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Mass. tries to retain $250 million for hospitals

WASHINGTON — The Massachusetts congressional delegation, after holding a rare emergency meeting Wednesday, launched what could be a final effort to preserve more than $250 million in bonus Medicare payments to the state’s hospitals that critics call the “Bay State boondoggle.”

But the prospect of holding on to the windfall is dimming. The Democrat-controlled Senate voted earlier this year to end the payments, enacted under President Obama’s health care overhaul law and which come at the expense of most other states. A similar bill was introduced in the Republican-led House this week.

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“We’re all on high alert,” Representative Richard Neal, a Democrat from Springfield, said in an interview following the hourlong meeting during which he briefed the delegation about the impact of the House bill.

Neal said Massachusetts members would argue that the state’s hospitals are a national treasure and urge Congress “not to do anything in haste, because you jeopardize one of the crown jewels of the American medical system.”

Massachusetts hospital representatives said the bill would affect every hospital in the state and, if passed, could result in layoffs and harm patient care if hospitals can no longer afford to invest in state-of-the-art facilities and technology.

But many members of Congress from other states believe that Massachusetts is getting unfair treatment. The additional payments are being made under an obscure provision that sets rates based on payments at a state’s rural hospitals.

Massachusetts wins under a Medicare rule that says a state’s urban hospitals must be reimbursed for wages paid to doctors and staff at least as much as rural hospitals. As the only federally designated rural hospital in the state, Nantucket Cottage Hospital sets the floor for wage reimbursement for the state’s 81 other hospitals. Wages on the tony island are high because of its remote location and high cost of living.

Massachusetts’ annual bonus has resulted in a financial loss for 40 other states as a result of an amendment to the 2009 health care overhaul law requiring that Medicare reimbursements for hospital wages come from a national pool of money instead of from each state’s allocation.

“I just think the Bay State boondoggle is the worst kind of policymaking — it’s done behind closed doors and favors one specific group over the nation’s interests,” said Representative Kevin Brady, a Texas Republican who heads the Ways and Means Committee’s health subcommittee and who sponsored the bill, along with 12 other Republicans. “It is my hope that Congress will act this year to repeal this misguided policy. It’s time to stop rewarding one state at the expense of all the others.”

The fight to preserve the Medicare payments is also a test of how much influence the Bay State’s once-powerful delegation still wields. Four members have left in the past year alone, including former senator John Kerry and former representative Barney Frank.

“It’s going to be a real fight,” said Representative Edward Markey, a Malden Democrat who is running for Kerry’s Senate seat. “We will fight this bill as one delegation, and we will find other allies.”

The Medicare provision initially was pushed by Kerry and Senator Robert Menendez, a New Jersey Democrat. Eight other states, including Connecticut, New Hampshire, and Rhode Island, benefited from the amendment, but none nearly as much as Massachusetts. Bay State lawmakers defended the Kerry-Menendez measure as a fix to previous Medicare payment rule changes that had hurt the reimbursements to the state’s hospitals.

Now, with Kerry serving as secretary of state, some hospital executives worry that Massachusetts will end up waging a lonely battle, with a delegation that lacks the clout to defeat Senate and House bills that would benefit the majority of states at no additional cost to taxpayers.

The Senate in March passed a budget amendment to kill the provision. The vote — 68 to 31 — represents a significant symbolic step toward repealing the provision, but does not carry the force of law since the budget is a nonbinding measure, said an aide to Senator Thomas Coburn, a Republican from Oklahoma who cosponsored the amendment and a similar bill in January with Senator Claire McCaskill, a Missouri Democrat.

With the House bill on the horizon, a McCaskill spokesman said she will be working to reintroduce the Senate bill either as stand-alone legislation or as an amendment to another bill as soon as possible.

In the Senate vote in March, 22 Democrats joined 45 Republicans and independent Angus of King of Maine to kill the provision. Senators Elizabeth Warren and William “Mo” Cowan of Massachusetts were among the 30 Democrats who voted against the amendment along with Vermont independent Bernie Sanders.

The Massachusetts Hospital Association called the House bill introduced Monday “ill-advised” because it would lead to “significant financial repercussions for many hospitals” across the country. The association said it supported a “comprehensive review” instead of “narrowly directed tweaks to individual adjustments,” said Tim Gens, executive vice president of the association.

Cowan said the bill unfairly targeted Massachusetts and would have “a devastating impact on our local communities that are served every day by some of the finest hospitals in the nation.”

Warren spokeswoman Lacey Rose said the senator “strongly opposes this punitive proposal, which threatens the quality of medical care in several states while doing nothing to reduce the deficit.”

No Democrat has yet agreed to cosponsor the House bill, given the political sensitivity around Obama’s health law, which Republicans have promised to make an issue in the 2014 midterm elections. But Republicans control the House by a 233 to 201 margin, and the party expects to gain some Democratic support for the measure given how much money is at stake for their states.

The biggest losers under the current system are Texas, New York, Michigan, Florida, and Illinois, which lose tens of millions of dollars each year, according to 2013 federal data.

Significantly, the federal Centers for Medicare and Medicaid Services has recommended changes to the system that could eliminate the provision that benefits Massachusetts.

Dr. Donald Berwick, Obama’s former CMS administrator, said earlier this year that the payment system is so complex that it’s highly “susceptible to gaming and manipulation.”

“It’s a zero-sum game,” Berwick said. “What Massachusetts gets comes from everybody else.”

During the March budget debate in the Senate, Menendez, along with Warren and Cowan, had introduced an amendment calling for a comprehensive approach for wage index overhaul, but it was narrowly defeated.

Given that a comprehensive overhaul is unlikely to pass, Massachusetts congressmen said they are prepared to lobby their colleagues to preserve the status quo, citing the extraordinary care Massachusetts hospitals displayed following the Boston Marathon bombings.

“Sometimes it’s the tug of regionalism, rather than the tug of substance” that sways members, Neal said. “I happen to think that on this issue, we are right on both region and substance.”

Tracy Jan can be reached at tjan@globe.com. Follow her on Twitter @GlobeTracyJan.
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