Robin Hood to Rescue of Rural Hospitals? New Math Promised on Medicare Payments

June 13, 2019

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Source: Las Vegas Sun

As rural hospital closures roil the country, some states are banking on a Trump administration proposal to change the way hospital payments are calculated to rescue them.

The goal of the proposal, unveiled by Centers for Medicare & Medicaid Services Administrator Seema Verma last month, is to bump up Medicare’s reimbursements to rural hospitals, some of which receive the lowest rates in the nation.

For example, Alabama’s hospitals — most of which are rural — stand to gain an additional $43 million from Medicare next year if the federal agency makes this adjustment.

“We’re hopeful,” said Danne Howard, executive vice president and chief policy officer of the Alabama Hospital Association. “It’s as much about the rural hospitals as rural communities being able to survive.”

The proposed tweak, as wonky as it is, comes with considerable controversy.

By law, any proposed changes in the calculation of Medicare payments must be budget-neutral; in other words, the federal government can’t spend more money than previously allocated. That would mean any change would have a Robin Hood-like effect: increasing payments to some hospitals and decreasing them to others.

“There is a real political tension,” said Mark Holmes, director of the University of North Carolina’s Cecil G. Sheps Center for Health Services Research. Changing the factors in Medicare’s calculations that help hospitals in rural communities generally would mean that urban hospitals get less money.

 

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