Another ObamaCare Medicare Gimmick


Today in you have to pass it to find out what's in it: a provision in ObamaCare that allows Massachusetts hospitals to get hundreds of millions a year in higher Medicare payments at the expense of every other state — inserted by John Kerry, who until this afternoon was the Democratic Senator from Massachusetts.

The specific trick involves an obscure Medicare payment rule setting the floor for urban hospital reimbursements at the same level paid by rural hospitals. In most states, rural hospital wages are lower than their urban counterparts. But Massachusetts has just one rural hospital, a 19-bed facility in Nantucket, a difficult to access, well-to-do area with high Medicare reimbursements. After being purchased by a large hospital group, the Nantucket facility specifically switched into the rural payment scheme in order to goose payments for the rest of the system. As a result, hospitals in Massachusetts are expected to get about about $3.5 billion in extra funding over the next decade.

At least, that is, if the provision isn't altered or removed. A group of rural hospital associations have requested that the provision be removed from the law. And earlier today, Sen. Tom Coburn (R-Oklahoma) and Sen. Clair McCaskill (D-Missouri) introduced revenue neutral legislation to end the Bay State-friendly gimmick. 

In the grand scheme of things, fixing a relatively small provision like this doesn't go very far. But the existence of the provision does tell you something about the nightmare of the Medicare payment system. 

ObamaCare supporters sometimes like to talk about the legislation's "delivery system reforms," which are supposed to change the way health care services are organized in ways that make health care less costly and more efficient. The bulk of these delivery system reforms are essentially payment reforms — restructuring the way medical providers are reimbursed in hopes of changing their incentives. But the sheer complexity of the way Medicare pays providers means that these sorts of payment games are not only commonplace, but key drivers of administrative decisions in medical facilities. Medicare's size also means that its decisions often have ripple effects throughout the medical payment ecosystem.

That has consequences for care. Rather than optimize their practices to patients and their illnesses, providers end up letting coding systems and payment rules drive their decisions. ObamaCare rearranges some of these incentives, but it leaves the complexity in place, and in some cases adds to it. Which means we're likely to see these sorts of payment games and gimmicks throughout the health care system for years to come. 

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  1. Obamacare is here to stay. Shouldn’t Gillespie or Welch be praising it for like covering gay married couples and black people?

  2. Who want’s a job on the Death Panel?
    Apparently, no one.

    1. I’ll take it.

      Needless surgery? You die!

      And fuck you, doc!

    2. Jonathan Gruber was one of the Obama administration’s key advisers during the health-care reform debate. As the economist who conceived the ideas at the heart of the Massachusetts health-care law, he is arguably the intellectual godfather of the Affordable Care Act.

      But Obama care had dick to do with MassCare! We’re repeatedly told this. Romey 2016, This Time We’re Serious!

    3. It’s not just Gruber. Obama’s former health policy advisers worry that other top health economists, those in hot demand in academia and in the industry, won’t be interested in a federal job where the compensation is low, the political controversy high and the ultimate payoff unclear.

      Compensation is “low”. Define “low”.

    4. Yeah, the more of this article I read, the less it has to do with people trying to avoid the stigma of being on a panel which decides if Grandma gets her surgery because she has no value to society, but that they’re “not allowed to do any outside work”.

      That’s obviously due to the government being keenly aware of the fact that if you have an unelected bureaucrat on a panel that decides if you get your surgery or not because your value to society is calculated in X dollars of Production, they don’t want him working for, say, the funeral industry.

      I don’t think they’d have any problem finding “medical ethicists” who would be in charge of deciding who lives or dies, in general. That’s easy peasy. There are people who would love that kind of power. But they want to sit on the board of seven other non-profits or corporations at the same time.

      Fuck ’em.

  3. Fucking Massholes.

  4. “Today in you have to pass it to find out what’s in it:”
    Well, some guy majoring in city planning at 38, still relying on ‘student insurance’ (and an active campaigner for Obamacare) finds out what’s in it:
    A cap.

    1. Health care limits like the one imposed by UC are already illegal under the sweeping federal health-care law – dubbed Obamacare – that takes full effect next Jan. 1. But the health care act does not apply to “self-funded” college plans like UC’s, in which the university takes on the financial risk of medical claims.

      A loophole? In MY Obamacare? That’s unpossible! Obama hates loopholes!

      The San Francisco Gate is obviously a right-wing, redneck echo chamber, fueled by Rush Limbaugh.

  5. Sen. Tom Coburn (R-Oklahoma) and Sen. Clair McCaskill (D-Missouri) introduced revenue neutral legislation to end the Bay State-friendly gimmick.

    How did this bill turn out?

    Did some wingnut like Inofe filibuster it?

  6. Oh yeah, the various hospital groups started finger pointing over this one about a year ago. The issue isn’t just that Mass gets the extra $3.5 billion. It’s that the $3.5 billion comes from other states. IIRC, the way the formula works MA would get the $3.5 billion and about 40 states would get cut.

  7. Texas should open a micro rural hospital in Mass. that pays minimum wage only.

  8. Soun ds like one heck of a plan to me dude. Wow.


  9. Wait, so a large conglomeration of businesses bought up a competitor in order to leverage a cost-cutting provision in poorly thought-out legislation into a profit-center? As someone who has never heard of regulatory capture, I am both shocked and appalled.

  10. ObamaCare supporters sometimes like to talk about the legislation’s “delivery system reforms,” which are supposed to change the way health care services are organized in ways that make health care less costly and more efficient

    You know who else thought they could deliver a more efficient system through central management?

    1. Companies that rely on internal warehousing to cut costs?

  11. Why they are misguiding people, please provide them with some formidable information.
    Medicare Benefits

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