Bipartisan Bill Would Repeal Medicare Hospital Payment Loophole

Sens. Claire McCaskill (D-Mo.) and Tom Coburn, MD (R-Okla.), have introduced a bill that would sunset Section 3141 of the Patient Protection and Affordable Care Act — a controversial provision that sets the Medicare hospital wage index floor for the entire country.

Under Section 3141, the Medicare hospital wage index is adjusted so that a state's urban hospitals must be reimbursed for wages paid to physicians and staff at least as much as rural hospitals. These reimbursements for hospital wages also come from a national pool of money, meaning that if one state receives higher Medicare wages, it will come at the expense of another state.

In January, 20 state hospital associations — Alabama, Arkansas, Delaware, Georgia, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Virginia, West Virginia and Wisconsin — as well as the National Rural Health Association wrote a letter (pdf) to the White House arguing this provision is decimating their Medicare reimbursements.  

A Boston Globe report found that Massachusetts had received an estimated $367 million in additional Medicare funding due to Section 3141 because the state's only rural hospital — Nantucket (Mass.) Cottage Hospital, based in an affluent area with a high cost of living — set an inordinately high floor for wage reimbursements. In total, nine states received higher Medicare wages under the provision, while the remaining 41 lost Medicare funds.

Sens. McCaskill and Coburn called the provision "unfair" and said it only benefited hospitals in some states to the disadvantage of many others.

More Articles on Medicare and Hospitals:

Health Reform in 2013: What's Happened, What's Left & What it Means for Providers
House Members Bring Back Public Option Legislation
Did the Fiscal Cliff-SGR Bill Rob Hospitals?

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