A bad time to hold back Medicare payments

As Modern Healthcare reports this week, more than 60 hospitals could lose almost $5 million collectively this year. Are we talking about problems with collecting patient debts? Poor payer mixes? Falling admissions? No. These hospitals stand to lose the money because Medicare determined that they hadn't met the quality reporting standards to get their full fiscal 2009 payment update.

The reasons for the denials vary, but generally speaking, Medicare denied hospitals 2 percent of the update because their reports were late or missing data. In some cases, hospitals may have simply failed to get their act together, but in others, it seems that problems such as vendor screw-ups are to blame.

Now, Medicare wouldn't be functional for long if it didn't enforce its own rules. And under ordinary circumstances, I can see where it would have to draw a bright line between those hospitals that met its requirements and those that didn't. That's just the reality of doing business in our current system.

But these aren't ordinary circumstances. We're in the middle of one of the most difficult economies this country has seen in many a year, and hospitals are in serious pain. Big hospital layoffs are an everyday thing, capital investment is screeching to a halt and services are being cut back.

Given the industry's situation, this is an absolutely terrible time for Medicare to get tough with hospitals over procedural issues. Even if the demand for quality data serves Medicare's larger purposes, taking a hard line on technical reporting issues doesn't right now. At minimum, hospitals that have made significant good-faith efforts should be rewarded for their efforts.

Sometime in the future, when the worst of the economic storm is behind us, Medicare can--and probably should--go ahead and crack the whip again. But in the meantime, it's dumb public policy to be punitive with an industry that is already on its knees. - Anne