AHA report: Medicare, Medicaid underpaid hospitals by $76B in 2017 

Hospital finance
Medicare underpaid hospitals by nearly $54 billion in 2017, according to new data from AHA. (Getty/utah778)

Many hospitals are making significant investments in community programs, despite losing nearly $77 billion in Medicare and Medicaid payments in 2017, according to new data from the American Hospital Association. 

The AHA’s Annual Survey found 84% of its hospitals are investing in community health education, 79% offer a nutrition program and 54% provide smoking cessation programs. Those programs are in the face of $53.9 billion in Medicare underpayments and $22.9 billion in Medicaid underpayments. 

That year, Medicare and Medicaid paid out 87 cents for every dollar spent caring for beneficiaries, according to AHA. 


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“Those underpayment levels have gotten more severe,” Aaron Wesolowski, AHA vice president of policy research and analytics, told FierceHealthcare. 

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The survey tracks a laundry list of trends relevant to revenue, service lines and other data points. In addition to looking at underpayments, the AHA found inpatient and outpatient revenues were nearly on par with one another in 2017. 

Hospitals earned $472 billion in net revenue from outpatient care that year, while inpatient care net revenues were close to $498 billion, according to the report. Wesolowski said it’s a sign that hospitals are adapting to changes in the market and consumer demand. 

“I think that reflects the fact that hospitals are committed to getting the right care, at the right time, in the right setting,” he said. 

Consumers are increasingly seeking care at more convenient, lower-cost facilities, which has forced traditional providers to pivot to these new models. 

Hospital admissions went up by less than 1% in 2017, but utilization rates for outpatient care slowed their rapid growth as well, according to the report. Outpatient visits increased by just 1.2% year over year, and Wesolowski said that the group expects that stabilization to continue. 

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Uncompensated care costs also remained flat in 2017, AHA found (PDF). Hospitals spent $38.4 billion on uncompensated care that year, the same as in 2016 and a significant decrease from the 2013 peak of $46.8 billion. 

Wesolowski said uncompensated care costs dropped significantly following the full rollout of the Affordable Care Act, but have ticked back up following erosion in coverage gains made under the law.

The AHA notes additionally that its uncompensated care figures don't account for all of hospitals' charity care spending and financial assistance.

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