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Covenant Health Systems continues to work with our organizations to analyze and report on the likely impact which the various, newly enacted Health Reform laws will have, and we will continue to provide information in regular Advocacy Newsletters.
Funding Health
Care Reform
The American Hospital Association (www.aha.org) and the Catholic Health Association of the United States (www.chausa.org) supported health care reform by accepting a .25% reduction in the hospital market basket upgrades in both 2010 and 2011. Skilled Nursing facilities will also have a decrease in the Medicare market basket of approximately 1%, which will be put into effect in 2012. Covenant is working with the hospitals and nursing homes within the System to determine the potential impact of these reductions. We will be reporting the impact in future Advocacy Newsletters.
Some of the other initiatives designed to fund health reform involve additional reductions in payments to health care providers. One of these initiatives affecting both hospitals and skilled nursing facilities will be denial or reductions of payments to providers which fall into the worst 25% of performers for hospital or health care acquired infections. Hospitals which fall into this quartile will see an automatic reduction in payment of 1% starting in 2015 and there will be similar Medicaid payment reductions for these health care acquired conditions. CMS must report to Congress in 2012 outlining the impact which these reductions will have. Hospitals and nursing homes within Covenant are not expected to be in the lowest quartile of performance. However, quality groups throughout the System will remain focused on this issue. As evidence of this focus, St. Mary's Regional Medical Center in Lewiston was recently recognized by a national publication for having one of the lowest (best) infection rates in the country for ICU central line infections. Their rate was zero.
With nearly 32 million more Americans having health insurance by 2014, there is growing understanding that having health insurance is only half the answer. People will need access to primary care. Reflecting this, Congress incorporated multiple provisions for workforce development to expand access to primary care, which included increased availability of loans for student nurses, and incentives for those pursuing careers in geriatric medicine. Overall, hospitals and other supporters of health reform expect that as more people have access to health insurance, there will be a rebalancing of hospital finances, with less uncompensated care and demands for disproportionate share payments.
Many people around the country are looking to Massachusetts for insights as to the potential impact which the new law will have.
The Massachusetts Experience - A Brief Overview
Massachusetts health insurance reform was signed into law in 2006 by then Governor Mitt Romney. As a result of the law's passage, 400,000 additional residents have health insurance today than in 2006, and approximately 250,000 of these are low income individuals. Despite mandates, 2.5% of the population in Massachusetts still is not covered by health insurance, and the vast majority of these individuals are below 200% of the Federal Poverty Level.
U
nder the Massachusetts law, several changes were expected as a result of more people being covered by health insurance. First, Massachusetts hospitals were promised increased Medicaid payments for their services because health insurance reform increased the number of people who were covered by Medicaid. The Massachusetts Hospital Association (www.mhalink.org) estimates that Medicaid covers only 75% of the cost of care, and that the gap between cost of care and reimbursement has not been narrowed. In addition, the Health Safety Net (Uncompensated Care Pool) provisions in Massachusetts were designed to pay for care for low income residents. Payment is now based on the Medicare payment for services. The "Pool" payments are funded by a provider tax. In 2009, MHA estimated that there was an 8.1% shortfall in the uncompensated care pool. Cost shifting still exists in Massachusetts despite the passage of health reform.
In another development closely monitored nationally, Massachusetts insurance plans have recently announced a suit against the Commonwealth because the Insurance Commission refused to approve increases in small group market insurance premiums of 8-32%. Approximately 800,000 people are covered by these plans. While hailed by small businesses as a way to control health care costs, this issue continues to be a battle ground between the Commonwealth of Massachusetts and the insurance plans, and will ultimately be decided by the courts.
One of the other expected changes of health care reform which has occurred is the reduction in bad debt expense for hospitals. According to a study recently reported by the Massachusetts Hospital Association(www.mhalink.org), 56 Massachusetts hospitals reported a 5% reduction in non-emergent bad debt expense between 2007 and 2008, but bad debt still represents a $172 million expense.
Concerns raised on the national level about access to primary care have been borne out by the Massachusetts experience where many people who now have health insurance lack appropriate access to primary care services and, as a result, continue to rely on emergency rooms for their care. The Massachusetts Hospital Association (www.mhalink.org)estimates that nearly 47% of all ED visits were either non-emergent or could have been addressed in a primary care setting, rather than an emergency room. National changes include significantly more funding for community health centers to address this demand for primary care.
All of these experiences point to the need, as health reform on the national level moves toward implementation, for health care organizations to be vigilant in monitoring and preparing for the financial and operational impacts which the provisions will have. We must ensure that the disparities and gaps in payment are addressed, and that our organizations put programs into place to reflect other requirements.
National Health Care Reform Changes for 2010
Among the provisions which were contained in the Patient Protection and Affordable Care Act (PPACA) and/or those which are contained in the Reconciliation Act which go into effect in 2010 are:
- Small businesses will be entitled to a tax credit of up to 35% of the premium cost for health insurance for employees. The tax credit will rise to 50% of the premium expense by 2014.
- Rebates of up to $250 per year will be provided to individuals who rely on Medicare and fall into the "donut hole" provisions.
- Insurance companies will be banned from dropping people from health insurance if they get sick.
- Health plans will be prohibited from denying coverage to children with pre-existing conditions, and the provision will be expanded to include everyone, in the year 2014.
- A high risk pool will be created to provide affordable health insurance to individuals with pre-existing conditions who do not currently have health insurance. This will provide coverage until other provisions go into effect in 2014.
- The Reconciliation Act eliminated that expansion of the 340 B program being extended to inpatient drugs which was contained in the original health reform legislation.
Covenant plans a series of periodic Advocacy Newsletters as health care reform continues to unfold. Please contact Susan McDonough, Vice President, Strategy & System Development at 781-862-1634 with any questions. Copies of previous Advocacy Newsletters are available on Covenant Health Systems' website at www.covenanths.org.
You may find these to be helpful links for more information:
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