How Albany Became Part of Hartford, and Toledo, Ohio, Became Part of Michigan - the US Congress Makes Hospital-Specific Earmarks

We have posted before, (e.g., here) about various peculiarities in the way the US Medicare program (essentially, a single-payer health government health insurance program for the elderly and the disabled) pays for services, particularly physicians' services. Robert Pear, in the New York Times, just disclosed some more peculiarities in the way Medicare reimburses hospitals. In this case, a bill passed by the US House of Representatives mainly to fund health care insurance for children also included multiple specific provisions that would benefit specific hospitals. (Caution, this section is easier to understand if you are thoroughly familiar with US geography.)

Despite promises by Congress to end the secrecy of earmarks and other pet projects, the House of Representatives has quietly funneled hundreds of millions of dollars to specific hospitals and health care providers under a bill passed this month to help low-income children.

Instead of naming the hospitals, the bill describes them in cryptic terms, so that identifying a beneficiary is like solving a riddle.

One hospital, Bay Area Medical Center, sits on Green Bay, straddling the border between Wisconsin and the Upper Peninsula of Michigan, more than 200 miles north of Chicago. The bill would increase Medicare payments to the hospital by instructing federal officials to assume that it was in Chicago, where Medicare rates are set to cover substantially higher wages for hospital workers.

Lawmakers did not identify the hospital by name. For the purpose of Medicare, the bill said, 'any hospital that is co-located in Marinette, Wis., and Menominee, Mich., is deemed to be located in Chicago.' Bay Area Medical Center is the only hospital fitting that description.

The bill, for example, would give special treatment to two hospitals in Kingston, N.Y., stipulating that Medicare should pay them as if they were in New York City, 80 miles away.

The two hospitals in Kingston, N.Y., that are beneficiaries of the bill, Benedictine Hospital and the nearby Kingston Hospital, recently announced an agreement that would bring them together under a single parent corporation.

Neither hospital is named in the bill, but they are the only ones that could qualify. The bill guarantees higher Medicare payments for New York hospitals with a 'single unified governance structure,' located less than three-fourths of a mile apart in a city with a population of 20,000 to 30,000.

Kingston has a population of 22,828, according to Census Bureau data issued this week.

Under the bill, hospitals in three counties of upstate New York — Albany, Schenectady and Rensselaer — are deemed to be in 'the large urban area of Hartford, Conn.'

Under another provision, an unnamed hospital in Burlington County, N.J., would be reassigned to the New York City metropolitan area, where wages are significantly higher. This provision was written for the benefit of Deborah Heart and Lung Center, in Pemberton Township, N.J., more than 60 miles from the bustle of New York City.

Representative Marcy Kaptur, Democrat of Ohio, won extra money for St. Vincent Mercy Medical Center in Toledo. Under the House bill, the hospital would be 'treated as located in the same urban area as Ann Arbor, Mich.,' more than 40 miles away.

Lawmakers did not identify St. Vincent by name, but referred to a hospital with Medicare provider number 360112. That is the identification number for St. Vincent.

Of course, politicians made their excuses.

Nadeam Elshami, a spokesman for Speaker Nancy Pelosi, Democrat of California, said people should keep the big picture in mind.

'It’s easy to criticize individual provisions of large, complex bills,' Mr. Elshami said, but 'the focus should be on the huge number of uninsured children who will be eligible for life-saving health care under our bill.'

Representative Pete Stark, the California Democrat who is chairman of the subcommittee, acknowledged that 'it’s hard to decipher' the cryptic language used in the bill to identify specific hospitals. 'It’s always been thus,” Mr. Stark said in an interview. “I am at a loss to explain why.'

Granting relief to particular hospitals is sometimes a way for Congress to improve 'the equity and fairness' of Medicare payments, Mr. Stark said. Under Medicare, he added, 'you are basically setting prices, and the system is clumsy.'

Clumsy is an understatement. In my humble opinion, this is an illustration first of how removed Medicare reimbursement is from any sense of rationality. Having individual hospitals enjoy increased reimbursement simply because their local congresspeople were able to horse-trade for special favors just lessens trust that any part of the federal process to set reimbursement is fair.

Although, as noted before, we often write here on Health Care Renewal about mismanagement, conflicts of interest, and outright corruption in for-profit health care corporations, the integrity of government paid and government run health care does not seem any better.

Those who think that we can fix the US health care problems by handing more control over to the government need to think twice about how well that really might work.

ADDENDUM (13 August, 2007) - Also see this post on the Health Care Blog.