Friday, October 05, 2007

The New Hospital Assessment Is Much Improved

The big news on the budget this morning is the Wisconsin Hospital Association withdrawing its opposition to the hospital assessment that would be aimed at leveraging federal dollars to help increase the Medicaid reimbursement rates hospitals receive.

The Journal Sentinel covers it here, although the Wisconsin State Journal provides a bit more informative of an article here.

I expressed concern about the hospital assessment when it was initially proposed back in February, and that concern was tied to the fact that the plan relied on federal dollars that aren't the most stable; even a slight regulatory change in how the federal money can be spent could tank the entire equation.

That's what makes this new agreement a really good one. Rather than making the assessment permanent, the budget bill would have it expire after the biennium. This alleviates the concern about relying on federal dollars over the long haul.

At the same time, it does require that another potentially contentious debate take place in two years over where to get the money to continue the increased reimbursement rates. And considering the new agreement calls for a fixed assessment rather than a percentage tax on hospital revenue, it's almost certain that more money will be required to sustain the same reimbursement level as health care costs continue to rise.

Of course, a big piece of the puzzle that's still missing is GOP support. According to the WSJ, Speaker Huebsch declined to comment on the new plan yesterday.

An aide to Rep. Steve Nass -- who doesn't have a position in the GOP leadership -- did, however, express opposition to the new assessment plan and display a general lack of understanding about how health care costs operate. According to the aide, the new agreement "doesn't change the equation in that the assessment is still going to be paid by anyone who goes to those hospitals."

Actually, the assessment would very much change the equation, which right now has everything to do with the fact that a significant chunk of health care costs are derived from cost-shifting. Part of that cost-shifting is as result of the uninsured, and part of it is a result of low Medicaid reimbursement rates (Medicare rates are low, too, but not as low as Medicaid).

Here's a chart (page 13) that helps to explain the situation:

(Click for larger view.)

By increasing the reimbursement rates for Medicaid patients, the hospital assessment would be able to pull down the rates paid by the privately insured. In fact, Children's Hospital -- which treats a large number of Medicaid patients as the only pediatric hospital in the Milwaukee area -- has already pledged to decrease health care costs for patients with private insurance if the assessment passes.

Of course, not every hospital would come out in the black. According to the WSJ article:
There would still be winners and losers under the plan, with about 50 Wisconsin hospitals receiving more money under the plan, 23 receiving less, and 72 remaining unaffected, according to figures provided by the Doyle administration. [WHA spokesperson Eric] Borgerding said the number of losers was actually lower, however, since about half of the losing hospitals were part of a hospital network that was an overall winner under the plan.
It's important to note, however, that even those 10-12 hospitals who would see a loss have the advantage of serving a smaller percentage of Medicaid patients, which means their privately insured patients aren't faced with the same cost-shifting that other privately insured patients face.

In other words, there are winners and losers involved in doing nothing, too.

In the end, if Huebsch and the rest of the GOP leadership do still oppose the assessment plan now that even the WHA has stepped out of the way, it'd be really interesting to see the justification. With the practical concerns absent from this new agreement, as evidenced by the WHA removing its opposition, any arguments remaining would have little to stand on aside from ideological purity.

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