THA study: $5.6B hit to Medicare reimbursement over 10 years

Nashville-area facilities to lose $500M+ by 2017, rural hospitals seen as particularly vulnerable

The Tennessee Hospital Association has completed an analysis of the existing and possible future cuts to Medicare reimbursement payments to hospitals across the state. These cuts are in play now and have been mandated by four separate laws. THA's study, grouped in five- and 10-year timeframes, says Tennessee's hospitals stand to lose more than $5.5 billion in reimbursements over the next decade, with about $2 billion of that amount being cut between now and 2017.

THA Senior Vice President David McClure is the architect behind the analysis. The four laws he analyzed were:

• The Patient Protection and Affordable Care Act of 2010 (ACA)
• Budget Control Act of 2011 (BCA)
• Middle Class Tax Relief and Job Creation Act of 2012 (JCA)
• American Taxpayer Relief Act of 2012 (ATRA)

The Nashville area's share of cuts mandated by those laws comes to $527 million in the next five years and more than $1.4 billion over 10 years. Davidson County's five-year number approaches $346 million in Medicare cuts to hospitals while the 10-year combined look comes to almost $1 billion. Rutherford County's five-year aggregate comes to $41 million, the 10-year to $112 million. Williamson County’s numbers are $15 million and $42 million, respectively. (Click here for the THA numbers for Middle Tennessee and other populous counties.)

In short, the impact these laws have on the future of Tennessee hospitals is staggering.

“The truth is I can’t get my arms around it,” said Craig Becker, THA's president. “We know we're on the hook for $5.5 billion (statewide) and this will be devastating to a lot of high-Medicare hospitals."

Becker and McClure agreed that the cuts will most affect hospitals in the more rural areas of the state. The long-term viability of these hospitals is in question as the very real possibility exists that these hospitals will cut services or close outright as a result of these massive cuts.

Larger hospitals, meanwhile, won’t get out of this unscathed as officials in bigger systems shift their focus. They also will likely have to contend with more high-acuity patients from rural towns who can't get treatment close to home.

“Over the years, CEOs’ concerns have shifted from worrying about the numbers of uninsured patients,” Becker said, “to now being more concerned with the number of Medicare patients treated in a given year.”

McClure's analysis also takes a stab at quantifying the effects of further potential cuts being floated as part of current budget discussions. Whether those materialize or not, Becker said his primary concern is that the pain of these cuts will be felt most acutely by those the system is designed to serve, the patients. And concerning what THA might do about all of this, Becker said his organization will continue to lobby on behalf of the state’s hospitals.

“The problem is we keep being the piggy bank for everything [Congress] wants to fund,” Becker said. “Their fix always seems to be to take money away from hospitals.”

To download a spreadsheet of the complete THA estimates and forecasts, click here.