Medicare Woes

There's a new monkey wrench in the Medicare mix--which may affect the E$$ent bottom line:

The New York Times reports (7/17/06) that the Bush administration is planning to cut Medicare payments to hospitals by 20 to 30 percent. It’s the biggest cut-back in Medicare history and health care providers say the results could be devastating, according to the Times.

The Feds say that it’s all about equity to patients regardless of their ability to pay. The new plan is to base payments on hospital costs instead of what the hospital charges. Reimbursements would take into account severity of illness and not just the diagnosis.

Here’s the kicker: The whole thing isn’t going to save the government any money, just move it around differently. As a result, many hospitals will lose out as payments for cardiac care, for instance, would be reduced. The government may end up cutting profits to specialty hospitals while hurting non-profits and research institutions in the process, the Times reports.

There are additional changes coming to imaging facilities, and possibly to leased MRI/CT leasees, modeled after California's reforms. A whole lot of businesses could be feeling stress at this point.