Group drops objection to BWC cuts

7/25/2006

COLUMBUS - The organization representing most of Ohio's hospitals yesterday withdrew its opposition to a plan by the Bureau of Workers' Compensation to dramatically cut how much it pays for in-patient treatment of injured workers.

But the Ohio Hospital Association, representing 170 hospitals and health systems, asked the bureau to increase to 25 percent the amount it will pay for services above what federal Medicare pays. The current plan calls for 15 percent reimbursement above what Medicare pays.

There were no commitments from the bureau yesterday.

With the association dropping its active opposition, the bureau's rule change appears to be on the fast track for approval by a legislative panel, possibly as soon as Aug. 7, with the goal of having the lower rates in place as of Oct. 1.

The bureau's attempts to cut operating costs come as its conservative, postinvestment-scandal approach to investing has dramatically reduced its annual surplus, and as a proposed ballot initiative threatens to undo reductions in the benefits of some injured workers that were approved by the General Assembly earlier this year.

A study by the Service Employees International Union-District 1199 - representing about 27,000 health-care and social workers in Ohio, West Virginia, and Kentucky - claimed the bureau paid $543.6 million more between 1998 and 2004 than the actual cost of treatment as determined by Medicare.

Through that time, the state-run, employer-financed insurance fund generally paid the bills as they were submitted by hospitals.

John Burant, the union's research director, told bureau attorneys during yesterday's public hearing the cuts would be "a drop in the bucket" in hospital profits that have been escalating in recent years.

"The planned reduction in bureau payments is only $60 million per year, amounting to just 4 percent of the industry's profits," he said. "Given the large and growing profitability of Ohio's hospitals, there is no reason for the engines of our economy, which are small businesses and employees, to continue subsidizing additional hospital profits when the state desperately needs more good-paying jobs."

The association has been arguing that Medicare is not a fair representation of a hospital's costs in providing care.

"In 2004, Ohio hospitals lost more than 7 cents on every dollar it cost them to deliver care to Medicare patients, and indications are this negative Medicare margin has increased every year since," said Charles Cataline, the association's senior director for health policy.

"Some of our hospitals say they won't come out [ahead] at all, because this is very expensive care, and then there's the administrative costs they have to deal with on top of the reimbursement," he said. "Many of our hospitals say even at 15 [percent], they won't break even."

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.