August 11, 2000

Petition drive seeks relief from Budget Act’s red ink

Featured Image

At the Belle Meade Country Club this week, members of the Belle Meade Barracudas swim team presented Monroe Carell Jr. (center) with a donation to the Monroe Carell Jr. Children’s Hospital at Vanderbilt. (photo by Anne Rayner)

Petition drive seeks relief from Budget Act's red ink

Vanderbilt University Medical Center staff and faculty are getting a chance to help balance the scales.

The financial scales, that is, of VUMC and the rest of America’s hospitals.

During the next two weeks, petitions will be distributed to managers and supervisors throughout the medical center as part of a national initiative by the nation’s health care providers to seek additional relief from the destructive financial effects of the Balanced Budget Act of 1997 (BBA).

Staff and faculty are encouraged to sign the petitions. The goal of the drive at VUMC is 5,000 signatures.

The petitions are one component of a larger, national campaign dubbed the Coalition to Protect America’s Health Care. It was launched by hospitals, health systems, national, state and local hospital associations, and major business groups from across the country and is aimed at raising awareness about the financial difficulties many hospitals are facing and the impact these struggles are having on their patients and local communities.

The campaign is being led by, among others, the American Hospital Association (AHA), the Association of American Medical Colleges (AAMC) and the Federation of American Health Systems (FAHS). It features television and print advertising and is being timed to maximize Congressional awareness prior to the end of this year’s legislative session in early October.

The need for BBA relief is dire. The act made significant changes to the Medicare and Medicaid programs, reducing spending for both by $116 billion and $15 billion respectively from 1998 to 2002. Though well intentioned, the act resulted in spending cuts that were, for a variety of reasons, far higher — especially for institutions like VUMC that are teaching hospitals providing a large amount of charity care. According to recent projections, the five-year impact of the BBA for hospitals and other Medicare providers may be more than $200 billion.

Among the changes wrought by the BBA were legislative provisions affecting all hospitals — $17 billion in reductions to the inflation updates for Medicare patient service payments and $10 billion in Medicaid Disproportionate Share Hospital (DSH) payments reductions from 1998 to 2002. Also, teaching hospitals are affected by reductions in Medicare payments that reimburse them for their higher operating costs.

After considerable lobbying efforts, Congress last year acknowledged that the BBA and its payment reductions created unintended consequences for providers and passed the Balanced Budget Refinement Act (BBRA). This legislation increased Medicare and Medicaid spending by approximately $16 billion over five years, with approximately $7 billion directed to hospitals.

While it was an important and needed step, the BBRA will only increase Medicare payments to the typical AAMC-member teaching hospital by about 6 percent.

According to the AAMC, such a hospital will still lose over $40 million between 1998 and 2002. Total margins will continue to decline by over half, from 4 percent in 1998 to 1.6 percent in 2002.

Without additional relief the negative financial impact on VUMC alone is projected to total nearly $37 million.

The national campaign for Balanced Budget Act relief in 2000 has several goals. Among them:

• Winning $25 billion over five years in additional relief from the BBA for America’s hospitals and health systems.

• When Congress passed the BBA, the Congressional Budget Office estimated that hospitals would contribute $53 billion over five years toward deficit reduction. New estimates show that number to be well above $75 billion. Congress should return, at a minimum, the excess it didn’t intend to cut to hospitals. Last year’s BBRA restored about $17 billion in BBA cuts to providers, only about half of which went to hospitals.

• Campaign proposals include legislation to restore substantial Medicare and Medicaid funds by repealing the last two year’s of the BBA’s inpatient market basket reductions, and by stopping additional state Medicaid disproportionate share reductions set for 2001 and 2002. These bills would restore $13 billion to hospitals.

• More help is needed to protect patient access to outpatient, skilled nursing and home health services. The specialized services provided by teaching and rural hospitals, along with the unique assistance provided by rehabilitation, psychiatric and long-term-care facilities, must be protected. Unreasonable disparities in Medicare managed care payments must be eliminated.

These efforts require additional relief that, combined with Medicare inpatient and Medicaid DSH efforts, can total an estimated $25 billion over five years.

The petitions that will soon be available at VUMC are but one facet of a national initiative, but they are a crucial one.

It is a chance for staff and faculty to have a voice in efforts that will play a huge role in determining the institution’s financial situation in the years to come.