A jackpot for Mass. and N.J. in health law

Posted: August 05, 2011

WASHINGTON - An obscure provision tucked into the federal health-care law has turned into a jackpot for Massachusetts hospitals - and a plus for those in New Jersey - while upsetting officials in other states because the money will come from their hospitals.

The windfall for Massachusetts - $275 million a year - could add up quickly, about $1.4 billion over five years.

"If I could think of a better word than outrageous, I would come up with it," said Steve Brenton, president of the Wisconsin Hospital Association.

Pennsylvania hospitals will lose $17.3 million a year - a hefty amount, though New York will be out three times as much.

Hospitals in seven states will come out ahead, for various reasons. New Jersey's $54.2 million annual gain is the second-biggest, after Massachusetts'.

The news was buried in a Medicare regulation issued Monday and comes at a time when hospitals face more cuts under the newly signed federal debt deal.

Even Medicare says it is concerned about "manipulation" of its inpatient payment rules to create big rewards for one state at the expense of others.

President Obama's health-care overhaul was supposed to lead to reforms in Medicare's byzantine payment system. Critics say this latest twist will encourage the big players to game the system in a scramble for increasingly scarce taxpayer dollars.

The saga of how Massachusetts scored big goes back a few years and twists and turns through Medicare's mind-boggling payment rules that allow for various adjustments. The reclassification of a hospital on the resort island of Nantucket ended up raising reimbursements elsewhere in the state.

Inquirer staff writer Stacey Burling contributed to this article.

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