fah hospital policy blog

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

Representative Gwen Graham Opposes Medicare Hospital Payment Cuts

February 20, 2015 | FAH Hospital Policy Blog Team

Category: Backstop, Medicare

In a letter delivered to HHS last week, Representative Gwen Graham calls on Secretary Sylvia Burwell to protect seniors in Florida from the effects of Medicare payment cuts to hospitals. Specifically, Representative Graham urged the Obama Administration to oppose Medicare bad debt cuts to hospitals which serves as a “backstop” for America’s seniors ensuring they will have access to hospital care.

In the 50 years since Medicare's inception, bad debt reimbursement has helped hospitals, serving Medicare patients, defray part of the cost of seniors' unpaid Medicare cost-sharing obligations. Over time, this "backstop" coverage has been reduced from 100% to now just 65%. Hospitals are forced to take on the 35% of uncompensated care as a result of the repeated cuts to bad debt reimbursement. Medicare was built to protect seniors, who as a vulnerable sector of the population require greater and more frequent care. Further, these cuts impact access to care for all patients, not just seniors.

As a result, hospitals are caught in the middle, with no room to negotiate. As Representative Graham explains in her letter:

“Unlike with private insurers, a hospital can’t renegotiate a contact with Medicare to make up for ‘bad debt’. Instead, the hospital is wholly reliant on the reimbursement policy set by Medicare.

The livelihood of many health care providers and patients is dependent on a viable Medicare program.”

Most importantly, the Medicare “backstop” provides seniors with a strong safety net if they cannot meet their cost-sharing obligations. When in need of critical medical attention, seniors should be able to focus only on their health care needs. Hospitals are first and foremost providers of this critical care, but in order to continue to provide the care communities expect, hospitals need a sustainable Medicare “backstop.”

The FAH applauds Representative Gwen Graham for her efforts to protect Florida seniors and the hospitals working hard to protect patient access to care.