Medicare reimbursement changes will benefit Iowa hospitals, doctors

A proposed change in Medicare reimbursement could increase payments to Corridor hospitals by more than $4 million next year.

Under changes expected to be finalized later this month, reimbursement for Medicare services would increase payments to St. Luke's Hospital by $794,841 and to Mercy Medical Center by $584,883. In Iowa City, the University of Iowa Hospitals and Clinics could see an increase of $2.3 million in 2011 and Mercy Hospital could get a $509,898 boost.

At the same time, a rule change on reimbursement to doctors could boost their Medicare payments by 5 percent beginning next year.

“This will mean a great deal to Iowa hospitals that have been struggling for many years,” according to 1st District Rep. Bruce Braley, a Waterloo Democrat. He is part of a group of U.S. House members who have sought to move Medicare away from payment plans that resulted in geographic disparities that “punished health care providers in Iowa that provide high-quality care and get low reimbursement rates.”

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Also this week, Iowa Democratic Sen. Tom Harkin said Iowa doctors would see greater reimbursement for providing Medicare services under a proposed physician fee schedule proposed released by the Centers for Medicare and Medicaid Services. Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee (HELP), has been an outspoken advocate for changing the Medicare formula he said unfairly reduces reimbursement rates for rural areas.

“This flawed formula penalized Iowa providers, putting them at a geographic disadvantage,” Harkin said. The proposed rules are a “welcome first step as we await a new report directed by the health reform law.”

Although he couldn't put a dollar figure on the impact of the change, Harkin's staff estimated the increase in doctor reimbursement at 5 percent. Nationally, doctors should get about $400 million more for the Medicare services they provide. Under a complicated Medicare formula, doctors in Iowa and a number of states were paid less for their services than their colleagues in other states. Iowa physicians were reimbursed less than doctors in Louisiana, for example. Under the formula, Iowa physicians' cost are lower than their Louisiana counterparts.

The proposed change won't reduce payments to any doctors.

Medicare is accepting comments on the proposed rule until Aug. 24 and a final rule is expected on or about Nov. 1.

In addition to addressing geographic disparities in hospital reimbursement, Braley said the proposed changes will also “move away from a fee reimbursement model to one that rewards quality outcomes.”

“This will mean a great deal to Iowa hospitals that have been struggling for many years,” he said. Twenty-one Iowa hospitals will get the higher reimbursement.

“We're trying to make sure those hospitals with the greatest need because of low-reimbursement are getting the maximum benefit,” Braley said.