Hospitals see pain in Medicaid revision

9/13/2005

COLUMBUS - Ohio hospitals say they will lose $168 million caring for Medicaid patients under a revised state reimbursement formula approved yesterday by a bipartisan legislative panel.

Coupled with a freeze in Medicaid reimbursements included in the two-year budget that went into effect July 1, hospitals told the Joint Committee on Agency Rule Review that the move could force struggling facilities in low-income areas heavily dependent on Medicaid to reconsider what services they can afford to offer.

"Federal law says that we have to provide emergency care to anyone who presents themselves regardless of ability to pay," said John E. Callendar, senior vice president of the Ohio Hospital Association. "We're not interested in getting out of the Medicaid program. We're not interested in building fences around our emergency rooms and doing wallet biopsies on patients."

Hospitals said the formula adjustments are due to constraints imposed by a state budget that limits spending growth to about 4 percent despite overall rising medical costs and an increase in the number of people using the federal-state health insurance of last resort.

But the Ohio Department of Job and Family Services countered that the revisions to correct a formula that was five years out of date were begun independently of the budget, although the spending plan did factor in the $168 million in savings expected from its calculations.

The committee determined that the hospitals' argument did not meet the limited criteria it may consider in striking down a rule, such as whether the rule violated legislative intent.

The hit to hospitals this time around is four times greater than experienced during the last adjustment five years ago, something Barbara Edwards, Job and Family Services Medicaid director, said is at least partially due to the increased number of Medicaid patients being treated by hospitals.

"We have to do [the revisions] more often, not less often, and we have to bite the bullet," she said, noting that the changes were delayed from April to Jan. 1, 2006, to give hospitals time to prepare. The study uses past hospital data to calculate the cost of providing specific services, taking into consideration such things as improved technology.

As an example, Ms. Edwards noted that the overall cost for caring for normal deliveries of healthy babies decreased. The cost of caring for sicker babies from difficult deliveries climbed, but such deliveries are fewer in number and the increase does not compensate for the decrease experienced from normal deliveries.

"It just boggles my mind that with the increased use of hospitals now, that in five years we are going to cut that amount of money," said Rep. Kenneth Carano, a suburban Youngstown Democrat and committee member.

The hospitals contend that the amount they were reimbursed in 2004 fell $210 million short of their costs.

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.