Hospitals on average earn profits from Medicare and from private-sector payers, meaning Medicare payments probably are adequate, the staff of a congressional advisory commission said last week.
An American Hospital Association official responded, however, that hospitals actually lose 1% on their Medicare business, but the commission's figures don't show that because they rely on outdated cost figures.
Preparing for a vote early next year on 2003 hospital payment updates, the Medicare Payment Advisory Commission staff said hospitals are projected to make a 10.8% profit on Medicare inpatient business and a 3.8% profit on their entire Medicare business in 2002. Both figures are down slightly from 1999, when the inpatient margin was 11.9% and the total margin was 4.7%.
The staff didn't publish margin numbers for 2000 and 2001. But based on survey data, the MedPAC staff said hospitals' total margins from all payers combined was a seasonally adjusted 4% in fiscal 2001.
Carmela Coyle, the AHA's senior vice president of policy, said MedPAC's profit numbers are based on outdated assumptions that don't fully take into account all of the costs of treatment.
"When you're looking at payment adequacy, you need to take a look at all of the costs that are incurred in treating a Medicare patient," Coyle said.
She said the AHA's figures show that one-third of all hospitals lose money and that 58% lose money on their total Medicare business.