Sidebar: CMS and Rhode Island (re: RFK Day 1)

What's Senator Whitehouse saying about "payment disparities in Rhode Island?"  Surely there are no specific policies designed to be adverse to Rhode Island.

 Senator Sheldon Whitehouse (D-RI) raised concerns about CMS reimbursement disparities that he argues systemically underpay Rhode Island providers compared to their counterparts in neighboring states like Massachusetts and Connecticut. While there are no explicit policies designed to target Rhode Island negatively, he pointed out that CMS payment formulas result in lower reimbursements for Rhode Island hospitals and doctors—by about 23-26% less than those in nearby states.

Why Would This Disparity Exist?

CMS (Centers for Medicare & Medicaid Services) sets Medicare reimbursement rates based on geographic factors, such as:

1. Wage Index Adjustments – Medicare payments for hospitals and providers are adjusted based on regional labor costs. Wealthier states like Massachusetts often have higher wage indices, leading to higher reimbursements.
2. Hospital Cost Reports & GME Funding – Teaching hospitals and research institutions receive additional funding, which benefits states with large academic medical centers (e.g., Boston hospitals).
3. Historic Rate Baselines – Some states have been locked into historically lower reimbursement rates because their healthcare costs were lower when CMS first set its formulas.

Whitehouse’s Complaint

• He accused CMS of failing to correct these disparities, even though Rhode Island hospitals operate in the same regional market as Massachusetts and Connecticut.
• He blamed bureaucratic inertia, stating that CMS refuses to revisit outdated formulas, leading to Rhode Island’s healthcare system "bleeding out."
• He demanded "payment parity" to ensure that Rhode Island is not shortchanged compared to its neighbors.

Is This a Real Problem?

Yes—Rhode Island has long had lower Medicare reimbursement rates than neighboring states, which:

• Makes it harder for hospitals to retain staff and specialists.
• Pushes providers toward financial instability, increasing hospital mergers and closures.
• Leads to disparities in patient care, as providers may limit Medicare/Medicaid patients due to lower payments.

What’s Kennedy’s Position?

Kennedy agreed with Whitehouse, calling CMS a “tyrannical, insensate bureaucracy” and pledging to work on correcting the disparities. However, Whitehouse was skeptical, stating that nominees often say they’ll work with Congress but fail to deliver once in office.

Bottom Line

Whitehouse isn’t claiming CMS deliberately targets Rhode Island, but rather that rigid, outdated payment formulas continue to disadvantage the state, and CMS has been unwilling to correct it. He wants policy adjustments to ensure Rhode Island gets equal treatment in Medicare reimbursements.