fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Category Archives: backstop

Senator Pryor Stands up for Seniors in Arkansas

January 06, 2014 | FAH Hospital Policy Blog

Category: Backstop, Medicare

Today, the Northwest Arkansas Business Journal published an editorial by Dan McKay, the CEO of Northwest Health System in Springdale, a FAH member hospital. In it, McKay touches on the importance of protecting the Medicare backstop and explains why hospitals can no longer be used as a bank for Congress’ spending cuts.

The Medicare Backstop (commonly referred to as “bad debt” payments) is a safeguard that was baked into the Medicare law upon its creation to protect seniors who are unable to afford their cost sharing obligations. The federal government pays for most of the hospital care seniors receive, but beneficiaries are also responsible for some cost-sharing obligations such as copayments and deductibles paid directly to hospitals for the care they receive.

McKay outlines in the op-ed why the backstop is so essential to low income seniors:

It ensures access to quality hospital care for our seniors, even when they cannot pay their share of costs, which is set by law of the federal government. There is a very real threat of cuts to the backstop, the latest in a series of significant cuts to your local hospital.

Unfortunately, this critical protection has come under fire, and has been subject to cuts that reduced hospitals’ backstop payments from 100% to only 65% of unpaid cost sharing amounts. Increasing uncompensated care by further reducing backstop payments would be a significant burden to hospitals and threaten patient access to the care they require.

The Northwest Health System and FAH are grateful to have the continued support of Senator Mark Pryor (AK), who has fought to protect senior citizens and local hospitals. Senator Pryor understands that if Congress makes further cuts to the backstop, it will endanger access to care and vital medical services American seniors need.

And it is not only patient access to care that will be threatened by further cuts; the jobs of nurses, clinicians and other critical hospital staff are impacted when budget cuts hit hospitals, further compromising hospitals’ ability to focus on our number one goal - providing quality care 24/7.

We applaud the Senator’s continued support of Medicare beneficiaries and his commitment to ensuring some of our most vulnerable citizens have access to the care they need when and where they need it.

Keeping the Medicare Backstop intact will ensure that no Medicare patient will ever hesitate to seek care for reasons of financial insecurity. Seniors and Medicare beneficiaries are fortunate to have Senator Mark Pryor as a champion for the protection of patient access.

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Representative Ruiz Stands up for Seniors

December 16, 2013 | FAH Hospital Policy Blog

Category: Backstop, Medicare

Over the weekend, the Desert Sun published a letter to the editor from Carolyn Caldwell, CEO, Desert Regional Medical Center in Palm Springs and Gary Honts, CEO, John F. Kennedy Memorial Hospital in Indio (member hospitals of the FAH), on the importance of protecting the Medicare backstop.

The Medicare backstop (commonly referred to as “bad debt”) is a signature safeguard of Medicare that protects seniors who are unable to afford their cost sharing obligations. The federal government pays for most of the hospital care seniors receive, but beneficiaries are also responsible for some cost-sharing obligations, such as copayments and deductibles paid directly to hospitals for the care they receive. When Medicare was enacted by Congress in 1965, the backstop was built into the legislation to ensure any senior unable to fully cover his or her share of cost would be protected.

Unfortunately, this protection has come under fire and has been subject to cuts that have reduced hospitals’ payments received from the backstop from 100% to only 65%. That 35% in uncompensated care is a burden to hospitals and threatens patient access to the quality care they require.

Desert Regional Medical Center, John F. Kennedy Memorial Hospital and the FAH are grateful to have the continued support of Representative Raul Ruiz (CA-36).

Representative Ruiz understands that if Congress makes further cuts to the backstop, they endanger access to care and critical care services American seniors need. By standing up for the backstop, Rep. Ruiz is also standing up for the men and women who work as doctors, nurses, clinicians and staff in local hospitals. Health care jobs are impacted when budget cuts hit hospitals, further compromising hospitals’ ability to focus on providing quality care 24/7.

We applaud the Congressman’s continued support of Medicare beneficiaries and his commitment to ensuring their access to care is protected. Seniors and Medicare beneficiaries are fortunate to have Congressman Ruiz in their corner.

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Plan for Sequestration Relief Must Consider Hospitals

December 04, 2013 | FAH Hospital Policy Blog

Category: Backstop, Medicare, Sequester

A recent POLITICO article highlights the latest state of negotiations between Budget Conference Chairs Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA), who are reportedly close to a proposal that would replace certain domestic and defense sequester cuts for the next two years and increase spending from $967 billion into the $1 trillion range. A bill could be introduced as early as this week with floor action next week. A deal struck between Ryan and Murray could help stave off a potential second government shutdown next month.

The article explains that the new spending would be divided equally and sequester cuts would be spread out and moved to different programs and areas in the budget:

“If the two sides agree to that approach, the increase in spending would be split about evenly between defense and nondefense spending, sources said. Roughly $80 billion of the sequester cuts would instead be shifted to other programs in the federal budget, but overall deficit reduction would remain unchanged.”

The story goes onto name Head Start, transportation and housing programs as those domestic spending items atop the priority list for relief. It is imperative that any negotiation to replace sequester cuts include relief for hospitals’ $45 billion in Medicare sequester cuts. Continuation of these cuts will threaten hospital jobs, patient access to care and hospital closures in rural regions, as well as hinder the progress made in the historic spending slowdown in health care.

Hospitals have already borne the brunt of mounting payment cuts, working to deliver the high quality care patients need and deserve. In the past three years alone, local hospitals nationwide have faced $95 billion in cuts, with the sequester accounting for $45 billion. In total, hospitals are facing nearly $500 billion in Medicare and Medicaid cuts over the course of the next ten years. Enough is enough; Medicare must be included in the sequester relief.

Hospitals provide care 24/7, no matter the circumstances. In the face of these massive cuts, hospitals have been forced to downsize their staffs and, in some cases, even close their doors completely, forcing members of their community to seek care far from home.

Sequestration relief is necessary for hospitals to continue to serve their communities and protect patient access to care nationwide. The FAH urges the budget conferees to include relief for hospitals and health care in their negotiations.

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The Medicare Backstop: Protecting Patients’ Access to Quality Care Since 1966

July 12, 2013 | FAH Hospital Policy Blog

Category: Backstop, Financing, Medicare

Earlier this week we outlined the history and significance of the Medicare backstop policy. Understanding there would be instances when seniors who receive Medicare would not be able to pay their cost-sharing obligation, the government designed the backstop policy to cover the gap between the amount of individual cost-sharing that is paid, and cost-sharing that remains uncollected.

Originally, the backstop was created to fully reimburse for any Medicare beneficiary who could not pay his or her cost-share obligation, the amount of which is set by CMS. Over time, however, the government has applied cuts to the backstop – falling from the full 100% reimbursement to just 65%. 35% of the Medicare beneficiary’s cost-share goes uncompensated.

The backstop is fundamental because it helps ensure access to care for every single Medicare patient. The backstop is there to cover costs; it helps keep hospitals offering quality care, 24/7.

That is why the calls by some policymakers to further cut backstop payments are so disconcerting. Backstop payments have already been slashed from 100% to 65%. Further cuts will impact access to care including longer wait times in the emergency room, reduced access to cancer specialists, fewer training resources and fewer resources for the nursing staff.

Some policymakers target the backstop claiming it is a means of budget savings. But as our recent study shows, the U.S. is experiencing a historic new trend of slowed health care spending. This game-changing trend is projected to yield budget savings of an additional $2.6 trillion in Medicare spending compared to the 2008 Medicare Trustees projections AND reduce the federal deficit by $1 trillion—all over the next ten years. This marked and never-before-seen spending slowdown is part of a fortuitous cycle that will pay dividends into the next decade.

Understanding the spending slowdown and the need for the backstop, several policymakers have stepped in to defend the backstop policy and call for an end to the cuts. The support across Congress is growing. Policymakers are putting their constituents—and our patients—first. They know access to care hangs in the balance with precipitous cuts to the backstop payment. They know it was the federal government in 1965 that created a health care system that provided for its seniors and the disabled. Policymakers saw fit to ensure those patients would never have to worry about their ability to pay when they needed medical care.

And hospitals go to great lengths just to receive that 65% backstop. There is a painstaking process—government-mandated, complex criteria that can take years to complete. The call by some policymakers for more cuts to the Medicare backstop in the face of potentially trillions of dollars of savings will up-end a foundational principle of Medicare and hurt patients. Further cuts threaten the sanctity of the Medicare system, and put unnecessary financial strains on hospitals that are already operating at a loss due to existing cuts. It is imperative that we leave the system to do its work and reap the additional $2.6 trillion in Medicare savings, and the $1 trillion in deficit reduction through 2023.

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