Hospital News: Medicare Cuts and ACO Collaborations

Some items that made headlines this week for hospitals and health systems

One state’s hospitals getting more in Medicare

According to the Boston Globe, Massachusetts hospitals will get $275 million more a year in Medicare payments because of a provision inserted into the nation’s new health care law that benefits the state, angering hospitals across the country that will get less money as a result. Medicare adopted the change last week, as required by an amendment to the health care law cosponsored by Senator John F. Kerry, a Massachusetts Democrat. The amendment essentially requires Medicare to reimburse all Massachusetts hospitals for employee wages at at least the same rate that it reimburses Nantucket Cottage Hospital, a windfall that Partners HealthCare set in motion in 2007, when the Nantucket hospital became its subsidiary. Wages on the island are hefty because of its isolated location and high cost of living.

HealthSouth Corp to close remaining LTAC

HealthSouth Corp (Birmingham, AL) announced that it will close HealthSouth Hospital of Houston (Houston, TX) within 60 days. The Houston hospital is currently under investigation by the Office of the Inspector General of the U.S. Department of Health and Human Services (Washington, DC) and was the only HealthSouth long-term care hospital that was not acquired by LifeCare Hospitals (Plano, TX). The closing will affect 161 employees.


Saint Joseph Health System, Blue Shield of California to create ACO

Saint Joseph Health System (Orange, CA) and Blue Shield of California (San Francisco, CA) intend to collaborate on an accountable care organization (ACO), which is set to launch January 1, 2012 and will run for a minimum of 12 months. Saint Joseph Health System/Blue Shield of CA ACO (Orange, CA) will involve Saint Joseph Hospital Orange (Orange, CA), Saint Jude Medical Center (Fullerton, CA), Mission Hospital (Mission Viejo, CA), Mission Hospital Laguna Beach (Laguna Beach, CA), Saint Joseph Health System Home Health Agency (Orange, CA), three affiliated physician networks and three medical groups. 30,000 Blue Shield HMO members in Orange County will participate in the ACO.

CMS to reduce Medicare payments to SNFs by 11.1 percent

CMS (Baltimore, MD) intends to reduce Medicare payments to skilled nursing facilities (SNFs) by 11.1 percent, or $3.87 billion, in FY 2012. The changes are due to CMS recalibrating its payment structure, enacted through resource utilization groups, or RUGs, to correct the incentives that led to billing for higher-cost therapies. CMS also tightened the rules for SNFs in the timing of allocating group therapy, to also reduce future overbilling. The nursing home industry strongly opposes the move.

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