Protection sought for hospitals

With the support of the powerful health-insurance lobby, lawmakers from states with prestigious teaching hospitals are fighting to protect their institutions from cuts in Medicare payments.

The teaching hospitals themselves, though, are staying out of it. In fact, the Association of American Medical Colleges (AAMC) is essentially agnostic on the issue.

{mosads}Instead, the push is coming from the health insurers. They are trying to prevent Congress from cutting out the additional payments to teaching hospitals included in the pay structure for private Medicare Advantage plans.

America’s Health Insurance Plans (AHIP), the industry’s main trade association, maintains that the extra Medicare dollars private plans pay to teaching hospitals are needed to maintain the high level of care those facilities provide and to train the next generation of physicians.

The AAMC, however, says hospitals have no way of knowing how much, if any, of those funds end up in their coffers.

The payments are worth more than $1.8 billion every year to Medicare Advantage plans. The industry maintains any reduction in its payment rates will result in fewer benefits and higher costs for the patients enrolled in their plans.

“Eliminating [these] payments would harm beneficiaries just as any Medicare Advantage cuts would harm beneficiaries,” AHIP spokesman Mohit Ghose said.

To protect its position, AHIP has targeted lobbying efforts to lawmakers in states that get the biggest shares of these special payments.

Medicare Advantage plans in New York get more of this money than those in any other state: $412 million a year, according to AHIP. New York is home to House Ways and Means Committee Chairman Charles Rangel (D), a frequent critic of spending on Medicare Advantage.

Pennsylvania is second with $241.4 million, followed by California, Ohio, Michigan and Massachusetts, which get between $70 million and $204 million. In contrast, the seven states at the bottom receive less than $1 million each. Wyoming’s take is $273,000; Alaska gets less than $3,000.

Rank-and-file members of Congress from states at the top of the rankings are pressing their case to the committee leaders in charge of drafting Medicare legislation.

Enacting a reduction in the payments made to teaching hospitals through Medicare Advantage “would have a disproportionate effect on the 724,000 Medicare beneficiaries enrolled in [Medicare Advantage] plans in our state,” Pennsylvania Rep. Jason Altmire (D) and nine home-state colleagues wrote in a bipartisan letter sent last Friday to Rangel and Ways and Means Committee ranking member Jim McCrery (R-La.) and to Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa).

In a statement, Altmire also expressed concern about the effect it would have on teaching hospitals and their patients in his western Pennsylvania district. “Medicare beneficiaries benefit from the medical expertise provided by our academic medical centers, which tend to have greater expenses and treat patients with more complex conditions. This modest extra payment helps with these additional costs and allows patients to continue to receive high-quality care,” he said.

These lawmakers and the insurers face some considerable obstacles. Foremost is that reducing the payments would provide Congress with $4.2 billion in savings over five years, which could go a long way toward helping offset at least $8 billion needed to fix doctor payments scheduled to be cut on July 1.

The notion also fits neatly with the Democratic priority of reducing government spending on private plans in Medicare. The Bush administration has been very protective of Medicare Advantage but supports this narrowly targeted cut.

The White House and congressional supporters of the cuts say taxpayers are paying twice for the special payments to teaching hospitals because traditional Medicare already gives them billions every year in indirect medical education (IME) payments.

The medical schools have decided not to push hard against the elimination of Medicare Advantage IME payments, though they oppose the proposal on principle, Atul Grover, a lobbyist at the AAMC, indicated.

The traditional Medicare program gives teaching hospitals roughly $5 billion a year in IME payments to account for the fact that they serve a disproportionate share of very sick patients who need costly or innovative treatments. Bush has called for those payments to be cut, as well, for a combined savings estimate of $8.9 billion over five years.

The smaller Medicare Advantage IME funds are less important to the hospitals, so the proposal to eliminate them is not a priority for the AAMC, he explained.

“While we’re concerned about that, in the grand scheme of things we understand that we may have to give up some of the payments,” Grover said. “We weren’t going to make a major objection to the IME Medicare Advantage payment cuts” because “there’s no guarantee that those IME payments to the plans are actually passed on to the hospital,” he said.