Burr, McCaskill Aim to Close Health Care Law Loophole with Bipartisan Bill

November 20, 2017

WASHINGTON – U.S. Senators Richard Burr of North Carolina and Claire McCaskill of Missouri are teaming up on the bipartisan Hospital Payment Fairness Act to fix a problematic provision in the Affordable Care Act that causes the majority of states, like Missouri and North Carolina, to unfairly subsidize high wages at a handful of hospitals through Medicare reimbursements.


“I’m pleased to work with my colleague from Missouri to repeal this problematic provision of Obamacare. Today, this policy benefits a handful of states at the expense of others, pulling millions of dollars away from North Carolina’s health care providers,” Burr said. “With this repeal, states would be required to take responsibility for their own costs. I hope to see this bill garner even more bipartisan support and bring relief to negatively impacted states across the country.”


“I’m the first to admit our healthcare law isn’t perfect, and that it’s in need of changes that’ll make it more fair and affordable for Missourians,” McCaskill said. “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.”


Medicare rules stipulate that a state’s urban hospitals must be reimbursed for wages paid to doctors and staff at least as much as rural hospitals in that state are reimbursed. A section of the Affordable Care Act required Medicare reimbursements for hospital wages be drawn from a national pool of money, instead of from each state’s allocation. As a result, any increase for one particular state means a decrease for other states.


This provision has proved problematic for many states since Massachusetts has only one rural hospital—Nantucket Cottage—which sets the floor for wage reimbursements in the state. While rural hospitals typically have lower wages than urban ones, wages at Nantucket Cottage are high because of the hospital's remote location and high cost of living. Therefore, the rural wage floor established on Nantucket has become a boon for hospitals in the rest of Massachusetts. Nantucket Cottage's rural designation has allowed the state's dozens of other hospitals to collectively reap hundreds of millions of dollars in Medicare reimbursements at the expense of other states, like Missouri and North Carolina.


The Hospital Payment Fairness Act will sunset this section of the Affordable Care Act, meaning states like Massachusetts will be responsible for bearing the burden of their own increased rural wage floor costs, instead of tapping the resources of other states. Roughly 40 states lose money under the current system, with Massachusetts receiving the lion’s share of redistributed revenue of the states that have been positively affected.