The grumbling commences

There’s an old saying in Washington that goes like this: If no one is happy with a piece of legislation, then you know you’ve crafted a good bill.

By that measure, the sweeping health reform package released last week by Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, qualifies as a very good bill.

Almost immediately after its release, healthcare industry executives quickly found provisions within the 220-page measure that would affect the way they do business and how they’re compensated. More than $227 billion in federal payments would be cut to restructure how different sectors are reimbursed.

Yet while many industry groups weighed in, the nation’s three largest hospital associations were uncharacteristically silent. At least one association official said that the group was continuing to meet with committee staffers to iron out certain provisions, but declined to say which ones. The bill moves this week to the full committee, where members can offer amendments, and then must be melded with a bill approved by the Senate health committee.

The American Hospital Association, Federation of American Hospitals and Catholic Health Association did not officially endorse Baucus’ package. Through a spokeswoman, the AHA said “it welcomes this (legislation) as an important contribution to the health reform debate,” but added that it is still reviewing the bill.

Possible issues could center on the creation of a new, independent Medicare commission that would hold sway over some payment recommendations; and the phase-out of disproportionate-share hospital subsidies.

“I applaud Sen. Baucus for the enormous amount of work he has done and sought from just about everybody,” said Sister Carol Keehan, president and CEO of the Catholic Health Association. Keehan said that the groups have been working with Finance Committee staff to make sure everyone understands all of the proposal’s details.

All three associations declined to comment on specifics.

But a source separate from the hospital associations said that for the CHA, the divide is centered on abortion. The source, who spoke on the condition of anonymity, said that the United States Conference of Catholic Bishops is leaning on the CHA to withhold its endorsement until provisions in the bill are strengthened to restrict federal funding for abortions.

From the state perspective, Kenneth Raske, president and CEO of the Greater New York Hospital Association, said that he has lingering concerns over the phase-out of federal subsidies that go to hospitals for treating the poorest patients.

Raske said he is concerned that the reduction in disproportionate-share hospital payments is troubling because in many cases the amount of new people who gain coverage may not immediately result in a drop in uncompensated care.

A similar problem happened in Massachusetts, which reshaped its healthcare system to expand coverage to nearly all of its citizens.

Raske said that he is also concerned that states like his, which have a progressive history of expanding coverage, would not benefit as much as other states when it comes to the federal expansion of Medicaid and other programs.

Still another possible concern is the creation of an independent Medicare commission that could restructure federal provider payments.

In July, the nation’s hospitals agreed to $155 billion in savings over 10 years in return for certain exemptions in the bill. Most notably, the deal is based on the numbers of people covered by health insurance. It would also protect hospitals from payment recommendations made by a new Medicare advisory commission.

Under the Baucus bill, hospitals would see more than $118.7 billion in cuts from Medicare alone, with the lion’s share coming from a revamp of the formula used to determine inpatient pay rates and a scale-back of federal assistance used to offset the cost for treating the poorest patients.

Physicians, however, have more to cheer in the bill. Under the Baucus proposal, doctors would see a reprieve in their steep projected Medicare cuts.

In 2010, under current law, doctors face a 21% reduction in payments. The Baucus bill wipes those cuts out and instead replaces them with a 0.5% raise. But it’s only a one-year fix—and a costly one at that. The Congressional Budget Office said it would cost the federal government $10.9 billion, meaning that pay cuts would have to resume to compensate for the deficit. In 2011, for instance, physicians would face steeper cuts—up to 25%.

Sen. Orrin Hatch (R-Utah), a member of Finance Committee’s health subcommittee and a critic of the bill, told reporters that the lack of a permanent sustainable-growth-rate fix skewers any savings being predicted over the next decade (See Payers and Purchasers story, p. 32).

“We really ought to be honest about what it’s going to cost,” Hatch said. “And we all know that when Washington says it’s only going to cost $5, you can count on it costing $50.”

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