Teaching hospitals fight Medicare cuts

By Julian Pecquet - 01/17/12 12:19 PM ET

Teaching hospitals are ramping up the pressure on lawmakers to reject cuts to their Medicare payments as Congress seeks to avert an almost 30 percent cut to physician rates on March 1.

Proposed cuts to hospital outpatient departments, the Association of American Medical Colleges warned Tuesday, would be "counter-productive and would reduce teaching hospitals' ability to provide outpatient care to vulnerable populations, and will make it more difficult to train physicians and other health care providers in an integrated, team-based environment."

The warning is included in a three-page letter sent to a bipartisan panel of lawmakers who are negotiating a payroll tax cut extension and a fix to the Medicare physician payment formula.

The letter comes after the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare payments, voted last week to recommend cuts to hospital outpatient departments that could save the government between $1 billion and $5 billion over the next five years. The proposal is seen as a possible offset for the so-called "doc fix," which costs about $30 billion for every year that scheduled cuts to physician Medicare rates are delayed.

MedPAC voted 15-2 last week to recommend that Medicare reimburse doctors' visits at the same rate, whether they take place in a hospital or a physician's office. The panel says Medicare currently pays 80 percent more for the same routine visit if it takes place in a hospital setting.

The AAMC in its letter says the impact of any cuts to outpatient departments should be studied before they are implemented, rather than after the fact, as proposed by MedPAC. The letter goes on to say that outpatient departments operated at a negative 9.6 percent average Medicare margin in 2010.

The hospitals, the letter argues, offer unique services not offered in physicians' offices, including coordinated care for patients with chronic or complex conditions, including cancer.

"Reducing support for [hospital outpatient departments] would create strains," the letter says, "and could impose barriers to continuing these important patient care coordination activities."