Medicare Margins
Medicare payment shortfalls have resulted in a steady reduction in aggregate Medicare margins. New Mexico hospitals' Medicare margins were at a negative 10.9 percent in 2006, and the projected trend continues to move in a downward spiral. Without considering the Medicare payment windfall for specialty hospitals, a payment policy that Congress clearly needs to address, nearly all of New Mexico's Prospective Payment System (PPS) hospitals have negative Medicare operating margins.
- The percent of New Mexico hospitals with positive Medicare Margins has declined from 70% in 1997 to 30% in 2006.
- The total New Mexico Medicare Margin has gone from +9.8% to -10.9%.
- Medicare pays New Mexico hospital 89% of their cost of delivering services to beneficiaries.
- Medicare payment policy aimed at lowering program costs by reducing payments to providers below the cost of providing services is not sustainable in the long run.
- MEDPAC, Congress' own independent advisory committee, reports that hospitals' overall Medicare Margins have steadily declined from 11.8 percent in 1997 to -4.8 percent in 2006 - a loss of almost 17 percentage points over those ten years.
- No business enterprise can remain viable when it repeatedly sustains significant losses; yet, this is exactly the situation that the hospital indusry faces with its Medicare business.
- Consistent negative margins do not allow for reinvestment in replacement technologies, staff, plant and equipment.
- If the trend in Medicare payments continues, hospital margins will drop so precipitously as to place the entire health care delivery system in jeopardy.
These reports reflect the 3rd quarter HCRIS data.
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NM Hospitals' Under-Reimbursement Trends (HURT)
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Congressional District Medicare Margins
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New Mexico Statewide Medicare Margins
