Hatch, Upton Highlight New Non-Partisan Government Report on Uncompensated Care

Government Watchdog Finds Administration Fails to Accurately Measure Hospital Needs

WASHINGTON - Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) today highlighted a new report from the Government Accountability Office (GAO) evaluating federal support for health care services provided by the nation’s hospitals for uninsured and other low-income individuals. The report, which was requested by the chairmen, found that the Centers for Medicare & Medicaid Services (CMS) needs to do more to improve the alignment of Medicare and Medicaid payments to hospitals to more accurately allocate uncompensated costs and reduce the potential for overpayments.

“Our nation’s hospital systems devotedly serve all of our citizens regardless of ability to pay, and ensuring local hospitals are covered for uncompensated costs helps prevent those costs from being passed on to other patients in those communities,” Hatch said. “To better serve and protect taxpayers from potential wasteful spending, I am hopeful CMS heeds the advice of Congress’s non-partisan oversight agency and takes the appropriate steps to ensure it is adequately coordinating and aligning payments for our local health care providers.”

“Everyone wants to preserve a strong safety net to help cover the costs for caring for the most vulnerable and uninsured,” Upton said. “The government watchdog report helpfully maps out how the Medicare and Medicaid programs pay for uncompensated costs that hospitals incur in providing care for all Americans. But this new report also raises important questions about ways in which CMS can recalibrate existing payments to achieve needed efficiencies to protect taxpayers.”

According the report, hospitals were covered for nearly $50 billion worth of uncompensated services for each of fiscal years 2013 and 2014. GAO found that almost three-quarters of these payments each year were made by state Medicaid programs with the remainder of the payments made by Medicare. The three Medicaid and two Medicare payments that help offset hospital uncompensated care costs are based on similar factors, such as services provided to Medicaid patients or to both Medicaid and uninsured patients.

GAO noted a misalignment with one type of Medicare payment, called the Medicare Uncompensated Care (Medicare UC) payment. The payment, which is based primarily on the number of Medicaid patients treated and not on hospitals’ actual uncompensated care costs, can result in greater payment shares to hospitals when uncompensated care is declining.

Additionally, GAO found that CMS does not adjust the Medicare UC payment for the Medicaid payments hospitals already receive to offset uncompensated care costs.

GAO recommended that CMS make changes to reduce misalignment between Medicare UC payments and costs.

The full report can be found here.

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