The hidden cause of the health care access crisis

OPINION:

When the federal government (rarely) looks to cut costs, it often focuses on the lowest-profile line items. These are the easiest to cut. But in many cases, these programs offer benefits well beyond their annual budgets.

One example is a cost-cutting effort that is endangering hospitals and threatening Americans’ ability to access care.

Americans, especially in rural areas, rely on access to treatment from hospitals. Unfortunately, many hospitals are being forced to shut down. This trend is not new, but it is a very real crisis for large swaths of rural America.

Instead of addressing this crisis, recent efforts by the Centers for Medicare and Medicaid Services (CMS) to scale back spending have led to cost cutting, which endangers hospitals by raising their costs and not compensating them for the treatments they provide.

How is CMS doing this?

Let me first say that reducing wasteful spending within Medicare and Medicaid is a worthy goal. But not all spending inside those programs is wasteful.

CMS is expanding its use of “site-neutral payments” to pay hospitals less. Site-neutral payments are used to set reimbursement rates for treatments by comparing the fees hospitals charge with the fees other independent care facilities charge. They say, “this independent physician charges less than this hospital for a treatment,” so we will reimburse the hospital at the lesser rate.

But you cannot compare the costs physicians’ offices carry to the costs that hospitals carry.

The operating costs of Hospital Outpatient Departments (HOPDs) with the overhead costs of independent facilities is an apples-to-trees comparison.

While Congress tried to address the problem of not paying hospitals enough to continue to operate, they only created more problems by “exempting” old HOPDs.

The costs of keeping HOPDs operational are astronomical, and using site-neutral payments to cover the costs of treatment will directly jeopardize hospitals’ ability to keep their doors open.

Because treatment costs less at small independent facilities, such as independent physicians’ offices, CMS will pay only that amount to hospitals by using site-neutral payments, regardless of the higher overhead costs that hospitals carry.

Physicians’ offices regularly employ only a few people, have set hours of operation and provide limited on-site treatment options.

Hospitals are open 24 hours a day, seven days a week and employ doctors, nurses, and administrative staff. They also house the equipment for all types of treatments and procedures, which independent physicians don’t have at their offices. Therefore, hospital operating costs are higher.

Using this CMS model of comparison to make Medicare and Medicaid payments for treatment at HOPDs directly leads to an unsustainable financial burden on hospitals, forcing the most at-risk hospitals to close their doors, which further limits patient access to care. Even before site-neutral payments were enacted, hospitals provided care to patients, regardless of their ability to pay. In 2012 alone, hospitals provided more than $45 billion in uncompensated care.

Republicans who represent rural areas and back these payment cuts are endangering their constituents. Rural patients are the most at risk to have their access cut.

Rural hospitals are closing at a rapid pace, severely limiting treatment options for at-risk populations.

Since 2010, 80 rural hospitals have closed, and more than 40% “are operating in the red,” according to The Boston Globe. In fact, 16 closed last year alone.

Rural hospital closures force other health care providers to absorb patients they are ill-equipped to treat. In Texas, 13 rural hospitals have closed in just the past year. There are 27 Texas counties that do not have a licensed physician, which has resulted in preventable deaths.

Instead of slashing the needed payments to HOPDs, CMS should expand its efforts to counter Medicare and Medicaid fraud.

For years, Medicare and Medicaid fraud has cost taxpayers billions of dollars. Here are just two recent examples: In April, federal prosecutors charged 24 people for perpetrating a $1.2 billion Medicare scheme, one of the largest in U.S. history. In September, prosecutors charged 35 people with stealing $2.1 billion in Medicare fraud. This year, the Justice Department and the Department of Health and Human Services established a task force to uncover various schemes to commit Medicare and Medicaid fraud. By achieving task force success, CMS will save money on payments without jeopardizing hospitals.

CMS’s expansion of site-neutral payments is a direct threat to patients and hospitals and woefully misunderstands the basic economics of health care. Access to health care shouldn’t be a partisan issue. Republicans should especially be mindful of the harmful effects policies such as site-neutral payments have on their constituents and local economies.

Any policy that accelerates the trend of rural hospitals closing is “penny wise and pound foolish.”

• Matt Mackowiak is president of Austin, Texas, and Washington-based Potomac Strategy Group. He’s a Republican consultant, a Bush administration and Bush-Cheney reelection campaign veteran and former press secretary to two U.S. senators.