sustaining safety net hospitals supporting access, quality & efficiency alliance for health...
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Sustaining Safety Net HospitalsSupporting Access, Quality & Efficiency
Alliance for Health ReformWashington, DC
June 4, 2012
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Characteristics of Safety Net Hospitals
Disproportionately larger numbers of:• Medicaid patients• Uninsured patients• Underinsured patients
Disproportionately fewer:• Privately insured patients
Minimal reserves and low operating margins However, no bright line cut off for safety net hospital
(SNH) status
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Data reflects all hospitals with 1000 or more total discharges in 2009. SOURCES: AHRQ HCUP SID, THCIC PUDF
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Data reflects all hospitals with 1000 or more total discharges in 2009. SOURCES: AHRQ HCUP SID, THCIC PUDF
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Core SNHs: Key Revenue Streams
Medicaid• Single largest payer and getting larger
• By 2019, expected to cover 25% of all Americans• Low rates and getting lower• Incentives often irrational
Medicaid DSH Payments• Covers uncompensated care burden• Not well targeted to safety net hospitals• ACA reduces significantly starting in 2014
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Medicaid Payment PoliciesConsiderations for SNHs
Overarching Goals• Sustain SNHs• Support delivery system reform at SNHs• Ensure access to high-quality, coordinated & efficient care
The Landscape Today• Federal and State budget deficits are putting downward
pressure on Medicaid rates• Across-the-board increases to Medicaid payment rates
generally not feasible– Methodological changes may be– Increases to primary care rates are, at least in 2013 and 2014
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Strategic Investment in Medicaid Rates
Target hospitals with higher Medicaid and lower commercial volume• Link to performance• Ensure transparency and accountability• Avoid lump sum payments
Incentivize care delivery in the right settings Target needed services with limited access Cross-walk strategies to managed care models
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Medicaid DSH Payments
Intended to support hospitals serving a disproportionate share of low-income patients, but states have flexibility
Subject to state-wide and hospital-specific DSH caps Hospital DSH cap based on uncompensated care costs of
Medicaid and uninsured patients Federal matching dollars approximately $11.5 Billion today ACA reduces federal DSH monies starting in 2014; 50% cut by
2019, with largest DSH reductions to states• With lowest uninsured rates• With lowest levels of uncompensated care • That do not target high Medicaid/uninsured hospitals
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Targeting Medicaid DSH Payments
First Priority: uncompensated care costs of uninsured patients• Over 20 M people will remain uninsured post- ACA • Allocate DSH funds along sliding scale• Allocate DSH funds based on actual services to actual
patients, valued at percentage of Medicaid rate
Second Priority: uncompensated care costs of underinsured• Unclear if sufficient DSH funds available• Who should be considered “underinsured” post-ACA?
Third Priority: difference between Medicaid costs & revenue• Should this be a factor at all?
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For More Information Contact:
Deborah BachrachSpecial Counsel
Manatt Health [email protected]
212-790-4594
Background & Data Sources
• The information in this presentation is based on a paper funded by the Commonwealth Fund and prepared for the Commonwealth Fund Commission on a High Performance Health System, Toward a High Performance Health Care System for Vulnerable Populations: Funding for Safety Net Hospitals, March 2012.
• Hospital Data reflects all hospitals with 1,000 or more total discharges in 2009 in eight selected states (N = 1,234).
• Data for seven states (Arizona, California, Florida, Iowa, New York, West Virginia and Wisconsin) reflects full-year 2009. Data for Texas reflects 2009Q4 adjusted to full-year estimate.
• Data Sources: – 2009 AHRQ HCUP State Inpatient Database (AZ,CA,FL,IA,NY,WI,WV)
– 2009Q4 Texas Health Care Information Collection (THCIC), Inpatient Public Use Data File
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