In Trend Similar to WI’s Experience, Medicare Underpayments Worsen Nationally

January 16, 2020

The American Hospital Association’s (AHA) most recent hospital survey shows that the nation’s hospitals are facing government reimbursement shortfalls similar to those experienced by Wisconsin’s hospitals and health systems. 

AHA’s Annual Survey of Hospitals for 2018 – the survey of more than 6,500 hospitals nationwide – collects data on an extensive array of topics, including government underfunding of medical services. The latest AHA results show that in 2018 Medicare underpaid hospitals by nearly $57 billion compared to underpayments of $54 billion in 2017. A previous WHA survey of Wisconsin hospitals and health systems showed that Medicare underpayments grew from $2.2 billion in 2017 to $2.5 billion in 2018. Wisconsin hospitals’ uncollected bad debt also grew from $215 million in 2017 to $228 million in 2018. WHA has been closely monitoring the implications of Wisconsin’s aging population on hospitals, as more Wisconsinites are shifting from commercial health insurance to Medicare, leading to hospitals caring for more patients at rates that do not cover the full cost of care. 

Wisconsin’s Medicare and Medicaid reimbursements continue to lag well behind national averages, with Medicare paying Wisconsin hospitals roughly 73 cents for each dollar of care provided and Medicaid paying just 67 cents on the dollar. Nationally, Medicare paid about 87 cents for every dollar of care and Medicaid paid about 89 cents. This failure by the government to pay the full cost of care results in a hidden health care tax on everyone else, creating a cost shift in the form of higher health insurance premiums for businesses and individuals. 

Despite these challenges, Wisconsin continues to have nationally-recognized high-quality care. Additionally, WHA-led initiatives like the disproportionate share hospital (DSH) Medicaid program have helped improve these deficits. In the most recent state budget, WHA secured an increase of nearly $50 million annually (a 73% increase) in Wisconsin DSH payments and an increase of nearly $5 million annually (an 800% increase) in rural critical care payments (for certain rural hospitals that do not receive DSH). WHA will continue to advocate aggressively in Madison and Washington, D.C. to inform lawmakers on how they can reduce the hidden health care tax and help support Wisconsin’s ability to access high-value, high-quality health care.

This story originally appeared in the January 16, 2020 edition of WHA Newsletter