AHA Comments on Medicare’s Proposed “Backdoor Budget Cuts”
In response to the Centers for Medicare & Medicaid Services proposed rule for fiscal year 2008 inpatient Prospective Payment System, the American Hospital Association (AHA) is expressing concern over what it calls “arbitrary and unnecessary cuts” in capital payments to urban hospitals.
In a comment letter dated June 4, 2007 posted on its web site, the AHA says that the elimination of the capital payment update for urban hospitals would result in a $880 million reduction in payments to urban hospitals over a five-year period.
“These backdoor budget cuts will further deplete scarce resources, ultimately making hospitals” missions of caring for patients even more challenging, says Rick Pollack, AHA’s Executive Vice President.
The organization also recommends phasing in proposed changes to the patient classification system known as diagnosis-related groups (DRG), a structure used to determine Medicare payments to hospitals for specific medical conditions and treatments.
Changes to the DRG structure are designed to recognize the severity of a patient’s illness or condition, and adjust payment accordingly. The AHA supports these changes, but calls for a transition to the revised system to reduce the financial impact on hospitals, estimated to be between $800 million – $900 million.
The American Hospital Association is a national organization comprised of approximately 5,000 hospitals and healthcare systems and 37,000 individuals. Over one hundred years old, the AHA serves as a public policy advocate for its members in regulatory and legislative matters.