"Too often, Medicare offers a one-size-fits-all approach," Grassley said. "A lot of its formulas don't take geographic differences into account. This is a shame, when you consider that the health care climate in Iowa isn't anything like the health care climate in New York. Of course, we have the same quality, but we don't have the same costs. That's where Medicare is failing Iowa. We're a low-cost state that Medicare punishes for being low-cost."
Grassley announced the Geographic Adjustment Fairness Act of 2000 on a conference call with Steve Brenton, president of the Iowa Hospital Association, and Stephen Goeser, administrator of Myrtue Memorial Hospital in Harlan.
Grassley and the hospital officials said Medicare's formula for paying hospitals for wages penalizes Iowa. The wage formula presumes that labor costs are a greater percentage of Iowa's hospital costs than they actually are. This presumption drives down Medicare payment rates. The problem plagues low-cost parts of the country, and Iowa is at the top of the list, Grassley said.
Grassley said the solution is basing the wage payment calculation on each hospital's actual labor costs instead of using a general, arbitrary number. He said his legislation, which he will introduce today, will require the formula change to reflect true need.
The Geographic Adjustment Fairness Act of 2000 would mean more money for Iowa hospitals right away, upon enactment, Grassley said.
Right now, St. Luke's Hospital in Cedar Rapids receives $7,658.93 from Medicare for replacing someone's hip, Grassley said. Under his legislation, St. Luke's would receive $7,938.57 ? a difference of $280. In Des Moines, IMMC/ILH/Blank and Mercy Medical Center receive $8,736.26 each time they fit a patient with a pacemaker. Under the Grassley bill, the hospitals would receive $9,110.41 ? $374 more.
"Just about every procedure, at just about every community hospital, would receive a higher payment," Grassley said. "The money might not seem like much, but it adds up. It means the difference for many hospitals between staying open and shutting their doors. This bill is a chance to make Medicare payments more fair and accurate and help Iowans keep their access to quality health care."