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Reposted. This was first published as a Morning Feature at Daily Kos, a progressive, political blog on Wed., March 31, 2010. I am reposting because this diary contains information about IRS reporting requirements for non-profit hospitals of value to our coalition members. As many of you know, I am a died-in-the-wool leftie. My political opinions are my own and are not shared by the RACHC which is both non-partisan and unopinionated. All council members are welcome to post diaries on the RACHC blog, which exists to encourage public dialogue about health care.)

Rachel Maddow, Keith Olbermann and other luminaries are skewering Senator Charles Grassley (R-IA) for crowing about his insertion of a new IRS rule into the Health Care Reform Bill after first voting against HCR. Because he has publicly mocked and blocked HCR (along with other Republicans), and because the importance of his new rule is only appreciated by hospital financing aficianados, his announcement had the loft in left blogistan of a lead comforter. BPI-MF-Logo

I love Rachel Maddow. I wake up every weekday at 4:30 am to her podcasts. And I am no fan of Chuck Grassley. But I am ecstatic about the Grassley rule. You will be too, once you understand it. If McConnell’s minions were Little Red Riding Hood, the Grassley insertion would be the Big, Bad Wolf dressed like Granny without a death panel in site. (Where are those blasted panels when you need em?)

Grassley has quietly provided communities across the US with a powerful tool to build support for ongoing reform.

The backstory (and the back-backstory) after the jump!

“Medicaid (and Medicare) Fraud”

At Obama’s Bi-partisan Health Summit on February 25, Tom Coburn (R-OK) suggested that eliminating fraud in government-run health programs (Medicare and Medicaid) would obviate the need for more comprehensive reform:

And when you look at, when it’s studied, if you look at what Malcolm Sparrow from Harvard says, he says 20 percent of the cost of federal government health care is fraud. That’s his number [snip]…Well, when you look at the total amount of health care that’s government run, you know, you’re talking $150 billion a year.

“Government-run health care fraud” is a catch-all phrase used by politicos of various persuasions to refer to a variety of otherwise unrelated financing issues.

Because Americans are typically segregated by income, individuals without means to pay for health care are heavily concentrated in certain communities while those with insurance reside elsewhere. People of color are more likely to be uninsured and to reside in these zipcodes as well. Lacking insured clientele, health care providers in low-income communities use Medicaid to subsidize astronomical rates of unreimbursed care and to stay afloat. In other words, Medicaid payments are used to cover the costs of undocumented workers, low-income adults between the ages of 19 and 54 (who qualify for neither Medicaid, which covers children, nor Medicare, which covers the elderly), and individuals such as those with mental illness who find it difficult to apply for help.

Prior to the Bush administration, the Feds averted their gaze from this practice because most competent career health officials realize removal of Medicaid subsidies would cause the collapse of our public health infrastructure. Bushies replaced career civil servants with political appointees, labeled the subsidies “Medicaid Fraud,” and attempted vigorously to eliminate them. Subsidies to for-profit insurance and hospitals were left untouched.

In contrast, when reformers use the phrases “Medicaid” or “Medicare Fraud,” they are often referring to some of the dubious and extremely opaque financing illusions used by both non-profit and for-profit hospital chains to make our public indigent dollars turn into rabbits. In most communities, the hospital is the 800 lb. gorilla in the health care arena. Hospitals suck up a lot of money, and, in many communities, refuse to collaborate with community-based health care providers, while displatying little concern for the indigent care safety net. Hospitals use a wide variety of tricks to move money into private hands including outrageously priced goods and services (such as the $50 aspirin), hospital buying groups, and aggregated IRS reporting for chains which makes it impossible to examine the finances of individual community hospitals within the chain.

Charles Grassley has been concerned with the opacity of hospital financing and its impact on America’s health care delivery system for over a decade. In the Clinton years, he and Orrin Hatch presented an alternative proposal very similar to the “Obamacare” they are now maligning. Grassley has lead investigations into various conflicts of hospital interest such as the buying groups mentioned above.

A third group, the ultra-right-wing spin-meisters (such as the newsies at Fox) note that many people on Medicaid have dark skin, that undocumented residents show up in the same clinics as other uninsured dark people, and make up stories about Medicaid Welfare Queens driving Cadillacs.

Bush’s War on “Medicaid Fraud”

In the waning years of his Presidency, after he had emptied HHS of much of its qualified staff and intimidated the rest, Bush 43 moved aggressively to address Medicaid Fraud Part A (using Medicaid to subsidize the cost of high rates of uninsured) to bypass Congress and impose through arcane regulation what seventeen governors called, “simply awful public policy.” In short, he decided to eliminate a variety of permissible activities including:

  • Medicaid funds for hospitals matched by state or local government to subsidize non-Medicaid indigent care;
  • Medicaid funds used to subsidize graduate medical education and teaching hospitals;
  • Medicaid funds used by schools to enroll needy children in Medicaid;
  • Medicaid funds used to case manage medically fragile patients;
  • Medicaid support for school-based clinics.

Had these rules been implemented, New Mexico, which is geographically the fourth largest state in the union and which has the second highest rate of uninsured (right behind Texas) would have lost most of its emergency rooms and its next generation of physicians. Like other low-income regions, its health care system would have been Katrina-ized.

My Excellent Medicaid Rules Adventure

In December of 2007, a small group of New Mexico county health administrators became alarmed by the potential impacts of Bush’s proposed rules changes and asked Senator Jeff Bingaman (D-NM) to step in. After several months of trying, one of his staffers informed me that they just couldn’t muster the votes they needed to block the rules. “The issue is too arcane,” said the staffer. “Nobody understands it. We can’t get any press at all.”

Six of us decided to travel to Washington to do something about it. My five colleagues went to the annual conference of the National Association of Counties to get our colleagues from across the US to lobby their delegations. I embarked on a different kind of mission.

My friends at ePluribus Media formed a research posse, locating an intelligent, award winning-editor at McClatchy they thought might cover the story. They forwarded me information about his various awards and articles and I embarked on a weekly calling campaign to him on the topic of Medicaid Rules. Friends here at Daily Kos like DemFromCT and Jill Richardson (Orangeclouds115) helped me to draw blogging eyes to the story. I sent links to the rec-listed diary to MSM here in NM and to the editor at McClatchy. In DC., while my friends were at the NACo conference, armed only with a camcorder, a laptop, several pens, and a young man to act as my cameraman, I trotted off to Fox News to get videotaped trying to force my way in. While that didn’t pan out, a videographer I met at MyDD named Marty Sonnenburg shot a YouTube video for me, using some of his original footage of Charity Hospital in post-Katrina New Orleans. County health administrators across the country who had never blogged, helped to increase traffic to diaries on the story. McClatchy picked it up in papers throughout the US, as did the NYT and ABC News.

A few weeks after our return, Senator Bingaman gathered enough votes to attach a moratorium on the Bush Rules to the Iraq Spending bill. While I was in DC, a democratic staffer asked me to promote the story to blogs and papers in Iowa. This individual told me it would help to pressure Grassley, who was chair of Senate Appropriations, quietly. Dems in the Senate not want the blogs to call out Grassley by name, or to otherwise alienate him because, I was told, he was the only Senior Republican Senator willing to work with Democrats, and frequently incorporated Democratic ideas into his bills. Grassley was seen as a key to the success of attempts to reform health care.

Grassley, Obama and the IRS

I first met Keith Hearle, president of Verite Consulting, and the author of Grassley’s IRS rules last year at a conference of community organizers and health coalition coordinators. Keith presented his ideas (which had not yet become law) to an ecstatic albeit geeky audience.

In the first weeks of the new administration, Obama posted a set of health care principles on the newly minted website, Whitehouse.gov. Among them, was hospital financing and reporting reform. Like Grassley, Obama realized the health care system could not be fixed unless hospital finances were made transparent. He immediately inserted into the 990H, the form non-profit hospitals use to report to the IRS, a question requiring, for the continuation of non-profit status, a description of the means in which the hospital involved the public in its needs assessment determining “community benefit” (i.e., those moneys non-profit hospitals are required to invest in other community services). Although the new rule had no teeth, Obama was signaling to hospitals the importance of working with community coalitions to develop a health care safety net outside of its own walls.

Grassley took this one step farther and gave the rule teeth. He inserted new IRS reporting rules into HCR for non-profit hospitals that require them to work with community health coalitions to develop needs assessments defining and prioritizing “community benefit” based on actual data. This means that it is now in the best interest of non-profit hospitals to strengthen, contribute to and cooperate with community based health care advocacy groups. They will have to define “charity care” through policy (with the help of broad-based coalitions), and will no longer be able to simply write off bad debt (unpaid and often inflated bills) as charity care or community benefit. Public money that is taken by non-profit hospitals to subsidize the uninsured, and to support the community safety net will actually have to be used for that purpose.

Why the New IRS Rules Strengthen Continuing Reform Efforts

Most Americans have never experienced national health care. They have no point of reference and are thus vulnerable to misinformation campaigns. Our best strategy to create Single Payer, or a strong public/private hybrid that meets our needs, is to allow individual communities to develop their own health care safety nets. We need hospitals, primary care providers, behavioral health specialists and other human service organizations to come together. The game is already lost if the local hospital is not at the table.

Coalitions that are able to successfully coordinate community care become powerful advocates. They are trusted in their communities and sway votes. Fifty to 100 successful community coalitions scattered across the US could change public opinion about health care.

Fortunately, this eventuality is also provided for in the HCR bill. In response to Communities Joined in Action, a coalition of community-based coalitions scattered across the US working to build rational health care infrastructure, Senator Patty Murray (D-WA) and a team of bipartisan Senate and House co-sponsors, inserted a funding stream for coalition-run community care coordination into the HCR bill. In other words, they funded health-related, results-based community organizing.

This bill may not fix everything in our broken health care system. But it creates organizations of people who can mobilize for continuing reform. As for Senator Grassley, he is caught between a rock and a hard place. Teabaggers have threatened to primary him for his cooperation with Democrats and his sensible health care positions. On the other hand, if he swings too far to the right, he cannot win a general election in Iowa. Hence, his simultaneous support of and opposition to HCR; and his clandestine efforts to insert language into the bill he is publicly not supporting.

Like HCR, he may be history.

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