Benefits of Medicare reform are unclear for county hospitals

January 13, 2004|by DON AINES

CHAMBERSBURG, Pa. - The Medicare Prescription Drug and Modernization Act passed last year will mean millions of dollars in Medicare savings over the next decade in Franklin County, but U.S. Rep. Bill Shuster and Summit Health President Norman B. Epstein say they do not know exactly how those savings will be realized.

Shuster, R-Pa., stopped by Chambersburg Hospital Monday to discuss the ramifications of the 1,100-page bill as part of a tour of his district's 12 hospitals and one medical center.

"It really depends on the hospital," Shuster said when asked how Chambersburg and Waynesboro hospitals, both owned by Summit Health, will benefit. "There are about a dozen different ways to benefit hospitals."


Shuster said Chambersburg likely will benefit from a downward revision in wage index of the labor share. According to a summary of the bill his office provided, the labor share is "an estimate of the national average proportion of hospitals' costs associated with inputs that are directly or indirectly affected by local wage levels."

"Actually, I can't explain it. It's too complicated," Epstein said.

An estimated $7 million or more in savings over the next 10 years is based on figures provided by the American Hospital Association, he said.

The law will have a more immediate impact beginning with reimbursements paid to physicians. Before the bill passed, Epstein said those Medicare reimbursements were supposed to decrease 4.5 percent this year, but now will go up 1.5 percent this year and in 2005.

"We appreciate it's not going down any further because they have been steadily decreasing for about 10 years," said Dr. Sohael Raschid, president of the medical staff at Chambersburg Hospital.

"That's a good way to go out of business," Raschid said. "In most businesses, if your costs go up, you can just pass it on to the consumer," but Medicare dictates how much is paid for certain procedures.

A Medicare cap on reimbursements for therapy also has been lifted for the next two years, Shuster said. The limit made no distinction between therapy for heart problems or a hip replacement, leaving expenses above the cap to be paid by the patient.

Another benefit to seniors, according to Shuster, is the prescription discount card for which they can apply in April. The cards will provide discounts on prescriptions of up to 25 percent, according to the bill summary.

The guaranteed prescription benefit begins in 2006, with Medicare paying 75 percent of drug costs up to $2,250 and catastrophic coverage of 95 percent over $3,600 a year. The voluntary program does have a $35 monthly premium and a $250 deductible.

Seniors with incomes under $12,900, or $16,600 for couples, will get a $600 annual subsidy combined with the discount program in 2004-05. In 2006, they will have a co-payment of $2 for generic drugs and $5 for name-brand prescriptions, he said.

Shuster said the federal prescription program will supplement Pennsylvania's PACE program for low-income seniors through the discounts and additional subsidies offered to seniors the state no longer may have to cover.

The congressman said federal medical malpractice legislation capping pain and suffering judgments at $250,000 could be just as important to Pennsylvania, by restraining increases in malpractice insurance premiums that have caused doctors to leave the state. The bill has passed the House of Representatives, but has not been acted on by the Senate.

Shuster said the bill passed the House the previous two years, and died without a vote by the Senate.

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