Non-profit hospitals with weak credit ratings would be hurt most if the congressional “supercommittee” fails to recommend at least $1.2 trillion in cuts to Congress.

If the committee – formally, the Joint Select Committee on Deficit Reduction – fails to recommend cuts to Congress by November 23, an automatic two percent cut in Medicare payments would take effect.  According to Fitch Ratings, each percentage point cut in Medicare payments would cost hospitals 40 basis points in net revenue and would reduce operating profitability by an average of 14 percent.

Fitch’s also noted that non-profit hospitals with weaker credit ratings generally serve more Medicare patients and would be at greater risk of losses.

Read more about the Fitch Ratings report in this Bloomberg article.

Recent events have left many hospitals and health care organizations wondering:  would they be better off taking their chances with cuts recommended by the new congressional “supercommittee” (the Joint Select Committee on Deficit Reduction) or just accepting the two percent cut in Medicare payments that would automatically be triggered if Congress fails to adopt the committee’s recommendations?

The Congressional Budget Office (CBO) has put a tentative price tag on the cost of the automatic two percent cut in Medicare:  $123 billion over ten years.  Read in an article in The Hill about CBO’s estimate, what it means, and why some people may want to take their chances with the supercommittee while others might gladly settle for the two percent Medicare cut and the knowledge that Medicaid would be exempt from any automatic cuts.

Hospitals and other providers have a great deal at stake in Medicare policy changes that may result from the budget deficit reduction process established through the Budget Control Act passed last month.

That process started with $900 billion in future federal spending cuts adopted immediately and another $1.2 trillion to be identified and passed by the end of the year – or, failing that, immediate cuts in various aspects of federal spending, including a two percent cut in Medicare payments to hospitals and other providers.

In an issue brief entitled “The Budget Control Act of 2011:  Implications for Medicare,” the Kaiser Family Foundation presents a broad look at what Congress has already done, the process Congress and its new Joint Select Committee on Deficit Reduction will follow to identify and consider additional future federal spending cuts, and the time-frames for completion of this work.

Hospitals and other health care providers will be watching closely – and undoubtedly weighing in with their own preferences – as this committee and Congress address their deficit reduction responsibilities in the coming months and make vital decisions about Medicare’s future.  Many aspects of Medicare reimbursement that are vital to hospitals – inpatient and outpatient payments,…

Medicare and Medicaid cuts currently under consideration in Washington, D.C. could hurt Pennsylvania hospitals.

According to an August 28, 2011 article in the Scranton Times-Tribune, Pennsylvania faces a number of challenges on the federal legislative front, including a possible 30 percent cut in Medicare payments to doctors; proposed conversion of Medicaid to a block grant program; and a two percent cut in Medicare payments to hospitals if Congress cannot agree by the end of the year on $1.2 trillion in future federal spending cuts.  Read here about these and other such possibilities and how they might affect Pennsylvania hospitals.