Hospitals in Alabama are bemoaning the Medicare reimbursement system as "very flawed," noting that hospitals with a lower wage index get lower reimbursements, the Anniston Star reported.
Even with all other factors being equal, since the state has the lowest hospital wage index, its hospitals would get fewer reimbursements.
"When a patient has a colonoscopy or something through Medicare … for the exact same treatment … we get much less in reimbursement than a hospital across the border in Georgia," Anniston, Ala.-based Stringfellow Memorial Hospital CEO Barry Keel told the Anniston Star. "It's a very skewed system we've been trying to work on for years," he said.
Thanks to lower Medicare reimbursements, many Alabama hospitals are lowering wages and other expenses to offset the shortfalls. But lowering wage costs means a lower wage index, ultimately reducing reimbursements even further, the article noted.
"It's kind of a vicious cycle," said Ingram Haley, chief financial officer and senior vice president of the Alabama Hospital Association. "You trim costs and that trims future payments."
Complaints against the Medicare area wage index are nothing new. Last year, the American Hospital Association studied the effects of the Medicare area wage index and found various flaws in this system, FierceHealthFinance previously reported. For example, it takes four years for hospitals' reported wage data to be included the area wage index so the fiscal year 2012 wage index is based on data from 2008 cost reports, according to the analysis.
Meanwhile, the Medicare Payment Advisory Commission (MedPAC) last week recommended payment cuts based on geographic regions should proceed, as planned.