Medicare costs to rise
July 3, 2008 · Updated 12:44 PM
"By Aug. 1, many of Whidbey Islands 6,000-plus seniors may be paying more for Medicare. Thats when the federally run health insurance program plans to change its method for reimbursing hospital outpatient costs by using a national average, rather than hospital-specific charges.Essentially, hospitals will no longer determine how much they will be paid for providing a service. The government will.The new system will eventually lower the national overall co-insurance rates for seniors using out-patient services by as much as 17 percent, according to sources in the Health Care Financing System, or HCFA. And in fact, the change will result in reduced rates for 39 states. Some states, like California, face reductions of more than 30 percent. Washingtons rates however, will increase by 4.7 percent.Meanwhile, say administrators at Whidbey General Hospital, a complicated system is about to become even more so. Hospitals will be left in the position of having to find other sources of revenue to cover inflationary medical costs, as well as the costs of new services.Over the long term, I believe it will be good for seniors from a cost standpoint, said Whidbey General Chief Executive Officer Scott Rhine. But I also believe it will be very complex as the system changes, and very difficult to understand how Medicare arrives at what the co-insurance will be.The change, said Whidbey Generals director of business services Beth Stout, stems from the 1997 Balanced Budget Act, a congressional mandate that Medicare use a national average to determine a payment system.Until now, Medicare beneficiaries were responsible for 20 percent of hospital charges for outpatient services. Because Medicare reimbursed hospitals much less than the charges, seniors sometimes ended up paying more than than 20 percent, and as much as 50 percent in some cases, according to HCFA. And while the seniors share increased, Medicares share of the payments decreased, while hospitals payments remained unchanged.The result was that an outpatient procedure in Florida might cost a senior a lot more than a similar procedure in Arizona. Under the new system, Medicare patients will be paying 20 percent of the total rate, as determined by Medicare.The new system is intended to level the playing field for all seniors, in all states.A laudable goal, Rhine said, but one that is causing hospital administrators concern.For one thing, Whidbey General will be providing the same services but for less revenue, he said.And for another, the system will be difficult to understand and explain to Medicare patients.Most of us would applaud if there was going to be a significant simplification of hospital billing systems, Rhine said. What we are frustrated with, as I believe so is the consumer, is that the changes being made wont simplify the system but make it even more complex.Moreover, Rhine said the new system will reduce Medicare reimbursements to Whidbey General, reimbursements that are not big to begin with.For the first five months of this year, for every dollar we billed for Medicare, we collected 56 cents, Rhine said. And for some outpatient services the hospital will be paid at a rate that is less.Well continue to provide the same services and our patients should continue to have the same expectations, Rhine added. Regardless of how Medicare pays us.Medicare patients that are currently covered by HMOs will not be affected.For more information about the changes in Medicare call 679-6620 or patients accounts at Whidbey General, 678-5151."