Debt deal could cut hospital Medicare payments by $1.4M annually

Thanks to the recently enacted debt-ceiling legislation, hospitals could see their Medicare payments cut by $1.1 to $1.4 million annually over the next 10 years, according to estimates from MedeAnalytics, a leading provider of healthcare performance management solutions.

If Medicare is to bear its proportional share of the budget reductions, $150 billion to $200 billion in cuts to Medicare could be expected over the next 10 years, said Ken Perez, director of MedeAnalytics' healthcare policy team and the company's senior vice president of marketing.

"If one further assumes that 100 percent of the cuts will be covered by reduced reimbursements to providers [currently a more politically popular approach than reducing Medicare benefits] and that the Inpatient Prospective Payment System (IPPS) would bear its proportional share of the cuts, we estimate that the IPPS would be cut by $50 to $65 billion over the 10 years," he said.

Under the debt-ceiling legislation, a 12-person bipartisan congressional committee is tasked with coming up with $1.2 trillion to $1.5 trillion in deficit reduction by Nov. 23. It's that "super committee" that is making healthcare providers worried about how the next phase in spending cuts will affect hospitals' bottom lines, as well as patients' access to quality care.

"There's a huge amount of uncertainty," Dr. David S. Katz, president of the Connecticut State Medical Society, told the Connecticut Mirror, although he said most healthcare providers are sure to take a hit. "With the way this table is set, the only way to squeeze lemonade out of this lemon is [for Congress to create] a lower fee structure for all providers" who serve Medicaid and Medicare patients, Katz added.

While not official, MedeAnalytics says its estimate is based on the best available data. Its numbers could be helpful to hospitals as they try to figure out how to handle the financial outcome of the debt ceiling deal without having to compromise care.

"[W]e believe we're contributing to the conversation, said Perez . "At a minimum, it's a place to start."

For more:
- read the press release
- read the Connecticut Mirror article