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Group: AHCCCS hospital payment cuts hurt patients, firms

PHOENIX – Further cuts in payments that the state’s Medicaid system makes to hospitals would mean higher health insurance costs for companies and individuals in Arizona, business leaders told state lawmakers Tuesday.

“Privately insured individuals are picking up the tab of the cuts that the government is inflicting on hospitals,” said Elizabeth Basket, director of government affairs and policy for the Arizona Hospital and Healthcare Association.

The leaders appeared before a joint session of the House Commerce and Health and Human Services committees to discuss the findings of a study conducted for the Arizona Chamber Foundation. They urged lawmakers to use money from the federal stimulus to bolster the Arizona Health Care Cost Containment System.

The study found that privately insured families and employers paid 40 percent above hospital costs, or $1.3 billion, in 2007 to cover the gap between the cost of care and payments from Medicare and AHCCCS and also to cover unreimbursed treatment expenses.

Of that, $407 million came from AHCCCS underpayments, according to the study conducted by the Lewis Group of Virginia.

The study said the gap, which it calls a “hidden health care tax,” added $1,017 to a typical annual family health insurance policy costing $11,617. Of that, $324 was attributable to AHCCCS underpayments, the study said.

For individual coverage, that gap added $396 to a typical annual policy costing $4,519, the study said. Of that, $126 came from AHCCCS underpayments, it said.

The business leaders said additional cuts in hospital payments being considered for the coming fiscal year would raise the impact of AHCCCS underpayments from $407 million to $663 million, with businesses and insured individuals picking up that cost.

“Hospitals are not designed to make money off of the AHCCCS system or to make money off the Medicare system,” Basket said. “We are asking to be paid our cost so that we don’t have to shift the rest of the burden over to business.”

Arizonans Against the Hidden Healthcare Tax, a group of health care and business organizations, is asking lawmakers to use $53.3 million from Arizona’s share of the federal stimulus on AHCCCS.

“These cuts don’t just hurt your health care safety nets, your hospitals – they hurt businesses,” Basket said.

Judy Bernas, associate vice president for external relations at the University of Arizona, spoke on behalf of Phoenix Children’s Hospital, saying the underpayments make it difficult for hospitals to stay afloat and also make it more difficult for businesses to offer health plans.

“And if they don’t offer insurance, then they have more people going on the Medicaid program, so it’s a vicious cycle,” she said.

Rainey Holloway, a spokeswoman for AHCCCS, said she couldn’t comment on the study because officials there hadn’t seen it. She said it’s up to lawmakers and the governor to determine how to use stimulus money.

Rep. Nancy Barto, R-Phoenix, said she hoped the presentation would help the Legislature to make informed decisions when allocating stimulus funds.

“It’s important that we consider leveraging federal monies to the fullest extent,” she said. “Otherwise that money’s going to go to other states and we’ll be the loser.”

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