Health Forward Foundation

Hospital Officials Fret Looming Federal Budget Cuts

Super Committee looking for $1.2 trillion over 10 years

KANSAS CITY – Kansas and Missouri hospital officials are among those lobbying Congress in an effort to protect government health programs headed for the budget chopping block.

Last week, the Joint Select Committee on Deficit Reduction received the last of various proposals from the White House and other congressional committees. Now it begins the work of writing a plan for cutting at least $1.2 trillion in federal spending over the next decade.

Super Committee

The so-called Super Committee of six House and six Senate members has until Nov. 23 to vote out its bill, which must be presented to Congress and President Barack Obama by Dec. 2. If the measure fails on an up-or-down vote in the House or Senate, that would trigger automatic cuts to most government programs through a process called sequestration.

Most proposals on the committee’s table would cut Medicare, which provides health coverage for about 436,000 Kansans and more than 1 million Missourians age 65 or older. Because both states have disproportionately elderly populations in their rural areas, the looming cuts are expected to have major consequences.

For example, a plan from the Obama White House would reduce federal Medicare spending on critical access hospitals by $6 billion over 10 years. Kansas has 83 of those type of rural facilities, more than any other state. Missouri has 36, including two in the Kansas City area: Excelsior Springs Hospital and Cass Regional Medical Center.

The White House also has proposed spending $20 billion less over 10 years by reducing federal makeup payments to hospitals saddled with bad debt. That would hurt most Kansas and Missouri hospitals, rural and urban, because they no longer would get as much federal help dealing with the costs of patients who won’t or can’t pay their bills.

‘Very concerned’
“We’re very concerned about that,” said Fred Lucky, senior vice president with the Kansas Hospital Association. “That’s a huge hit.”

Lucky said the White House plan would mean about $43 million less for Medicare per year for Kansas hospitals, enough to jeopardize operations at those with slim operating margins.

At some critical access hospitals, he said, Medicare patients make up 75 percent or 80 percent of the business.

“So they don’t have ability to absorb losses with other payers,” he said.

Lucky and other hospital advocates were in Washington, D.C., last week, trying to persuade members of Congress to look for other ways to cut the deficit. They were there as part of a broader push by the American Hospital Association, the National Rural Health Association and other groups trying to keep funding intact as the president and Congress look for ways to meet the restrictions imposed by the debt-ceiling deal formalized in the Budget Control Act of 2011 on Aug. 2.

“Obviously, several of the current proposals for deficit reduction include some significant changes to existing programs that have been in place since 1997 as pertains to critical access hospitals,” said Brock Slabach of the National Rural Health Association in Kansas City, Mo.

Slabach said according to the association’s calculations, the White House plan would mean annual reimbursement cuts of between $40,000 and $150,000 each for the nation’s critical access hospitals.

“That’s the difference between being profitable or not profitable and possibly having to lay people off,” he said. “That means fewer jobs in rural communities and translates into increased unemployment, which we feel would be deleterious to the rural economy. And the president’s proposal is the least harmful, at this point.”

Congressional void
“We understand that deficit reduction is name of the game,” Slabach said. “But critical access hospitals consume less than 5 percent of Medicare. For us, it doesn’t seem like a significant place to go for dollars, and it could do very much harm to rural communities.”

Slabach said the association is not advocating for sequestration, although critical access hospitals would fare better if it comes to that scenario of across-the-board cuts.

He also said that many congressional supporters of rural health programs were replaced in the 2010 election.

“We lost 37 members of the rural health caucus from both parties,” he said. “Those were 37 strong, strong advocates for rural health. Let’s just say that void hasn’t been filled completely.

“They’re freshmen,” he said. “Many don’t have any institutional memory of the programs we’re talking about. The critical access hospital program was implemented in 1997. Many weren’t there when that program was birthed and and have no recollection of all the struggles getting it.

“I think that’s why there is no feeling of ownership with these programs. It’s easy to talk about (cutting) 1 percent here or 2 percent there, because there wasn’t any sweat equity in the development of those programs.”

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