House approves hospital fee over cuts

Wednesday, May 5, 2010 at 5:52pm

The state House of Representatives adopted legislation Wednesday to let Tennessee's hospitals pay a fee to avoid more than $650 million in cuts in Medicaid spending.

The bill, which already cleared the Senate, now goes to the governor for his signature. The House vote was 91-4.

The bill prohibits hospitals from passing on to patients the $239 million assessment they would pay.

In his February state budget proposal, Gov. Phil Bredesen capped Medicaid payments to hospitals at $10,000 for each patient. That meant Nashville's General Hospital and the state's other charity hospitals would wind up holding the tab for enormous medical expenses.

The Tennessee Hospital Association said it would force hospitals across the state to close. General Hospital said it would lose $10 million. The association's director, Craig Becker, called it "Armageddon" for hospitals in this state.

Hospitals then agreed to volunteer to pay the fee and use the money to draw matching federal funds to offset Medicaid cuts. For every $1 of state tax, the federal government sends nearly $3 for Medicaid.

2 Comments on this post:

By: localboy on 5/6/10 at 8:55

"The bill prohibits hospitals from passing on to patients the $239 million assessment they would pay." This is more of a grandstanding insult than a practical prohibition. First off, if caught doing something similar on their cost reports by Medicaid the state would be throwing around allegations of fraud. Second, Medicare pays inpatient bills under the DRG system, which isn't cost based and wouldn't result in any pass-through of any increases to patients anyway, so the state knows they're safe there. Third, insurance pays based under contractual fees, which again seldom contain any cost-based reimbursement. Finally, private pay charge schedules are generally fixed in advance and contain a profit motive, but few patients actually pay full charge and the hospitals know that these are a relatively small percentage of revenue to cap in comparison to the potential gain (or less loss, according to your viewpoint).
What a shell game by both sides; at least the hospitals can quantify why they are losing money and justify their approach - the state doesn't have that excuse.

By: Dragon on 5/10/10 at 8:56

So, General gives $5 to the state so the state can pay General $5 to get $15 from the federal "match" funds. Sounds a little like fraud.

So, General loses 25% rather than 100%. Where is General supposed to find the 25% if it can't charge its customers?