Hospitals blast Medicare payment proposal

The American Hospital Association said Tuesday it was "deeply disappointed" by an Obama administration proposal to cut Medicare payments for acute-care hospitals by 0.5 percent next year.

The trade group says a new proposed rule penalizes hospitals because it wrongly assumes that per-patient spending has increased as a result of coding changes rather than hospitals' treatment of more complex and severely ill patients. The rule also increases Medicare payments for long-term-care hospitals by 1.9 percent.

"America's hospitals are deeply disappointed that today's proposal puts further stress on vital care on which seniors depend on," AHA President and CEO Rich Umbdenstock said in a statement. "Medicare already fails to covers the cost of hospital services and these reductions ultimately make hospitals' ability to care for patients and communities even more challenging."

The Premier healthcare alliance concurred.

"Particularly when hospitals are preparing for reimbursement cuts and simultaneously making large investments in accountable care and health information technology, now is not the time to take such a large percentage of income away from hospitals," said Blair Childs, senior vice president of Public Affairs.

The Obama administration is in tight spot as it seeks to work with hospitals to change the way Medicare pays for care while also keeping payments under control. The rule begins to lay the groundwork for a public-private partnership announced last week that seeks to reward hospitals that reduce preventable readmissions.

"The proposals CMS is making today reflect an underlying premise that we can improve the quality of and access to care while at the same time slowing the growth in health care spending," Medicare Administrator Donald Berwick said in a statement. "In fact, there is a growing body of evidence that improving care — focusing on the patient's needs, reducing unnecessary duplicate services, and avoiding costly mistakes and preventable healthcare acquired conditions — is key to reducing health care cost growth."

Tuesday's regulation proposes measures for rates of readmissions for three conditions — acute myocardial infarction (heart attack), heart failure and pneumonia; and it proposes a methodology that would be used to calculate excess readmission rates for the program, with more conditions possibly added later. The payment adjustments will apply to hospitals for discharges on or after Oct. 1, 2012.