Hospital advocate calls impact of BBA ?devastating? for state

Concern about the state of rural health care prompted 40 people to turn out Friday for a meeting that usually attracts about a dozen people.

The Marion County Interagency Council had invited the public to their meeting at Tabor College to hear Fred Lucky, vice president of the Kansas Hospital Association, talk about the state of health care in rural Kansas in the aftermath of the Balanced Budget Act of 1997.

As local health-care providers have already concluded, the situation is challenging to say the least.

?Some of the impact was good, but from a financial standpoint it was very devastating,? Lucky said.

Although a few corrections have been made during the past year, most hospitals and other providers throughout Kansas will continue to suffer under its impact even though the basic intent of the BBA had merit.

?It?s hard to argue against the need to balance the federal budget,? Lucky said. ?We?d been running deficits since the early 1970s and it was becoming an economic drain on society.?

The BBA was intended to balance the federal budget in five years. But the objective was met within nine months, he said.

?What we in the health-care provider community said was that the reason it happened so quickly was because you took too much money too quickly,? Lucky said.

Medicare was a key BBA target. Among other things, hospitals began to be paid a set rate for a specific condition, regardless of how much care the patient required.

For Kansas hospitals, that translated into a more than a $100 million in payment reductions. Skilled nursing facilities, home-health, outpatient and rehabilitation services all took a hit.

?In Kansas alone, nearly 100 home-health agencies have had to close as a result of the Balanced Budget Act,? Lucky said.

Hillsboro Community Medical Center was among those to terminate its home-health agency.

Initial estimates indicated payment reductions would equal $580 million over five years. The reductions turned out to be $805 million.

In the first year alone (1998), Kansas hospitals experienced $59 million in BBA reductions, wiping out the $58 million net profit they had experienced the previous year.

Because of an aging population and the percentage of patients on Medicare, Kansas hospitals were hit particularly hard.

Lucky said Congress had to make significant budget cuts in Medicare because of the changing population distribution projected for the United States. Aging baby boomers would add 40 percent more beneficiaries to the program over the next 20 years.

At the same time, the ratio of workers to support Medicare through payroll taxes will be dropping.

Right now there are four workers for every beneficiary. By the year 2030, it will be 2.3 workers for every beneficiary.

?A train wreck was about to happen,? he said. ?There just wasn?t enough money to pay for it.?

Lucky said the problem for heath care providers is that the government did too much too quickly. Providers are now living with what Lucky called ?the unintentional consequences? of BBA.

Ironically, the BBA added only a decade of projected solvency to Medicare, Lucky said. The program now is expected to lose solvency in 2017 unless additional changes are made.

The implications of the BBA were significant for hospitals, Lucky said. Reimbursements were reduced, necessary health care services and jobs were eliminated, nursing homes have shut down skilled beds, and at least two hospitals in Kansas have closed.

He said other implications include reduced access to health-care services, fewer choices for employers wanting to provide health-care providers for their employees, increased restrictions on health-care benefits, and increased pressure on private-sector payers.

Some legislative measures over the past year have restored some of the lost funding.

Kansas hospitals will receive an additional $50 million over the next three years.

?We?ve still got a lot of work and we?ll be working with Congress again to try to restore some of those cuts,? Lucky said, ?so that communities like Hillsboro, Marion and elsewhere will be able to continue to provide the kinds of health-care services needed in their communities.?

Lucky said the BBA is only one aspect affecting the future of health care in Kansas.

He projected increasing government involvement, noting that many of the provisions rejected several years ago as being too bureaucratic in the reform legislation promoted by Hillary Clinton have been quietly implemented anyway.

Lucky also foresees a shift from emphasizing acute care and illness to emphasizing a continuum of care and promoting wellness.

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