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1 1 (December 1, 2022)

handle is hein.crs/govejok0001 and id is 1 raw text is: Congressional ____ ~ ~Research Service Federal Support for Financially Distressed Hospitals December 1, 2022 Recent reports of hospitals closing or reducing services in urban areas (such as in Atlanta and Cleveland) and ongoing issues of rural hospital closures have raised concerns about access to care. In addition, some hospitals report experiencing financial strain and are reducing services (particularly labor and delivery services). These reports raise questions about federal support for hospitals and potential options to aid financially distressed hospitals. This Insight addresses Medicare hospital payments, other sources of federal support for hospitals (programs that support other types of health facilities are not discussed), and temporary financial assistance available for expenses related to COVID-19. Federal Payment for Health Care Services Provided to Beneficiaries Insurance programs such as Medicare, Medicaid, and private health insurance generally pay for services furnished to beneficiaries and enrollees; they do not provide generalfinancial support to hospitals. For example, Medicare is the largest source of federal government insurance spending for hospital services. Medicare pays most hospitals a predetermined fixed payment rate for each Medicare beneficiary inpatient hospital stay-referred to as the base payment rate under the Medicare inpatient prospective payment system (IPPS). The IPPS base rate was set using hospital operating and capital costs in the early 1980s, updated for inflation. Thus, it is a rate based on the average cost of furnishing inpatient hospital services to a Medicare beneficiary; it is not a hospital's actual cost of furnishing inpatient care. The IPPS base rate is subject to numerous adjustments to account for the relative difference in costs due to patient conditions, geographic labor costs, and certain characteristics of a hospital, such as whether the hospital trains medical residents or treats a disproportionate share of low-income patients. In addition to the aforementioned payment adjustments, some qualifying hospitals may change the baseline costs used to set their IPPS base rate if such change would result in a higher IPPS payment rate. These are referred to as Medicare payment designations (e.g., Sole Community Hospital), which are often targeted to small rural hospitals. However, even these hospitals are still paid under IPPS, not at-cost. Thus, Medicare does not provide general financial support to hospitals. Rather, Medicare is primarily insurance coverage; it pays providers (e.g., hospitals) for services furnished to Medicare beneficiaries. Congressional Research Service https://crsreports.congress.gov IN12057 CRS INSIGHT Prepared for Members and Committees of Congress

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