There was a high wage in Nantucket…

HHS Secretary Kathleen Sebelius weighed in for the first time publicly this week on an ongoing battle between hospitals in Massachusetts' and those in at least 19 other states.

Sebelius told the Senate Finance Committee on Wednesday that the Patient Protection and Affordable Care Act required her to change Medicare's reimbursement of employee wages at all hospitals in Massachusetts to match the rate it pays for those at Nantucket Cottage Hospital. The wage match to a 19-bed hospital located in one of the wealthiest localities in the nation had the effect of increasing Medicare wage reimbursements for all state hospitals by $275 million annually.

The change drew the ire of hospitals in other states because the extra money for Massachusetts came through reductions in wage reimbursements for other states.

Sebelius was pressed to justify the change by Sen. Tom Coburn (R-Okla.).

“Why should one state have the advantage over all the rest of the states for reimbursements that are markedly higher than anybody else, and all of the other hospitals pay for it?” he said.

Sebelius said she was merely implementing the law but also indicated the reimbursements could further change. Two Medicare wage studies also were required by the 2010 healthcare overhaul, she said.

“We are directed to not only report back to Congress but to re-evaluate the entire CMS wage basis based on that market analysis, so this will be part of that overall look,” Sebelius said.

Follow Rich Daly on Twitter @MHRDaly.