Logjam broken on health? | Arkansas Blog

Tuesday, December 8, 2009

Logjam broken on health?

Posted By on Tue, Dec 8, 2009 at 7:54 PM

Everybody's saying the Democrats may have a plan -- drop public option from Senate health bill, expand Medicare to cover uninsured as young as 55. Who doesn't like Medicare? Besides, of course, every Republican in the Senate, all of whom will vote no. It's a government health program, after all. (Whoops, Blanche Lincoln hates those, too.)

Meanwhile today, take a look at a Washington Post's writer effort to determine if Sen. Kent Conrad (and, by extension, U.S. Rep. Mike Ross) are right when they talk about how Medicare puts rural hospitals at a disadvantage. Hold on to your hats, and first say the Pledge of  Allegiance. But from this reporting, it would appear Mike Ross has been misleading you again.

The question I'm going to try and answer in this post is whether Conrad has a point, and Medicare does put rural hospitals at a disadvantage. It's going to get real complicated, real quick. But before it does, keep this in mind: There are, according to experts I spoke to, seven hospitals in North Dakota that rely on Medicare payment rates (others use special reimbursement schemes, and so aren't relevant to Conrad's point). Seven. There's something deeply absurd about scotching good national policy because seven North Dakota hospitals complained to Kent Conrad.

On to the substance. The answer, as far as most people can figure out, is no, Medicare does not disadvantage rural hospitals. Evidence can be found on page 57 of MedPAC's 2009 report (pdf) to Congress. Relative to urban hospitals, Medicare's payments actually covered a slightly higher percentage of rural hospital costs. To repeat: If the measure of payment adequacy is whether revenue cover expenditures, then rural hospitals did better than urban hospitals in the most recent year for which there is data.

Which gets to the difficulty of this conversation. The issue does not seem to be that rural hospitals are suffering compared with their urban cousins. Rather, it's that rural hospitals want to be paid more money. And one obvious place to squeeze some extra money out of Medicare is in what's called "input price adjustments."

Are rural hospitals struggling? Of course some are.

The areas they serve are shrinking, but the services demanded by customers are increasing. And hiring staff and maintaining machinery in a chemotherapy unit, for instance, is pricey.

You might conclude  rural hospital advocates want them to be paid disproportionately high rates just so they can stay in a business they can't justify. You can see why a local politician who cares little about government efficiency (even one who claims to be a fiscal conservative Blue Dog) would like this. Should the country?

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