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Health reform, hospitals, and work comp

As health reform stumbles like an exhausted runner towards the finish line, we are starting to get a clearer picture of the potential changes reform will bring to the health care landscape.
One that bears close watching is the increasing likelihood Medicare will be cutting reimbursement to hospitals. There are two ways this may affect work comp; in those jurisdictions that base reimbursement off Medicare rates, any changes may – or or may not – have a direct impact on comp reimbursement. I’m not expert in the various ways states apply their own formulas to Medicare’s, but will be studying up on it and will repor back in more detail later.
The other, and likely more significant impact may be the result of cost shifting by hospitals if/when Medicare cuts come down from CMS coupled with the expansion of Medicaid. this has plusses and minuses; Hospitals may get more paying and fewer indigent patients if the Medicaid expansion goes thru, but if these were formerly privately insured or if there is a substantial increase in their Medicaid census then their revenue mix may worsen. (Recall Medicaid reimbursement is well below most hospitals’ cost). It is mo likely the MedicUs expansion is a net plus but this will vary across the country.
Potentially more significant would be any major decrease in Medicare reimbursement as medicare is a major payer at most hospitals. Expect hospitals hit hard by a cut to look for other places to make up the lost income, and the softest target around is usually work comp.
Apologies for typos; this post written on my iPhone.

One thought on “Health reform, hospitals, and work comp”

  1. Joe,
    Good points.
    Another observation if I may: CMS is sensitive to the possibility of hospitals opting out of the Medicare program if reimbursement is reduced to a level which would justify such a decision.
    As such, Medicare cuts (which represent a large part of the “savings” in the Senate and House versions of reform) potentially could have a dramatic affect on which, and how many, providers are willing to accept ever decreasing levels of reimbursement.
    Watch for the likely backlash of provider resentment.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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