Hospitals push White House to back change in healthcare law

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"Scarce Medicare funding should reward value and efficiency in healthcare, not be diverted based on manipulation of obscure payment formulas," the associations wrote in their letter to Obama.

Here's how Massachusetts gets extra money: Hospitals in urban areas have to be paid at least the same amount as rural hospitals. Massachusetts only has one rural hospital — a 19-bed facility on Nantucket island. So, the Nantucket Cottage Hospital sets the floor for every hospital in the state.

But because Nantucket is so wealthy, its cost of living is high — and thus, so are its Medicare payments. That drives up the payments for every other hospital in the state. And under Kerry's provision in the Affordable Care Act, hospital payments come from a nationwide pool.

"It's a zero sum game. What Massachusetts gets comes from everybody else," Don Berwick, Obama's former Medicare chief, told the Boston Globe.

The 21 hospital groups that wrote to Obama this week said Massachusetts gets about $367 million per year from the other 49 states. Over the next decade, it'll get about $3.5 billion, they said.

The letter was signed by 20 state hospital associations and the National Rural Health Association.

"We all understand and appreciate the challenging financial environment that our nation confronts, but unless this problem is swiftly corrected, it could serve to impede your administration’s goals of moving toward value-based purchasing and accountable care," the letter states. "Therefore, we respectfully ask that you help us right this wrong and address this ill-advised provision."