Medicaid
reimbursement rates are well below the actual cost of care. Mental
health and substance abuse services were reimbursed by Medicaid at an
average rate of just 63% last year. Reimbursement rates for emergency
room care, primary care, and other critical care services also fell
grossly below the cost incurred by hospitals. There were collectively
$11.6 billion dollars in Medicaid underpayments in 2006 nationwide.

Safety
net hospitals like the Cambridge Health Alliance (CHA) and Boston
Medical Center (BMC), which serve a disproportionate share of uninsured
and low income patients, rely heavily on Medicaid funding. Prior to the
implementation of the state's public insurance program, known as
Commonwealth Care, these safety net hospitals were able to tap into
additional Medicaid dollars in recognition of deep losses sustained by
caring for a large number of Medicaid and uninsured patients.

Rather
than adjust reimbursement rates for all providers, it was more cost
effective to supplement those providers serving high proportions of
free care and under reimbursed care. Following the implementation of
Commonwealth Care, however, this supplemental money was no longer
directed solely to hospitals to offset the costs of uncompensated care.
Massachusetts is the only state that has secured a waiver of Medicaid
requirements so that this additional federal funding can also be used
to subsidize coverage expansions for Commonwealth Care. While this
funding is essential to ensuring that health care in Massachusetts
continues to be a model for other states and the federal government,
the pool of money available to safety net hospitals is diminished.

More
states will surely follow the Commonwealth's lead in expanding access
to health care to their residents. s they do, the mechanisms available
to finance these reform efforts must be carefully examined to ensure
that critical funding is not drawn down from disproportionate share
hospitals. If the Obama Administration and new Congress are serious
about making health care reform a priority, they must make available
other sources of federal dollars to support public insurance programs.

Governor
Patrick and the administration have been faced with the difficult task
of supporting the new reform model while at the same time sustaining
the large safety net hospitals that are just as vulnerable as they were
prior to the reform. Despite these challenges, the Governor and the
administration, especially Health & Human Services Secretary Judy
Ann Bigby, have remained committed to disproportionate share hospitals.
The federal stimulus law includes funding for an enhanced Medicaid
matching rate that increases the percentage contribution from the
federal government toward Medicaid from 50% to 58.8% in Massachusetts,
adding about $2 billion dollars and acting as a tourniquet to quell the
financial bleeding that threatens safety net hospitals with cardiac
arrest.

Unfortunately, stimulus money will be used to prevent
more layoffs rather than address the previously laid off health care
workers. CHA, for example, has already undertaken a painful
restructuring of its hospital network to do its part. The long-term
survival of our safety net hospitals, however, depends on a Medicaid
reimbursement rate structure that addresses the disparity in providing
critical care to the most vulnerable patients.

Downward
financial pressures can serve as the catalyst for unprecedented change
in government. The inequity of low reimbursement rates existed before
the recession began, but it can be remedied by the time recovery
arrives.