Provider groups readied their final pitch for Medicare and Medicaid payment increases last week as Congress prepared to leave Washington for political party conventions and its annual August recess.
A coalition of hospital groups, led by the American Hospital Association and the Federation of American Hospitals, unveiled a television, radio and print ad campaign to pressure Congress to add as much as $50 billion to Medicare's projected spending over the next five years.
The first $1.6 million purchase of ads sponsored by the 114-member alliance, calling itself the Coalition to Protect America's Health Care, began last week on television and will continue through the Republican National Convention this week in Philadelphia and the Democrats' convention the week of Aug. 14 in Los Angeles.
The first round of ads is part of a larger $30 million, 18-month campaign to draw public attention to healthcare issues.
The advertisements urge Congress and President Clinton to reverse spending restraints enacted under the Balanced Budget Act of 1997. That law aimed to reduce Medicare spending growth by $112 billion between 1998 and 2002, but hospitals blame it for forcing providers into a financial tailspin.
"It's to shine the spotlight on the critical condition of so many of our hospitals and the effect (the budget law) has had on patients and communities around the country," AHA President Richard Davidson said at a Washington press conference announcing the campaign.
Hospitals have pushed Congress to ease the spending controls, last year persuading Congress to pass a $16.1 billion package of increased Medicare, Medicaid and State Children's Health Insurance Program payments between 2000 and 2004.
They're asking for up to $25 billion more over the next five years--a figure Thomas Scully, president and chief executive officer of the federation, said could double. The federation represents for-profit hospitals.
Ironically, many of the federation's hospital-chain members are singing a happy tune over their financial fortunes. Over the past two weeks, six chains representing nearly 500 hospitals reported jumps in quarterly and year-end earnings, most of them in the double digits, excluding one-time extraordinary charges (See stories, pp. 18-19).
For-profit hospital company executives told analysts they are bullish on the prospects for growing industrywide profits and are optimistic about what's coming out of Washington.
"All in all, you can say this is the best of times in the rural hospital marketplace," said Martin Rash, president and chief executive officer of Brentwood, Tenn.-based Province Healthcare Co., during an earnings conference call with analysts last week.
Those reports confirm an earlier Goldman Sachs investment report that recommended purchasing stock in investor-owned hospital chains and said for-profit hospitals are poised for rapid growth (May 29, p. 2).
Still, Davidson said that he believed the package Congress will eventually pass will be insufficient and that hospitals are likely to ask for more money next year.
The pitch has met with some resistance, however. Rep. Fortney "Pete" Stark (D-Calif.), senior Democrat on the House Ways and Means health subcommittee, released preliminary General Accounting Office data showing that overall Medicare inpatient payments still are 9% higher than hospitals' Medicare-related costs.
Of hospitals the GAO surveyed, it found only 24% received Medicare payments that were less than their Medicare-related costs, Stark said.
Medicare+Choice plan payments to hospitals, meanwhile, were 7% above hospitals' costs overall. Some 41% of the hospitals were receiving Medicare+Choice reimbursement below the costs attributable to Medicare+Choice enrollees who were admitted to the hospital, Stark said.
"Since Medicare is paying more than cost-conscious managed-care plans, why should we increase the annual update to Medicare hospitals?" Stark said. "That raises the key question: If we pay hospitals more with taxpayer dollars from Medicare, will they just keep signing lowball contracts with the managed-care plans?"
Stark disclosed the preliminary GAO data at a subcommittee hearing on potential Medicare payment increases.
Meanwhile, HCFA said that Medicare+Choice plan withdrawals will affect 934,000 Medicare beneficiaries in 2001, more than those affected by pullouts in the past two years combined.
Managed-care plans capitalized on the announcement to call for new payment relief. The American Association of Health Plans said an additional $15 billion in Medicare+Choice payments is needed over the next five years.
--With Barbara Kirchheimer