Survey Finds Pennsylvania Should Boost Medicaid Reimbursement Rates

An independent analysis conducted for the Pennsylvania General Assembly's Legislative Budget and Finance Committee concluded that the state should boost Medicaid reimbursement rates for hospitals, especially for outpatient care, while hospitals should increase support for community services that target Medicaid beneficiaries, the Philadelphia Business Journal reports. In the 91-page study, conducted by the Lewin Group, a private health care consulting firm, researchers analyzed the state's Medicaid payments between FY 1992 and FY 1999 and found that they covered 82% of inpatient costs and 54% of outpatient expenses. Carolyn Scanlon, president and CEO of the Hospital & Healthsystem Association of Pennsylvania, said that the report provides "more evidence of the damage being inflicted on our hospitals and health systems" by "inadequate" Medicaid reimbursements -- which she said has limited the "ability of hospitals to purchase new equipment," replace "aging" buildings and hire and retain nurses and other employees. "The bottom line is that the financial condition of Pennsylvania hospitals continues to deteriorate. ... It's now time for the state to contribute its fair share to help hospitals meet the needs of their communities," she added, urging the state Legislature to pass a bill that would "update" Medicaid reimbursement rates annually "based on actual data from hospitals."

Flawed Survey?
However, Susan Aspey, deputy press secretary for the Pennsylvania Department of Public Welfare, said that Medicaid costs, on average, represent just 8.5% of the total expenses for hospitals in the state. "We continue to believe that (raising Medicaid payments) is not the solution to the financial woes of hospitals in this state or any other," she said, adding that increasing reimbursement rates would "unfairly burden taxpayers." She also said that the Lewin Group study "included some flaws," such as the use of American Hospital Association data that "included expenses that are not reimbursable under the Medicaid program" -- such as lobbying, fundraising, patient telephones and televisions, public cafeterias and corporate advertising. "We think up to 10% of the costs (Lewin used) are unallowable under Medicaid regulations," she said. In addition, she pointed out that Pennsylvania Gov. Tom Ridge (R) has proposed spending 40% of the state's share of the national tobacco settlement to provide health coverage for the uninsured and 10% to reimburse hospitals for "uncompensated care" (George, Philadelphia Business Journal, 4/2).