MARCH 1, 2006 -- House Ways and Means Health Subcommittee Chairman Nancy L. Johnson, R-Conn., gave a chilly reception Wednesday to cuts in Medicare hospital spending growth advocated by the Medicare Payment Advisory Commission (MedPAC).
Those recommended cuts are at the heart of a proposal by the Bush administration to trim Medicare spending this year. Her remarks won't dispel the impression that key lawmakers aren't keen on cutting Medicare this year.
In a hearing on MedPAC's annual Medicare payment recommendations to Congress, Johnson said she was concerned that more than 50 percent of hospitals are losing money on Medicare patients, and that industry-wide margins on Medicare inpatient care average negative 2 percent.
Policymakers are counting on hospitals to add information and other technology to make care more efficient and to reduce medical errors, yet many hospitals are losing money on Medicare and MedPAC suggests trimming the increase in inpatient hospital payment under current law, Johnson said.
MedPAC Chairman Glenn Hackbarth defended the recommendation by saying private insurer payments to hospitals have increased dramatically, suggesting hospitals have become less careful about their costs of treating Medicare patients as a result. Medicare should set payment levels based on the reimbursement needs of efficient providers, not all hospitals, he said.
Consistent losers among hospitals tend to have higher costs per case than other facilities in their markets, he said. "We shouldn't gear Medicare policy to make sure they make a profit," he said of inefficient providers.
Johnson expressed skepticism about "luxurious" reimbursement of hospitals by private insurers, however.
But California Democrat Pete Stark was skeptical that hospitals are in financial trouble. "What puzzles me is that they aren't going broke," he said, noting that relatively few facilities close each year.