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Hospitals are deploying their political power to protect their bottom lines in the battle to control healthcare costs.
The point of contention: For decades, Medicare has paid hospitals — including hospital-owned physician practices that may not be physically located in a hospital building — about double the rates it pays other doctors and facilities for the same services, such as mammograms, colonoscopies, and blood tests.
The rationale has been that hospitals have higher fixed costs, such as 24/7 emergency rooms and uncompensated care for uninsured people.
I can understand why federally funded Medicare would pay moreto organizations with higher fixed costs, but why would they pay lessto organizations with lower fixed costs?
I know. That sounds like double talk. If you pay more to one group, you pay less to another. But there is a point to be made.
Colleen DeGuzman
Medicare is an agency of the Monetarily Sovereign federal government. Contrary to popular wisdom, Medicare is not funded by FICA taxes.
All federal tax dollars, including FICA, are destroyed upon receipt by the government.
They begin in the M2 money supply measure, but when the dollars reach the Treasury, they cease to be part of any money supply measure.
Effectively, they are destroyed. There cannot be a money supply measure for an entity with the limitless ability to create dollars by clicking computer keys.
All federal agencies — Congress, the White House, SCOTUS, the military, etc. are funded the same way: By federal new money creation. That includes Medicare and Social Security.
Since the federal government can create dollars, why should it try to save dollars? It shouldn’t.
When there is a question about how much the federal government should pay for anything, the wise course is to err on the side of paying more. That would add growth dollars to the economy at no cost to anyone.
Suppose the goal is to pay hospitals the same rate as other doctors and facilities for the same services. In that case, the federal government shouldn’t cut hospital pay but rather increase pay to other doctors and facilities.
Insurers, doctors, and consumer advocates have long complained it’s an unequal and unfair arrangement that results in higher costs for patients and taxpayers.
It may or may not be “unfair,” but I don’t see why hospital pay would be considered too high.
It’s also a profit incentive for hospitals to buy up physician practices, which health economists say can lead to hospital consolidation and higher prices.
It would seem that the profit incentive is not with the hospitals to buy physician practices. Still, instead, there would be an incentive for doctors to sell their practices, depending on how Medicare is split between doctors and hospitals.
In December, the House passed a bill that included a provision requiring Medicare to pay the same rates for medical infusions, like chemotherapy and many treatments for autoimmune conditions, regardless of whether they’re done in a doctor’s office or clinic owned by a hospital or by a different entity.
The policy, known as site-neutral payment, has sparked a ferocious lobbying battle in the Senate, not the first of its kind, with hospitals determined to kill such legislation.
There would be no need for “ferocious lobbying” if doctor’s pay were increased rather than hospitals’ pay decreased.
According to the Congressional Budget Office, the House legislation would save Medicare an estimated $3.7 billion over a decade.
To put this in perspective, the program is projected to pay hospitals upward of $2 trillion during that same period. But hospitals have long argued that adopting site-neutral payments would force them to cut jobs or services or close facilities altogether — particularly in rural areas. And senators are listening.
“Saving Medicare $3.7 billion is identical to saying, “cost the economy 3.7 billion it otherwise would have received.
“The Senate is very much attuned to rural concerns,” Sen. Ron Wyden (D-Ore.), who chairs the Finance Committee, told KFF Health News. His panel has jurisdiction over Medicare, the health program for seniors and people with disabilities.
“I have heard many questions about how these proposals would affect rural communities and rural facilities,” he said. “So we’re taking a look at it.”
Outpatient departments at rural hospitals can have outsize importance to their communities. Taking any funding away from stand-alone rural hospitals is seen as risky. Scores have closed in the past decade due to financial problems.
With fewer patients, rural hospitals often struggle to attract doctors and update technology amid rising costs.
Taking money from rural hospitals impoverishes them while doing nothing for the federal government, which has infinite money. This is but one example of how economics ignorance hurts everyone.
Sen. Bill Cassidy, R-La., a physician serving on the Finance Committee, indicated he was apprehensive about the legislation.
“In some cases,” he said, higher Medicare hospital payments are “justified.”
“In some cases, it doesn’t seem to be,” he said. He told KFF Health News he was planning to introduce legislation on the issue but didn’t provide details, and his office didn’t respond to inquiries.
As the two senators show, the issue doesn’t break cleanly along partisan lines. In December, the House quickly passed the Lower Costs, More Transparency Act, the broader bill that included this Medicare payment change, with 166 Republicans and 154 Democrats voting.
Whenever Congress votes for “lower costs for the government,” it means “Fewer growth dollars for the economy, i.e., the private sector.
In short, you pay for all federal savings.
“It’s more about how close different members are to the hospital industry,” said Matthew Fiedler, a former White House health economist under President Obama and now a senior fellow at the Brookings Institution.
Barack Obama was notoriously ignorant about federal finances. He claimed the federal government had to “live within its means.”
The federal government always lives with its means because its “means” are infinite. It never can run short of dollars.
Obama also signed the Budget Control Act to cut annual government spending by about $1 trillion over the next 10 years. Additionally, the act charged the Joint Select Committee on Deficit Reduction with finding an additional $1.5 trillion in savings.
Translation: The Budget Control Act aimed to reduce the economy’s supply of growth dollars by $1 trillion and charged the Joint Select Committee on Economic Growth Reduction with taking another $1.5 trillion from the American people.
The American Hospital Association described the site-neutral policy as a “cut” to hospital Medicare payments. It said in a statement to a House subcommittee that it “disregards important differences in patient safety and quality standards required in these facilities.”
Rather than cutting payments to hospitals, Medicare could accomplish equality by increasing payments to healthcare suppliers, not in hospitals. This would satisfy rural hospitals, grow the economy, and improve the nation’s healthcare.
Chip Kahn, president and CEO of the Federation of American Hospitals, representing for-profit hospitals, offered a similar characterization of the House-passed legislation. “This is no time for so-called ‘site-neutral’ Medicare cuts that could harm beneficiaries,” he said in a statement.
Right. There has never been a time to make cuts to save the federal government money. Don’t cut water usage if the goal is to keep the ocean water.
“This is not a hospital cut. It is rolling back an unethical price increase,” said Mark Miller, a former MedPAC executive director now an executive vice president at Arnold Ventures, a philanthropy founded by John and Laura Arnold.
No, it’s a hospital cut. All he mealy-mouth rationalizations don’t change that fact. It is an unnecessary cut with zero benefit to America and much pain.
Large hospital systems with the money to buy physician practices, Miller said, have exploited the disparity between Medicare payments to physician offices and hospitals to increase their revenue and consolidate.
Miller said he’s hopeful the site-neutral provision of the House bill will be part of a larger government spending bill that must be passed next month to keep the government open.
If lawmakers need to offset the bill’s costs, “then it is more likely to get in the funding package,” he said.
But, lawmakers do not need to offset the bill’s costs. The reluctance to spend and keep the government open is total bullshit. Yes, there is no better way to state it: Total bullshit that has been fed to the American public.
The purpose of the bullshit is simple: To make the middle- and lower-income groups stop asking for federal benefits. When the people are told (falsely) that Medicare and Social Security “can’t afford” more benefits or even existing benefits, they meekly accept their impoverishment.
And that makes the rich, who run America, richer.
Sorry, folks, but your representatives are cheating you by keeping you ignorant of federal finances. Ignorance is costly.
The House-passed legislation is viewed as an “incremental” change, said Fiedler, but it faces a rough path forward. Evening out Medicare payment for physician-administered drugs, hospitals fear, could lead to similar moves for other outpatient services.
“Hospitals have a lot of money at stake and will fight this hard,” he said. “Hospitals feel if they lose here, there will be more substantial steps down the road.”
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