and much more concerned now."
Lobbying records recently released by the House clerk's office show that the AHA's annual lobbying expenses rose 40% between 1997 and 1999 to $10.9 million.
The federation's annual lobbying expenses nearly doubled between 1997 and 1999, from $880,000 to nearly $1.7 million.
The budget act of 1997 and subsequent efforts to roll it back have spurred the big increase. The law aimed to save $112 billion in projected Medicare expenditures between 1998 and 2002, in part by reducing hospital payment updates when compared with what the law prior to 1997 mandated.
Since then, the AHA and the federation have blamed the budget law for hospital bankruptcies, department closures, layoffs and credit-rating downgrades.
Last year, they used that argument to get passage of the Balanced Budget Refinement Act, which gave them $16.1 billion in increased payments from Medicare, Medicaid and state children's health insurance programs during the next five years.
Even before the campaign to roll back the balanced-budget law, the AHA in 1998 accelerated its lobbying spending when it tried to fight federal fraud prosecutors. Hospitals claimed they had gone too far with their investigations.
"We've had big challenges that we've dedicated big resources to addressing," said Richard Pollack, executive vice president of the AHA.
The big difference between the two years was advertising. The AHA spent about $2 million and the federation $600,000 to $700,000 on advertising in 1999, trying to persuade Congress to loosen Medicare's purse strings.
But hospital group leaders said they don't believe that increased lobbying spending would have held off 1997 payment restraints. They said lawmakers' support was so strong that hospital lobbyists were forced to play a defensive game to minimize payment reductions.
"When (the budget act) was going through, Medicare reductions were being looked at in a bipartisan way," Pollack said.
Scully added that few people in the hospital industry gave a budget bill a serious chance in 1997 since it had been seven years since the federal government had enacted a budget bill that squeezed significant savings from Medicare.
"I knew it was going to be bad, and AHA did too," Scully said. "We tried to bang pots together, but nobody listened."
By contrast, the Catholic Health Association saw its lobbying expenditures plummet to $200,000 last year from $520,000 in 1997. The CHA didn't respond by deadline to a request to explain its lobbying activities.
Both AHA and federation executives said they expect their organizations to spend more on lobbying this year than they did in 1999.
The AHA is seeking $25 billion in additional provider payments during the next five years.