Health law windfall for Massachusetts hospitals

By RICARDO ALONSO-ZALDIVAR | August 4, 2011 | 3:15 AM EDT

WASHINGTON (AP) — Industry officials say Massachusetts hospitals will reap an annual windfall of $275 million due to a loophole in the new health care law. Hospitals in most other states will get less money as a result.

The details were tucked into a regulation that Medicare issued late last week. Hospital association executives in other states are up in arms. This comes at a time when they're preparing for 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.

Hospitals in 41 states will lose money as result of the change, while seven states come out ahead, though none do nearly as well as Massachusetts.