AHA Study of Hospitals and Medicare Cuts

Hospitals in Rhode Island will lose $339 million in Medicare payments as a result of the 1997 Balanced Budget Act, according to a study released today by the Hospital Association of Rhode Island. The losses are 50 % higher than the $220 million projected two years ago. The study was conducted by The Lewin Group, which was commissioned to forecast BBA impact through the year 2002 on Medicare payments for hospital services including inpatient, outpatient, hospital-based home health, rehabilitation, long-term care, psychiatric and cancer services.

"This report confirms the worst fears of hospitals in Rhode Island", said Edward J. Quinlan, president of the Hospital Association of Rhode Island. "With hospitals in our state suffering operating losses of $50 million last year, the increased severity of Medicare cuts will only escalate severe financial pressures."

Rhode Island's hospitals, which have eliminated over 1500 positions since Congress approved the BBA, must now adjust to the following reductions:

• payments for Medicare inpatients will be trimmed 9.5%
• outpatient services payments will plummet 14.4%
• home health service reimbursement, already cut 15-20% in 1997, will drop an additional 15%
• teaching hospitals - Rhode Island, Miriam, Memorial, Roger Williams, Women & Infants, Butler - will face new reductions of 10%

The new report contributes to increasing evidence that hospitals and their communities are facing hardships. Reductions in workforce and continued re-evaluation of services will be required to respond to decreasing revenues. Rhode Island's elderly population, the fifth highest in the nation (165,000 - 16 % of our population), is highly dependent on Medicare. Indeed, most of Rhode Island's hospitals rely on Medicare for over 50% of their revenues.

For more information on the impact of Medicare cuts on hospitals across the country, click here to see the details of this American Hospital Association study.