And while the full impact of reform is not clear, the effects of the latter two are readily apparent – less money for most hospitals and a decisive cut in physician income.
The hospital tax – exacting a 1.45 percent share of patient revenues – was touted by Georgia lawmakers as a last gasp means of avoiding a more than $600 million shortfall in Medicaid funding. Medicaid is a joint state and federal program providing health coverage largely for the needy.
The measure is expected to generate $175 million and generate additional millions in federal matching dollars. The funds would be used to shore up hospitals with large Medicaid patient numbers.
The Medicare and Tricare reductions flow from a mechanism introduced in the Balanced Budget Act of 1997 that established spending targets for Medicare physician services. The formula has stipulated reimbursement cuts since 2002 but reductions have been avoided each year through administrative steps and congressional waivers.
Medicare is a federal program primarily for retired Americans. Tricare uses a system of civilian hospitals and physicians to meet the medical needs of active duty members, military retirees and their eligible family members.
Congress passed a temporary measure to delay the cuts this year to April 1 but no additional action has been taken. So far, Medicare reportedly has delayed acting on the reductions and Tricare, directly linked to Medicare rates, typically requires 30 to 60 days to make changes once they are enacted by Medicare.
Frank Powell, chief financial officer for Houston Healthcare, said he believed the local medical complex would lose money under the state’s hospital tax – although how much is not clear. Houston Healthcare operates hospitals in Warner Robins and Perry along with a number of additional health care sites throughout the county.
“Each hospital’s calculation is based on its data,” Powell explained, “including its percentage of charity care and other factors.” Houston Healthcare spends about ten percent of its gross revenue on indigent and charity care.
“Overall, we will have a reduction in Medicaid reimbursement,” he said. “So we will be less well off than we are right now in our market.”
The Medicare-Tricare cuts will primarily affect physicians in their private practices, Powell noted. And the cuts, if sustained, could impact physician willingness to accept patients covered by the two programs.
“If physician reimbursement goes down, access to physician care will get tighter and tighter,” he predicted. “We’re going to be facing a challenge, particularly if physicians are not appropriately paid – particularly if their costs are not reimbursed.”
The Medicaid, Medicare, Tricare changes – along with health care reform – are only part of the multiple forces impacting health care, Powell concedes.
“We have 300 different payers so the effect on one has a ripple effect,” he said. “It’s extremely complicated.”
He sees one consistency and that is lower reimbursements across the board.
“That’s true in part because the economy requires health care to be looked at because of its high cost,” he said. “Also, private insurers will reduce what they reimburse. Businesses will seek new approaches with higher deductibles and co-pays. It’s all interrelated and it changes the whole market scheme.”
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