Rural state hospitals want Obama to nix healthcare law's special deal for Massachusetts

Nineteen rural state hospital associations have signed onto a letter urging President Obama to nix the healthcare reform law's special deal for Massachusetts hospitals in his 2013 budget proposal next month.

The hospital groups say a provision in the law shifts $367 million annually in Medicare funding from 49 states to the Democratic-led commonwealth. The provision's aim was simply to increase Medicare payments for a single, 15-bed hospital in Nantucket but ended up raising payment rates for the state's 60 urban hospitals by 8 percent.

"If left uncorrected," the letter says, "hospitals in 49 states will experience reduced funding of more than $3.5 billion over the next ten years as a direct result of this manipulation of Medicare's hospital wage index.

"Hospitals nationwide are already struggling with reduced government payments and the potential for cuts through the federal deficit reduction discussions and health care reform. Scarce Medicare funding should reward value and efficiency in health care, not be diverted based on artful manipulation of obscure payment formulas."

The panel that recommends Medicare payment policy to Congress raised concerns with the provision last summer.

"This is a clear example of how the current system of exceptions is not an equitable method of adjusting for input prices," the Medicare Payment Advisory Commission wrote to then-Medicare Administrator Donald Berwick back in June. "A new wage index system is needed."

The new letter was signed by hospital groups from Alabama, Arkansas, Delaware, Georgia, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Ohio, Nebraska, North Carolina, Oklahoma, Oregon, South Carolina, South Dakota, Virginia, West Virginia and Wisconsin.

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