February 03, 2015 | FAH Hospital Policy Blog Team
Congressman Raul Ruiz urged Health and Human Services Secretary Burwell to consider the importance of Medicare bad debt in a letter sent on January 27th. By defending the sanctity of the Medicare backstop and urging HHS not to impose any further cuts, Congressman Ruiz is standing up for California’s seniors.
One key aspect in Medicare is the cost-sharing obligation for beneficiaries, which requires seniors to pay some portion of the cost of care. However, not everyone covered through Medicare can meet those requirements, especially low-income seniors. When seniors cannot meet the obligations, hospital providers are faced with higher levels of uncompensated care, which ultimately affects the entirety of the facility’s financial stability.
At its inception, the Medicare backstop was created to specifically and directly ease the burden of uncompensated care faced by hospitals. However, in recent years, the Medicare backstop has been cut—taking what was a 100% reimbursement for uncompensated Medicare cost-sharing, and cutting it substantially—to 65%. This means that hospitals must take on 35% of the uncompensated care. Now, there is a proposal to reduce that Medicare payment to just 25%.
For California, the effects of these cuts would be severe. Congressman Ruiz explains in his letter:
“Should the proposed 25 percent partial payment take effect, California hospitals would lose nearly $1.5 billion over 10 years. My district is home to two community hospitals that serve many low-income seniors who often find themselves deciding between paying their utility bill or receiving health care; this change would increase the financial strain on these essential community hospitals who provide vital services at an affordable cost.”
Congressman Ruiz goes onto urge lawmakers to be careful as they consider the FY16 budget.
“As HHS and Congress look for Medicare savings, it is my view that we should only look to policies that have been fully vetted so that we may understand the impact these decisions will have on Medicare beneficiaries and the providers who serve them.”
It is more critical than ever to protect the Medicare backstop. This pillar of the Medicare program helps hospitals ensure patient access to care 24/7 and support their local communities.
The FAH thanks Congressman Ruiz for his help in preserving the Medicare backstop on behalf of America’s hospitals and seniors.