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In letter to Governor Patrick, hospital group calls Medicaid cuts ‘unsound public policy’

The Massachusetts Hospital Association sent a letter to Governor Patrick last week asking him to stop proposed administrative changes the group says would result in cuts of about $40 million to Medicaid payments for hospitals.

The changes, effective Oct. 1, "represent the continued practice of shifting of government costs onto providers," President Lynn Nicholas wrote to Patrick in a letter dated July 3. "This cost shifting practice is unsound public policy and stands as a direct barrier to the reform effort in Massachusetts."

The letter points to an ongoing struggle between the hospitals and the state over Medicaid payments, which have fallen since 2006, even as the Affordable Care Act promises to bring Massachusetts nearly $2 billion from the federal government over six years, starting in 2014.


Nicholas's writes that the state underpays hospitals by about 29 percent, on average, for care provided to Medicaid patients. That is up from about 17 percent in 2006, said Tim Gens, the association's executive vice president, in an interview.

Nicholas writes that two measures meant to penalize hospitals that do poorly on health care quality measures are based on faulty policies. One would dock payments to hospitals at which patients with certain medical conditions return to the hospital soon after being discharged. In another, the state would not pay the hospital for an outpatient visit if the patient had been hospitalized in the three days prior to that appointment, "even if the medical situation are unrelated," the letter says.

The other changes relate to payments for buildings and other infrastructure and appeals to the process of accounting for Medicaid patients.

"The policies are so flawed as to be, we think, indefensible," Gens said.

Gens said money promised by the federal government under the Affordable Care Act should be used to increase payments to health care providers.


"Massachusetts has been very good in trying to cover people and to give them good benefits, but much of the payment for coverage. . . actually comes from providers who are covering 300,000 more people (since 2006) but who are being paid less, on average," he said.

Alec Loftus, spokesman for the Executive Office of Health and Human Services, said in an e-mail that the budget changes are part of the state's efforts to control health costs and take "steps toward administrative simplification, improved outcomes, and payment innovation."

"We value the Massachusetts Hospital Association's commitment to health care reform as we work together to improve performance and control costs," he said.

Loftus also noted that the Obama administration recently approved the use of $628 million from state and federal government for improvements at those hospitals that serve the highest numbers of poor patients.

Chelsea Conaboy can be reached at cconaboy@boston.com. Follow her on Twitter @cconaboy.