Texas Hospitals Face Medicare Cuts As High As $13 Billion
AUSTIN, Texas – Hospitals in Texas stand to lose as much as $13 billion in Medicare reimbursements over the next 10 years and, without a way to balance those reductions, many hospitals will have to cut services and expenses, said Dan Stultz, M.D., FACHE, FACP, Texas Hospital Association president/ chief executive officer.
The provisions of the Patient Protection and Affordable Care Act were financed by $500 billion in cuts to hospitals, home health care providers, nursing homes and Medicare Advantage plans when the bill was passed. Hospitals agreed to cuts in Medicaid and Medicare reimbursements in exchange for policies that created greater access to health insurance coverage in the private market and in Medicaid. On top of the cuts to pay for PPACA, another $19.4 billion in cuts to hospitals are being discussed in Washington. These cuts are in addition to $8 billion in Medicaid cuts to hospitals that were enacted by the Texas Legislature in Austin in 2011.
“These cuts will aggregate at your local hospital and reduce services and access to care, hitting our local economies with decreased spending and increased unemployment,” Stultz said. “Ultimately, the ripple effect will be felt by everyone in Texas, especially those in smaller communities.”
Under the terms of PPACA, funds are available at the federal level to expand health care coverage to patients who are uninsured and underinsured. Taking advantage of those dollars would help hospitals reduce the amount of unreimbursed care they currently provide. In 2011, Texas hospitals provided $5.4 billion in bad debt and charity care costs and had $9 billion in unreimbursed Medicare costs.
Medicaid expansion provides a unique opportunity because the federal government will fully fund the cost of expanded health care coverage for the first three years. Thereafter, the state would be required to provide matching dollars, but the state’s required share never increases above 10 percent.
While the legislative session has prompted some leaders to discuss politically risky alternatives that will take many years to implement — if at all — Stultz said the high stakes currently threatening Texas make bypassing Medicaid expansion a costly error in how hospitals are treated and are able to treat patients.
“These actions at the federal level will cripple hospitals and communities in Texas. Without offsetting the cuts, the burden will fall on all hard-working Texans, their employers, hospitals and the local communities they serve,” Stultz said. “Walking away from federal funding might be appealing to some, because future federal funding remains uncertain. However, should the federal funding decrease beyond what the law currently requires, Texas has the option to withdraw from the expansion. Consequently, expanding coverage in the meantime is the only responsible thing to do.”
About the Texas Hospital Association
Founded in 1930, the Texas Hospital Association is the leadership organization and principal advocate for the state’s hospitals and health care systems. Based in Austin, THA enhances its members’ abilities to improve accessibility, quality and cost-effectiveness of health care for all Texans. One of the largest hospital associations in the country, THA represents more than 85 percent of the state’s acute-care hospitals and health care systems, which employ some 369,000 health care professionals statewide. Learn more about THA at www.tha.org or follow THA on Twitter @texashospitals