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Medicare & Medicaid underpayments far outpace charity care at hospitals

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(Harrisburg) — A hospital, like every other business, might take a couple hits to its bottom line every year.

Often, it’s assumed the biggest write-down is for charity care.

But the numbers tell a different story. 

WITF found Medicare and Medicaid underpayments far outpace free care or uncollected payments for many of the midstate’s largest health systems.

The Hospital and Healthsystem Association of Pennsylvania says Medicare pays an average 91 percent of the true cost of providing care, while Medicaid covers about 82 percent.

“And so, that underpayment can really make it more difficult to serve a community’s broader health care needs,” says Paula Bussard, chief strategy officer for the industry group.

Hospitals with high numbers of Medicaid or Medicare patients have trouble investing in facilities, or attracting top notch doctors.

Lower reimbursements can impact nearly every patient, says Lancaster General Health’s Chief Financial Officer Dennis Roemer.

“We do have to charge a little bit more to commercial managed care patients. We’re not unique in that regard,” says Roemer.

In the most recent fiscal year available, Medicare and Medicaid payments fell short by more than $144 million at Lancaster General Hospital.

Roemer says the federal Affordable Care Act and the state’s Healthy Pennsylvania plan have helped get more insured people through the hospital’s doors, but he’s not sure that will help LGH’s bottom line.

He says Lancaster General Health is doing all it can to reduce costs, but is only willing to go so far before the loss is too great.

But Bussard adds that budget pressures at the state and federal level don’t help matters.

“That’s just really challenging, because they aren’t necessarily developed out of a cost accounting kind of basis, they really are just more of a flat across the board reduction,” she says.

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