McCaskill, Coburn Continue Gathering Momentum for Revision to Health Care Law

Press Release

U.S. Senator Claire McCaskill is continuing her bipartisan effort to change a problematic provision in the Affordable Care Act, sending a bipartisan letter to the American Hospital Association to encourage their support and input on a change to the way a hospital's Medicare reimbursement rate is calculated. The current system results in a loss of millions of dollars for Missouri and most other states.

"It's clear that there's increasing support for closing this loophole," said McCaskill, who has introduced legislation along with Senator Tom Coburn (R-Okla.). "I look forward to working with the AHA to get their input as I continue our bipartisan effort to change a regulation that treats the vast majority of states unfairly."

"We appreciate the American Hospital Associations' efforts to attempt to address ongoing problems associated with area wage index," the letter reads.

Last month, the U.S. Senate approved a bipartisan amendment to the Senate Budget Resolution on this issue.

Medicare rules stipulate that a state's urban hospitals must be reimbursed for wages paid to doctors and staff at least as much as rural hospitals. The Affordable Care Act required that Medicare reimbursements for hospital wages come from a national pool of money, instead of from each state's allocation. As a result, any increase for one particular state means a decrease for other states.

This new provision proved problematic since Massachusetts has only one rural hospital-Nantucket Cottage-which sets the floor for wage reimbursements in the state. While rural hospitals typically have lower wages than urban ones, wages at Nantucket Cottage are high because of the hospital's remote location and high cost of living. Therefore, the rural wage floor established on Nantucket has become a boon for hospitals in the rest of Massachusetts. Nantucket Cottage's rural designation has allowed the state's 81 other hospitals to collectively reap hundreds of millions of dollars in Medicare reimbursements at the expense of other states, like Missouri.

Only nine states come out ahead this year under the current system, while the remaining 41 states, including Missouri, are losing out on Medicare funds. Missouri alone stands to lose $15 million this year.

McCaskill's amendment provides a pathway for the elimination of that provision in the Affordable Care Act, meaning states like Massachusetts would be responsible for bearing the burden of their own increased rural wage floor costs, instead of draining reimbursements meant for other states.

As a strong supporter of the Affordable Care Act, McCaskill has consistently supported efforts to improve and strengthen the legislation. In 2011, McCaskill successfully helped pass legislation to repeal a burdensome tax reporting requirement included in the health care law.

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