AcuteCare Telemedicine Blog


Not Yet Out of the Woods

As most Americans celebrated the New Year, our elected representatives met in Washington to approve legislation narrowly avoiding the ‘fiscal cliff.’ As part of its extensive provisions, the new legislation saved Medicare providers from an impending 2% payment reduction that would have gone into effect on January 1 and postponed spending cuts to Medicare, but only for two months. Within the terms of the agreement, negotiations on ways to cut spending are expected to resume after this period, meaning hospitals are still facing the risk of cuts triggered by uncertainty and further harm if the reduction does eventually takes effect.

While overall Medicare spending may not be affected now, hospitals are still face a long-term decrease in payments. The compromise legislation includes the “doc fix,” which negates a 26.5% decrease in Medicare payments to physicians, with hospitals bearing the brunt of financing it. The tally will come to about $15 billion over 10 years, or roughly half the total cost of the one-year fix. On top of those made by the passage of major healthcare reform in 2010, the new cuts include decreases in payout from both projected Medicare payment increases for inpatient or overnight stays and Medicaid disproportionate share payments, as well as reducing risk-adjusted payments to Medicare Advantage plans.

The kind of last-minute action taken by Congress is a reminder of the severe need to address the provider payment formula for Medicare reimbursement with a long-term solution. Short-term fixes ultimately result in a reduction of important healthcare services detrimental to both patient and provider. Until a solution is reached, hospitals simply cannot afford to cover the difference.


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