Hospitals Score Medicare Victory

May 7, 2004
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Ten hospitals across western Michigan will receive some $90 million over the next three years in higher Medicare payments, reversing an earlier funding cut resulting from changes in federally designated metropolitan regions.

The higher payments will come after the federal Centers for Medicare and Medicaid Services agreed to reclassify the hospitals so the area wage index that’s used to calculate Medicare payments more accurately reflects the real wage and salary costs of West Michigan.

The net result is that the hospitals will collectively receive an estimated $30 million, or about 8.5 percent more than what they now receive annually, in additional Medicare payments each year for three years, which is about equivalent to the reduction that went into effect when the metropolitan statistical area was reclassified three years ago.

“It’s really a restoration,” said David Leonard, general counsel for Spectrum Health. “But it is certainly a net increase for West Michigan from the current levels, so it is a real victory.”

The 10 hospitals involved received an estimated $350 million in Medicare payments during the federal government’s most recent fiscal year.

The restoration in payment levels stems from efforts by federal lawmakers who inserted language into the massive Medicare reform bill that passed Congress late last year. The language — pushed by U.S. Reps. Vern Ehlers, R-Grand Rapids, Peter Hoekstra, R-Holland, and David Camp, R-Midland — directed the Centers for Medicare and Medicaid Services to review appeals from hospitals throughout the nation that sought geographic reclassification of their metropolitan statistical area in order to receive more appropriate Medicare funding.

Reclassifying the area wage index for the hospitals “simply creates a better level of equity with hospitals in other areas of Michigan,” Hoekstra said.

Yet there is still more to do to even the playing field further. While the restoration of payment levels is welcome, the hospitals continue to complain about what they see as unfair payment levels for West Michigan, compared to other areas of the state.

“It continues to pale in comparison in the disparity of Medicare payments,” Leonard said.

The hospitals involved in the changes are Spectrum Health’s Butterworth and Blodgett campuses, Metropolitan Hospital and Saint Mary’s Mercy Medical Center, all in Grand Rapids, Hackley Hospital and Mercy General Health Partners in Muskegon, Holland Community Hospital, Zeeland Community Hospital, North Ottawa Community Hospital in Grand Haven, Gerber Memorial Health Service in Fremont, and Munson Healthcare in Traverse City.           

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