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Safety net hospitals
experiencing shortfalls
(May
2008 Issue)
By Catherine Robertson Souter
Pioneering a new system is never easy and the groundbreaking new
Massachusetts law which required that all residents sign up for
health care by Jan. 1, 2008, is no different. A medical model being
closely observed by proponents of universal coverage across the
country, the healthcare reform mandates insurance coverage while
providing assistance for those who would normally be unable to afford
private healthcare.
In order to provide coverage assistance, the state created the
Commonwealth Care Health Insurance Program and eliminated its Uncompensated
Care Pool, money once used to refund providers for services to the
uninsured. That program was replaced with the Health Safety Net
Fund to reimburse for care of residents who have not yet signed
up for coverage. According to the official documents, the plan "anticipates
the transfer of funds to the Commonwealth Care Health Insurance
Program as free care use declines."
It makes sense on paper, but recently the state's safety net hospitals
have begun to notify the Department of Health and Human Services
that they are seeing an alarming shortfall in reimbursements for
care provided. Residents are not signing up for the new insurance
program as quickly as expected and the reimbursements are no longer
based on the actual cost of care. Instead, hospitals are provided
a block grant which has not proven to cover the actual expenses.
"All of the safety net hospitals have seen reimbursements cut,"
says Ellen Murphy Meehan, executive director of the Alliance of
Massachusetts Safety Net Hospitals, a trade group that represents
eight hospitals. The payment rates were based on "who was expected
to be uninsured in fiscal 2008."
Cambridge Health Alliance, has seen reimbursements drop dramatically.
"CHA is now seeing only 60 to 70 cents on the dollar of the actual
cost," says Gordon H. Boudrow, Jr., senior vice president of finance
and chief financial officer for Cambridge Health Alliance. "With
the Uncompensated Care Pool, we were getting approximately 100%
of the cost. That's a big reduction."
Additionally, payments have been changed to reflect the type of
services provided, with inpatient care and teaching hospitals receiving
higher reimbursements, explains Murphy Meehan. For some safety net
hospitals, a rise in ambulatory cases and a decline in inpatient
stays have coincided with these other changes leading to an overall
shortage of funds.
"Fiscally, there has been a combination of internal and external
drivers of the current situation," says Donna Fox, vice president
of government affairs for CHA. "CHA has seen a recent decline in
discharges and an increase in observational [clients] and because
we have a high mix of public payers, we see the impact more swiftly
than other institutions might."
Mental health care has also taken a hit. The bill stated that the
Commonwealth recognized that many insurance providers have been
underpaid in recent years through the Medicaid system. In response,
a one-time rate relief fund of $90 million was set up to retroactively
reimburse providers for the fiscal years of 2007, 08 and 09. However,
the rate relief is not extended to mental health care providers.
For CHA, which took over 117 psychiatric beds over the course of
the past 12 years at the request of the state, these are funds that
would help cover other shortfalls.
"We now handle 10 percent of all psychiatric discharges in the
Commonwealth," says Fox. "We don't have the ability to cross-subsidize,
to be able to cover some of the shortfalls in mental health care."
For now, the DHHS does not have a plan to make changes that will
ease the burden on safety net hospitals. In a statement, Deputy
Communications Director Jennifer Kritz says, "We are closely monitoring
the fiscal stability of hospitals in Massachusetts. We will also
continue to monitor the experiences of hospitals as we complete
the transition from the Uncompensated Care Pool to the Health Safety
Net."
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