Fiscal Cliff Deal a Mixed Bag for Hospitals

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Last week’s fiscal-cliff deal (such as it was) instituted a “doc fix” that came largely at the expense of hospitals. But as Politico is reporting, hospitals have a few reasons to be thankful for the deal.

Reporter Jennifer Haberkorn writes, “For all the hits the hospital industry took in the final fiscal-cliff deal, it managed to persuade Congress to avoid some of the biggest cuts that had been looming over it for years: cuts to outpatient payments, graduate medical education, and ‘bad-debt’ payments.”

True, she adds, this is little consolation for the cuts that are going to be painful. “But the fact that hospitals escaped the most widely expected cuts shows that the industry still holds real power with lawmakers,” especially when “each cut had been blessed by MedPAC or Obama-administration deficit plans.”

Those who have followed the twists and turns in the soap opera surrounding these cuts know that the evaluation and management (E/M) cuts have been up for grabs before, last disappearing from the 2011 House payroll tax bill when it reached the Senate. And the other two, graduate medical-education funding and bad-debt payments, are “very tempting proposals that have appeared in just about every Washington deficit-reduction white paper.”

All of this is “partly a reflection of the strength of the hospital sector in Washington,” Haberkorn writes. “Hospitals have some of the strongest lobbying muscle because every member of Congress has at least one in their district. They don’t just provide needed healthcare but are typically one of the largest employers, too.”

Each time these cuts have become a possibility, hospital lobbying groups like the American Hospital Association, Federation of American Hospitals, and the Association of American Medical Colleges have rallied the troops to put pressure on lawmakers, articulating why such cuts as E/M would be disastrous for the industry as a whole and rural and inner-city areas specifically.

According to Haberkorn, this time around, “They also stressed that the hospitals most likely to do the outpatient services covered by the policy are more likely to treat more poor, sick, or disabled communities. Physicians are more likely to send a sicker patient to the hospital for the same test they could do in an office on a healthier patient.”

Of course, “the less obvious cuts” are going to hurt, especially since most of the aforementioned cuts were replaced with other cuts, including “coding updates that would cost hospitals $10.5 billion and reductions in Disproportionate Share Hospital payments — which help facilities that care for a lot of uninsured patients — that would cost an additional $4.2 billion, according to some estimates.”

As one lobbyist told Haberkorn, “It’s not a victory. It’s a great frustration and disappointment.”

How do you feel about the fiscal-cliff deal and the cuts that came with it? How will these cuts affect your organization, and how will you cope with these cuts?

-by Pete Fernbaugh

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