CHA: Hospitals facing more than $2 billion in Medicare cuts

Colorado hospitals can expect to see more than $2 billion in Medicare payment reductions over the next 10 years, according to a report released Monday by the Colorado Hospital Association.

The reductions will come as a result of various federal statutes, including the Budget Control Act, the Patient Protection and Affordable Care Act, the Middle Class Tax Relief Act and the American Taxpayer Relief Act.

The cuts represent a combined 9.5 percent decrease in Medicare revenue.

The majority of the cuts, $1.4 billion, are a result of the Affordable Care Act, but another $359 million will result from the Budget Control Act, colloquially known as “sequestration.”

In 2011, Colorado hospitals received $253 million less for providing care to Medicare patients than in 2009, according to the CHA.

“Colorado is now seeing a greater health care cost shift due to Medicare underpayment than Medicaid — a phenomenon that was unthinkable to many just a few years ago,´ said Steven J. Summer, CHA president and CEO.

This shift is especially critical right now because of the expected influx of baby boomers headed for retirement, Summer said.

“Paying hospitals less and less for seeing more and more Medicare patients is unsustainable in the long run, and will inevitably result in higher health care costs for the privately insured,” Summer said.

In 2011, Colorado hospitals were faced with about $1.7 billion in uncompensated care statewide because of underpayment for services provided, according to the CHA.

The Colorado hospital provider fee, which allows the Colorado Department of Health Care Policy and Financing to assess a fee to hospitals to expand health care access, helped reduce underpayment by $237 million in 2011, but those improvements have been more than offset by reduction in Medicare payments.

The Budget Control Act cuts are across the board and allow little or no flexibility for affected providers, according to Summer.

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