Hospitals Expect Big Losses Balanced Budget Act Cuts Medicare Payments

By Ostrow, Nicole | The Florida Times Union, May 18, 1999 | Go to article overview

Hospitals Expect Big Losses Balanced Budget Act Cuts Medicare Payments


Ostrow, Nicole, The Florida Times Union


Florida hospitals are expected to lose $3.9 billion in Medicare payments through 2002 because of funding cuts spelled out in the federal Balanced Budget Act of 1997, leaving many hospitals trying to figure out how to offer the same level of care for less money.

They are not alone.

Nationwide, the government hopes to cut Medicare spending by $116 billion over five years, and $44 billion of that will come directly from hospitals.

The Florida Hospital Association, an Orlando-based industry trade organization, yesterday released a report on the impact of the Balanced Budget Act on Florida hospitals.

And a delegation from the association went to Washington, D.C., yesterday to lobby the state's representatives to support amendments to the act. The organization is planning a repeat trip next week.

Florida Hospital Association President Charles Pierce called the cuts in the Balanced Budget Act "unsustainable" because the government didn't take into account increases in inflation, technology and demand for better services, which hospitals still have to provide.

"In a sense [the government has] started us on a death spiral here," Pierce said.

So far, hospitals have only experienced 25 percent of the cuts; the association said the majority of the reductions will occur in 2001 and 2002.

Mike Lukaszewski, senior vice president of finance at Baptist/St. Vincent's Health System, said since Baptist Medical Center and St. Vincent's Medical Center merged, the hospitals have been working on consolidating costs.

But to offset further cuts to its income, the hospital system may try to increase its number of managed care contracts and workers' compensation patients, he said. It may also demand higher rates from managed care companies, he added.

Lukaszewski said the reimbursement cuts translate into losses to the hospitals' bottom lines.

Included in the Balanced Budget Act is a $121.4 million reduction in payments when Florida Medicare patients cannot pay their hospital bills.

"They are penalizing hospitals for a Medicare beneficiary's inability to pay," Pierce said. …

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