We need to look at health care impact on hospitals over the past two years and not just focus on the American Taxpayer Relief Act of 2012 recently passed by the Senate and House.

Hospitals in North Texas and across the nation realized the need to reform health care delivery. They supported the 2010 Patient Protection and Affordable Care Act (ACA) by agreeing to a $155 billion reduction in hospital reimbursement over 10 years in good faith and to stem rising health care costs. Hospitals anticipated Medicaid would be expanded in Texas (which is in jeopardy) because our state leads the nation with 27 percent of the population uninsured. This creates severe financial problems for our hospitals.

On the state level, hospitals have had Medicaid reductions of 10 percent over the past two years, receiving 45- 50 percent of the cost of those services. Two years ago the state reduced the Medicaid standard dollar amount, decreasing North Texas hospital reimbursement. Hospitals are working with the Medicaid 1115 waiver. This includes funds from a delivery system reform incentive payment (DSRIP) pool. This puts added risk of reimbursement on providers for DSRIP projects due to upfront cash funding and risk associated with matching funding. Texas has said Medicaid will not be expanded, creating more uninsured patients and numerous coverage issues for our most vulnerable citizens. More than 1.2 million Texas children have no health benefits and many mothers do not receive appropriate pre-natal care.

Action taken last week in Washington, D.C. included a provision to keep Medicare physicians from experiencing a 27 percent decrease in payments. Hospitals fully support this as physicians deserve appropriate reimbursement. However, funding for this $25 billion action was taken away from existing providers like hospitals. Documentation and coding adjustment will cost hospitals $10.5 billion from 2013-2022 and $4.2 billion from the rebasing of state Medicaid disproportionate share adjustments in 2022. Other actions include rebasing end-stage renal disease payments and radiology services. Essentially, hospitals are funding this action and will receive decreased reimbursement.

The sequester is turned off for two months, which means hospitals still face additional reductions. If sequestration takes place, then mandatory reductions include Medicare cuts limited to two percent of the program’s budget, estimated by the Congressional Budget Office (CBO) to be $10.8 billion in 2013 and increasing to $16.4 billion in 2021. This could mean potential losses of 49,695 health care jobs in Texas and 766,000 jobs nationwide by 2021.

On average, Medicare and Medicaid reimbursement represents 60 percent of the revenue of each hospital. The health care workforce represents 50-60 percent of the normal operating expenses. Reimbursement reductions over the past two years combined with future reductions strain all hospitals. Hospitals need healthy margins to continue effective day-to-day operations while also providing capital to invest in the latest technology so they can deliver the best treatment.

Our hospitals are economic engines providing more than 240,000 jobs to workers throughout North Texas with a major impact on economic growth. We do not want to jeopardize the economic stability of our hospitals by reducing reimbursement to providers of crucial services.