Kevin Downey,Colorado Hospital Association
(720) 330-6019
kevin.downey@cha.com

Colorado Hospitals Facing More Than $2 Billion in Medicare Cuts Over 10 Years

Date March 11, 2013

GREENWOOD VILLAGE, COLO. (Mar. 11, 2013) — A new analysis by the Colorado Hospital Association (CHA) shows that Colorado hospitals will experience more than $2 billion in Medicare payment reductions over the next 10 years as a result of various federal statutes, including the Budget Control Act (also known as ‘sequestration’), the Patient Protection and Affordable Care Act (ACA), the Middle Class Tax Relief Act and the American Taxpayer Relief Act. The payment cuts represent a combined 9.5 percent decrease in Medicare revenue.
 
While the approximately $1.4 billion in overall Medicare payment cuts as part of the ACA—which includes an individual mandate aimed at increasing insurance coverage to help offset these losses—have been expected since the law’s passage in 2010, recent actions by federal lawmakers are applying additional and significant fiscal pressure on Colorado hospitals. Enacted and expected Medicare payment cuts include:
  • Sequestration (Budget Control Act of 2011): $359 million
  • Medicare regulatory cuts and coding adjustments: $195 million
  • Radiosurgery payment and coding adjustments: $108 million
  • Decreases in bad debt relief: $29 million
In 2011, Colorado hospitals received $253 million less for providing care to Medicare patients than in 2009.
“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 chief executive officer. “This is especially disturbing given the expected increase in Medicare patient volume due to retiring Baby Boomers. 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.”
In 2011, Colorado hospitals incurred approximately $1.7 billion in uncompensated care statewide due to underpayment for services provided. The Colorado hospital provider fee has helped reduce levels of Medicaid and Colorado Indigent Care Program (CICP) underpayment by $237 million annually (2011, compared to 2009), but these improvements have been more than offset by reductions in Medicare payments.
 
“We are certainly appreciative of the fiscal challenges facing Congress right now, but repeatedly trying to balance the federal budget on the backs of Medicare patients will have dire consequences for Coloradans,” said Summer. “It will mean longer wait times and reduced services for patients, especially at hospitals in many of our rural communities where Medicare is the predominant insurer.”
 
The sequestration-related Medicare provider cuts are especially troubling, said Summer, as they are across-the-board and allow little to no flexibility for affected providers: “Sequestration was intended to frighten Congress into thoughtful action with the threat of thoughtless reductions. Instead, hospitals are now facing expensive and indiscriminate new cuts, and our patients and communities are the ones that will suffer most as a result.”
 
A September 2012 study found that sequestration could result in more than 10,000 job losses in Colorado by 2021, with the vast majority occurring in the health care sector. More than half of these job losses are predicted to occur in the first year following sequestration, which officially took effect Mar. 1.

About the Colorado Hospital Association
The Colorado Hospital Association (CHA) represents 100 member hospitals and health systems throughout Colorado. CHA partners with its members to work towards health reform and performance improvement, and provides advocacy and representation at the state and federal level. Colorado hospitals and health systems are committed to providing coverage and access to safe, high-quality and affordable health care. In addition, Colorado hospitals have a tremendous impact on the state’s economic stability and growth, contributing to nearly every community across the state with 72,000 employees statewide.