Perspective: Making Sure Hospitals Have the Resources to Care for Patients and Communities

Two and a half years into the ongoing COVID-19 pandemic, care providers continue to work tirelessly each and every day to treat patients, save lives and advance health in their communities.

But like individuals and families all across America, hospitals and health systems are dealing with the difficult challenges of high inflation. As we shared in a piece that ran this week in the Wall Street Journal, hospitals are facing significant increases in costs of labor, drugs, equipment and supplies (including food and energy costs), that are threatening their stability and ability to provide access to high-quality health care services.

To make matters worse, proposed Medicare payment rates are not reflecting the costs of providing care to patients. The fact is Medicare and Medicaid account for more than 60% of all care provided by hospitals and their caregivers. Those programs already reimburse less than the cost of providing care, and their reimbursement rates are virtually non-negotiable.

That’s why we are deeply concerned that last week’s Centers for Medicare & Medicaid Services proposed rule would increase Medicare hospital outpatient prospective payment system rates by just 2.7% in calendar year 2023 compared to 2022. Given the current historic rates of inflation and continued labor and supply cost pressures, a much higher update is warranted.

Moreover, this inadequate proposed increase for outpatient care comes on the heels of a CMS proposed policy for inpatient care that would actually result in a net decrease in payments to hospitals in fiscal year 2023 compared to the previous year.

Taken together, these proposed payment adjustments would place hospitals’ budgets under even greater strain at the worst possible time and further exacerbate the challenges of ensuring access to care in communities.

The AHA continues to push back against these inadequate reimbursement rates. Earlier this week, we sent out an Action Alert highlighting bipartisan letters in the House and Senate urging CMS to fix the hospital inpatient payment rates when it issues the final regulation, which is expected in the next few weeks. This is an effort that has bicameral, bipartisan support from Republicans and Democrats in both the House and the Senate.

As part of our efforts to ensure financial stability, we appreciate that, following the favorable unanimous ruling in our 340B Supreme Court case, CMS said in its OPPS proposed rule that it will end its unlawful cuts to 340B hospitals in next year’s Medicare outpatient payment. Having now recognized what 340B hospitals are owed under the law, we urge the Administration to promptly reimburse those hospitals that were affected by these unlawful cuts in previous years while ensuring the remainder of the hospital field is not penalized for the agency’s prior unlawful policy.

And we continue to push for the extension of coverage expansions provided during COVID-19 that expire at the end of the year. Without an extension, millions of people, including millions of children, could lose coverage. Negotiations continue to include these critical provisions as part of a slimmed down reconciliation package that could be considered soon.

As we see COVID-19 surging again throughout the country, it is likely that demands on care providers will continue to increase. Our heroic workforce stands ready, once again, to step up to meet the challenge. But it’s imperative that we make sure they have the resources needed to care.