Hospitals’ Uncompensated Care Is Reimbursed in Overlapping Ways, GAO Says

In fiscal years 2013 and 2014, the federal government paid hospitals nearly $50 billion a year to offset uncompensated care from patients who were either uninsured or did not pay their share of the insurance costs, according to a report made public by the Government Accountability Office Monday.

Payments to hospitals to cover uncompensated care come from a variety of places, including three separate Medicaid accounts, two types of Medicare payments, and a tax benefit for certain facilities. Sometimes those payments overlap, the researchers found, particularly in states with Medicaid expansion.

Uncompensated care in hospitals is a danger to their financial stability, the researchers noted, which is why both Medicare and Medicaid have provisions to compensate those facilities for treating people who can’t pay. But GAO said the “poor alignment” between Medicare and Medicaid may be causing taxpayers to overpay certain hospitals for such care. In particular, the report recommends that Medicare take into account the funds already received under Medicaid when doling out reimbursements for uncompensated care.

The report was requested by House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Senate Finance Committee Chairman Orrin Hatch (R-Utah). “Everyone wants to preserve a strong safety net to help cover the costs for caring for the most vulnerable and uninsured,” Upton said. “But this new report also raises important questions about ways in which [the Centers for Medicare and Medicaid Services] can recalibrate existing payments to achieve needed efficiencies to protect taxpayers.”

“To better serve and protect taxpayers from potential wasteful spending, I am hopeful CMS heeds the advice of Congress’s non-partisan oversight agency and takes the appropriate steps to ensure it is adequately coordinating and aligning payments for our local health care providers,” Hatch said.

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