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While this is far from a news flash, it’s never been more true: hospitals and medical practices are facing increasing costs and declining reimbursements. Leaders of both the Tennessee Hospital Association (THA) and the Tennessee chapter of the Medical Group Management Association (TMGMA) believe patient access to healthcare could suffer as a result.

THA President Craig Becker said his organization spent much of 2007 in the halls of Legislative Plaza working to improve the reimbursement side of that equation, and will be doing the same in 2008.

Trauma centers are high on THA’s list. “We actually got 2 cents added onto the cigarette tax that’s going to go toward getting a federal match to fund $15 million for the trauma centers. They are so expensive and they handle so much charity, they definitely needed the funds,” Becker said. The THA was also successful in nabbing $10 million in state dollars for hospitals that handle the highest volumes of charity care, particularly The Med in Memphis and Metro General in Nashville.

“Of course, continued funding for our disproportionate-share hospital payments, we got that one done,” Becker added, and THA will work toward similar goals this year.

“A lot of it was about money in 2007, but the charity-care problem has gotten so huge now in the state, mostly because of the TennCare disenrollment, that this is really just a drop in the bucket, but at least it does help,” he said. In 2005, the state dropped about 200,000 TennCare patients from its rolls, resulting in increased charity care and bad debt absorbed by providers.

According to THA, charity-care costs in Tennessee’s acute-care hospitals totaled $489.6 million in 2005 and rose to $699.7 million in 2006, a spike of 42.9 percent. Coupled with unreimbursed TennCare, the costs rose from $1.17 billion in 2005 to $1.3 billion in 2006.

Physician groups face the same pressures of rising costs and plummeting reimbursements, according to TMGMA president Randy Wilmore, CEO of Mid-Tennessee Bone & Joint Clinic in Columbia. While medical liability reform remains a top priority for TMGMA, Wilmore said reimbursement and other insurance issues are growing concerns. “It’s a spiral that we’re all facing,” he said.

The 2008 Medicare physician fee schedule cuts physician payments on average 10.1 percent, and that should be a concern for Tennesseans, Wilmore said. “What’s going to eventually happen is that there will be groups that won’t totally get out of Medicare, but they’re going to start limiting the number of patients that they see,” he said. The same is true of TennCare already, he added. He explained that his orthopedic group does still see TennCare patients, but must limit the number. “Every time you put a TennCare patient on the schedule, and they’re 80 percent of Medicaid, and you have a commercial payer that is paying 120 to 150, you’re taking a 50 percent discount to see that TennCare patient every time.” He noted that the state’s workers’ compensation payments are tied to Medicare schedules, thus “it’s kind of like a double-whammy, where you’re getting a reduction on your Medicare and then also getting a reduction on workers’ comp and, then, even on some commercial plans that are tied back to Medicare.”

Wilmore said there’s a “trickle down” when Medicare payments shift, because many government and private payers link their reimbursement rates to Medicare’s fee schedule. “We’ve allowed that to happen in a naïve kind of way,” he said, adding, “It’s pretty sad that we consider it a victory if we don’t take a cut in reimbursement. There are a whole lot of dynamics going on right now, and none of them are necessarily positive from the standpoint of the business of medicine.”

When it comes to health insurance reform, TMGMA stands behind state legislation introduced in 2007 to limit the ability of insurance companies to sell their physician networks and those networks’ discounted rates. If this is done without the knowledge of the physicians in the preferred provider organization, it’s known as a “silent PPO.” The practice is becoming more prevalent and, since insurance regulation is a state responsibility, state legislation is required to control the activity. “Not only does it make it complicated from an administration standpoint when you’re trying to figure out who is supposed to be paying you what, it undermines our whole ability to contract,” Wilmore said.

Finally, Wilmore said, “Dealing with legislative issues, physicians and physician practices have not been proactive enough. Physicians are busy individuals who don’t like to get into ‘politics,’ and that’s where TMGMA and those management organizations are stepping in to remind the doctors how important it is their voice be heard.”



January 2008

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