Hospital Leaders Meet at White House; Pledge Future Medicare, Medicaid Savings

Janice Simmons, for HealthLeaders Media , July 7, 2009

Vice President Joe Biden—standing in for President Obama, who is travelling overseas—met with hospital leaders on Wednesday at the White House to announce the agreement that hospitals will give up about $155 billion in Medicare and Medicaid spending over the next decade. That money could then be used to help for the nation's 47 million uninsured.

"As more people are insured, hospitals will bear less of the financial burden of caring for the uninsured and the underinsured, and we'll reduce payments to cover those costs, in tandem with that reduction," Biden said.

Joining Biden were Rich Umbdenstock, president and CEO of the American Hospital Association; Richard Bracken, president and CEO, Hospital Corporation of America (and representing the Federation of American Hospitals); Wayne Smith, president and CEO, Community Health Systems; and Sister Carol Keehan, president and CEO, Catholic Health Association of the United States. Health and Human Services Secretary Kathleen Sebelius also attended.

The agreement is the latest in behind-the-scenes health reform negotiating instituted by Senate Finance Committee Chairman Max Baucus (D-MT) in an attempt to reduce the cost of retooling the nation's healthcare system and to pull in many of those organizations that had historically opposed such reforms. Baucus was not able to attend the meeting.

Of that $155 billion of projected savings, an estimated $40 billion to $50 billion would come from decreasing federal payments hospitals receive for providing care to uninsured and low income patients. The Medicaid cuts would be apportioned state by state, using a 10% annual reductions starting in 2015.

Roughly $100 billion more would come from reductions in planned annual Medicare payments to hospitals. In addition, hospitals are reaffirming to support initiatives such as value-based purchasing, testing ways to better integrate care, and reducing unnecessary hospital readmissions.

Hospitals, though, are looking to get something from the deal. In particular, they are eying current measures that include a public insurance option: Hospital groups want a plan that they say would reimburse them above the rates Medicare and Medicaid would pay if the option is approved by Congress.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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