Oct 24, 2019

Hospitals lobbying to change Medicare's pay formulas

Texas Health Resources is part of a new lobbying alliance. Photo: Texas Health Resources

Several hospital systems are lobbying Medicare to stop basing certain payments on their sticker prices, also known as "chargemasters" — prices the Trump administration has required them to disclose publicly.

The intrigue: Hospitals aren't advocating for lower Medicare payments. They want to reduce the prices they list publicly, while retaining the same Medicare revenues.

How it works: Hospitals have a chargemaster that lists the rack rates of every service, test and procedure.

  • Those prices are relevant for people who are uninsured and for people who get out-of-network services, but they don't reflect the net price that's negotiated with private health insurers.
  • However, Medicare bases a handful of hospital payments based on those chargemaster prices — including things like "outlier" payments for patients who are extraordinarily expensive.

​Driving the news: Six hospital systems — Advent Health, Baptist Health, Geisinger, SSM Health, Texas Health Resources and Trinity Health — and the Healthcare Financial Management Association, a trade organization for hospital executives, are each paying $2,000 a month to fund the Chargemaster Alternatives for Medicare Payment Alliance.

  • They essentially want Medicare to do away with payment formulas that take those list prices into account.
  • Rick Gundling, a vice president at HFMA, said in an interview the changes would allow hospitals to "rationalize their charge structure" and "allow for better transparency."
  • The hospital systems either did not respond to requests for comment or did not make executives available for interviews.

The bottom line: Hospitals don't like having to post their high chargemaster rates. It's embarrassing, but they also argue the rates are misleading because they don't reflect patients' out-of-pocket costs.

  • If hospitals convince Medicare to calculate outlier and other niche payments on costs instead of charges, and guarantee the payments won't go down, they would get a PR win for potentially lowering some list prices and a financial win for not sacrificing revenue.

Go deeper

In photos: Protests over George Floyd's death grip Minneapolis

Protesters gather at Hennepin County Government Plaza on Thursday in Minneapolis, Minnesota.

Protests in response to the death of George Floyd, a black man who died shortly after a police encounter in Minneapolis, are ongoing as the nation waits to see if the officers involved will be charged with murder.

The state of play: Minnesota's governor on Thursday activated the state's national guard following violent outbreaks throughout the week.

Updated 4 hours ago - Health

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand has a single novel coronavirus case after reporting a week of no new infections, the Ministry of Health confirmed on Friday local time.

By the numbers: Nearly 6 million people have tested positive for COVID-19 and over 2.3 million have recovered from the virus. Over 357,000 people have died globally. The U.S. has reported the most cases in the world with over 1.6 million.

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8:30 p.m. ET: 5,803,416 — Total deaths: 359,791 — Total recoveries — 2,413,576Map.
  2. U.S.: Total confirmed cases as of 8:30 p.m. ET: 1,720,613 — Total deaths: 101,573 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
  3. Public health: The mystery of coronavirus superspreaders.
  4. Congress: Pelosi slams McConnell on stimulus delay — Sen. Tim Kaine and wife test positive for coronavirus antibodies.
  5. World: Twitter slapped a fact-check label on a pair of months-old tweets from a Chinese government spokesperson that falsely suggested that the coronavirus originated in the U.S.
  6. 2020: The RNC has issued their proposed safety guidelines for its planned convention in Charlotte, North Carolina.
  7. Axios on HBO: Science fiction writers tell us how they see the coronavirus pandemic.
  8. 🏃‍♀️Sports: Boston Marathon canceled after initial postponement, asks runners to go virtual.
  9. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.