Funding Cuts Mean Hospital Jobs Will be Lost on Louisiana Medical News

Funding Cuts Mean Hospital Jobs Will be Lost

By: TED GRIGGS

It’s just a matter of time before Louisiana’s 42 community hospitals have to start laying off workers and cutting services, according to a state hospital association executive.

“We’ve been faced with cuts from government payers since February 2009, and they just keep adding up – both from the federal government and the state government,” said Louisiana Hospital Association executive vice president Sean Prados.

The latest hit for Louisiana’s 42 community hospitals resulted from the Centers for Medicare & Medicaid Services’ decision to reduce Medicare inpatient reimbursements. The LHA estimates the cut will reduce Medicare revenue by $5 million to $10 million at non-rural, non-state-owned hospitals. The American Hospital Association has estimated the Medicare cuts will cost hospitals $3.7 billion nationwide.

The AHA said CMS failed to consider some important factors in cutting Medicare inpatient reimbursements, including a sicker patient population, more people without insurance because of the economic downturn and changes hospitals have to make because of federal health reform.

CMS said its analysis of inpatient claims showed hospitals had been coding for more severe care than patients were getting. The reimbursement reductions were designed to recover overpayments made the last two years.

Prados said Louisiana’s community hospitals were already trying to figure out how to address cuts the state made to Medicaid reimbursements. The LHA estimated those cuts would cost hospitals between $30 million to $40 million.

Since February 2009, the state has cut Medicaid funding to community hospitals by more than $211 million, a 19 percent rate reduction, according to the LHA. The association has described the cuts as unsustainable.

“It’s difficult to overstate the frustration that providers feel, that struggle every day to meet the needs of their communities and their patients, to see their work diminished by government payers, who have the obligation to pay for these patients,” Prados said.

Community hospitals’ ability to cost shift has declined, Prados said. Hospitals can only shift those expenses to the private sector for so long.

Without question, the state and federal cuts are going to have a direct impact on jobs, Prados said. The cuts just at the state level will mean the loss of 1,000 jobs.

“When you look at it simply from the business perspective of running a hospital and providing those services, you’re going to see an impact on jobs,” Prados said. “There’s going to be a negative impact economically.”

Prados said the repeated cuts in funding, both state and federal, are going to reach critical mass, sooner rather than later.

People will start seeing some of that impact this fall, Prados said. Right now, community hospital administrators and boards are trying to digest everything and conform to the changes required by healthcare reform.

The hospitals have been kind of shuffling the deck, but the facilities will have to make some difficult decisions and soon, Prados said.

“From a business perspective, any cut is going to be harmful at this point,” Prados said. “When hospitals have to make decisions and cut services, it’s not for a particular payer, Medicare or Medicaid, it’s going to impact everybody who needs those services.”

However, Prados said there is one bit of encouraging news: Congress is moving to extend Federal Medical Assistance Percentage relief to help states with their Medicaid programs.

States would receive $16.1 billion in Medicaid help through a six-month extension of FMAP. Last year, Congress increased the base federal payment by 6.2 percent, with additional adjustments depending on the state’s unemployment rate. The extension would reduce the base rate to 3.2 percent in the first quarter of 2011 and 1.2 percent during the second quarter.

The bulk of the additional FMAP funding will come from cutting food stamp benefits that were approved in the original stimulus bill. The food stamp benefits had been upped by 13.6 percent but that amount will be whittled over time. Congress plans a reduction of around $11.9 billion for the food stamp program.

In Louisiana, the proposed FMAP relief will mean $375 million in new funding for Louisiana’s most vulnerable patients, according to the LHA. The association has sent letters to Gov. Bobby Jindal and each member of the state Legislature, urging them to use the FMAP money to offset the cuts made since 2009.

The letters remind the governor that he signed Act 803, the Community Hospital Stabilization Fund, and legislators that they unanimously passed the law creating the fund.

The fund was designed to help Louisiana’s community hospitals offset the Medicaid cuts by using FMAP, and other available monies, according to the LHA.

The letters, signed by LHA president and chief executive officer John Matessino, say the purpose of this funding is to save lives.