Burr legislation would close ‘problematic’ Obamacare wage loophole

U.S. Sen. Richard Burr (R-NC) has introduced the bipartisan Hospital Payment Fairness Act to close an Affordable Care Act (ACA) loophole that allows states to unfairly subsidize high wages at a handful of U.S. hospitals through Medicare reimbursements.

“I’m pleased to work with my colleague from Missouri to repeal this problematic provision of Obamacare,” said Burr referring to S. 2156, which he introduced on Nov. 16 with U.S. Sen. Claire McCaskill (D-MO).
The current policy specifically benefits a handful of states at the expense of others, “pulling millions of dollars away” from states like Burr’s home state of North Carolina, he said.

S. 2156 would repeal this provision and states would be required to take responsibility for their own costs, he said.

“I hope to see this bill garner even more bipartisan support and bring relief to negatively impacted states across the country,” said Burr.

Under Medicare, a state’s urban hospitals must be reimbursed for doctor and staff wages at least as much as rural hospitals in that state are reimbursed. A section of the ACA requires that Medicare reimbursements for hospital wages be drawn from a national fund rather than from each state’s allocation. As a result, any increase for one state means a decrease for other states, according to Burr’s office.
The provision has proven problematic for many states, Burr said.

For instance, Massachusetts’ only rural hospital, Nantucket Cottage, sets the prevailing wage floor for statewide wage reimbursements. The Massachusetts hospital pays higher wages compared to other states’ rural hospitals due to the remote area’s high cost of living. Consequently, that higher wage floor benefits other hospitals around Massachusetts, which Burr said collectively reap hundreds of millions of dollars in higher Medicare reimbursements at the expense of other states.

Under S. 2156, this provision would sunset and going forward, states like Massachusetts would be required to carry the costs of their own rural wage floor increases.

The ACA isn’t perfect, said Sen. McCaskill, and it should be revised to be more fair and affordable.
“This bipartisan bill does exactly that and tips the scales back in favor of fairness for Missouri’s hospitals and the Medicare payments that help make the care they provide possible,” said McCaskill, who along with Burr introduced a similar proposal in 2015 that failed to move in Congress.

This new bill has been referred to the Senate Finance Committee.