Health Reform and Safety Net Hospitals Implications of Impending - - PowerPoint PPT Presentation

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Health Reform and Safety Net Hospitals Implications of Impending - - PowerPoint PPT Presentation

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Health Reform and Safety Net Hospitals Implications of Impending Reductions in Medicaid Disproportionate Share Hospital (DSH) Payments June 26, 2017 Teresa A. Coughlin Christal Ramos Timothy Waidmann Safety Net Hospitals and Health Reform

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SLIDE 1

Implications of Impending Reductions in Medicaid Disproportionate Share Hospital (DSH) Payments

Teresa A. Coughlin Christal Ramos Timothy Waidmann

June 26, 2017

Health Reform and Safety Net Hospitals

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SLIDE 2

Safety Net Hospitals and Health Reform

  • Safety Net Hospitals (SNHs) play important role in US health care

system

  • Serve vulnerable populations
  • Provide high-cost community services
  • Train medical professionals
  • Affordable Care Act (ACA) changed financial landscape for hospitals
  • Medicaid expansion reduced uncompensated care (UC) costs and

uninsured hospital visits (e.g., Nikpay et al; 2016; Dranove et al, 2016; Blavin 2016; MACPAC 2017)

  • Little research on how ACA affected SNHs
  • Medicaid disproportionate share hospital (DSH) payments
  • Significant revenue source for SNHs
  • ACA calls for 17% reduction in DSH payments Fall 2017
  • AHCA includes changes to Medicaid DSH payments beginning 2018
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SLIDE 3

Study Questions

  • 1. How did SNHs’ finances in states that took up the ACA Medicaid

expansion compare to those in states that did not expand Medicaid?

  • Financial measures: operating margins, UC costs, share of
  • perating expenses that UC costs represent
  • 2. How do SNH executives view the role of Medicaid DSH payments

in their institutions and communities? What do they think are potential consequences of pending federal Medicaid DSH cuts?

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SLIDE 4

Study Data

  • American Hospital Association (AHA) Survey, 2013-2014
  • Hospital characteristics: size, ownership, type, and Medicaid

inpatient utilization rate (MIUR)

  • Medicare Cost Reports (MCR), 2011-2014
  • Hospital financial information:
  • Operating margins [(patient revenue –operating expenses)/ patient

revenue]

  • UC costs (charity care and bad debt)
  • Share of operating expenses that UC costs represent
  • Interviews with executives from 7 hospitals in Medicaid expansion and

non-expansion states that receive Medicaid DSH payments (MACPAC 2017)

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SLIDE 5
  • Balanced sample of hospitals (n=2502)
  • Acute, short-term, non-federal facilities
  • Complete AHA and MCR data (2011-2014)
  • No outliers for financial indicators
  • Not in early ACA Medicaid expansion state
  • SNHs (n=329)
  • >1 standard deviation above the state mean Medicaid inpatient

utilization rate (MIUR) (MACPAC 2016, 2017, Bazzoli 2014)

Analysis Sample and SNH Definition

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SLIDE 6

Methods

  • Difference-in-difference (DD) analyses to examine the association

between ACA Medicaid expansion and selected hospital financial measures

  • Weighted by net patient revenue
  • Ran separately for SNHs and non-SNHs
  • Pre-ACA: 2011-2013, Post-ACA: 2014
  • Semi-structured telephone interviews conducted with 12 executives

in 7 SNHs located in both expansion and non-expansion states during summer/fall 2016

  • What is the role of Medicaid DSH payments in the hospital?
  • What would they do if DSH payments were cut?
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SLIDE 7

Descriptive Statistics, 2013 (n=2502)

Non-SNHs (n=2173) SNHs (n=329) Ownership Govt, non-federal Not-for-profit For-profit 430 (20%) 1398 (64%) 345 (16%) 107 (33%) 186 (57%) 36 (11%) Type Teaching Critical access 484 (22%) 655 (30%) 66 (20%) 129 (39%) Financials (means, weighted by net patient revenue) Operating margins UC costs Share of operating expenses UC costs represent Medicaid Inpatient Utilization Rate (MIUR) 1.9% $13.7M 4.4% 16.5%

  • 1.2%

$16.6M 5.8% 39.7%

Source: AHA Survey, 2013; Medicare Cost Reports, 2013

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SLIDE 8

Change in Mean Operating Margins, Pre (2011-2013) and Post (2014) ACA

0.78% 0.50% 1.19%

  • 0.37%
  • 1.00%
  • 0.50%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Non-SNH SNH Percentage Points Non-Expansion Expansion Non-Safety Net DD coefficient: 0.0040964, p=0.665 Safety Net DD coefficient: -0.008776, p=0.619

Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2011-2014, weighted by net patient revenue

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SLIDE 9

Change in Mean Total Uncompensated Care, Pre (2011-2013) and Post (2014) ACA

  • $931,835

$594,554

  • $4,110,522
  • $3,849,339
  • $5,000,000
  • $4,000,000
  • $3,000,000
  • $2,000,000
  • $1,000,000

$0 $1,000,000 Non-SNH SNH US Dollars Non-Expansion Expansion

#

*Non-Safety Net DD coefficient: -3178687, p=0.00

#Safety Net DD coefficient: -4443893, p=0.017

Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2011-2014, weighted by net patient revenue

*

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Change in Mean Share of Operating Expenses Represented by UC, Pre (2011-2013) and Post (2014) ACA

  • 0.61%
  • 0.41%
  • 1.41%
  • 1.19%
  • 1.60%
  • 1.40%
  • 1.20%
  • 1.00%
  • 0.80%
  • 0.60%
  • 0.40%
  • 0.20%

0.00% Non-SNH SNH Percentage Points Non-Expansion Expansion *Non-Safety Net DD coefficient: -0.0080725, p=0.000 Safety Net DD coefficient: -0.0077436, p=0.118

Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2011-2014, weighted by net patient revenue

*

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SLIDE 11

0.61% 2.73%

  • 6.24%

4.70% Operating Margin Share of Operating Expenses that are UC Non-Safety Net Safety Net

Even w/Medicaid expansion, SNHs fared worse financially Post-ACA

Financial Indicators (weighted means) – Hospitals in Expansion States, 2014

Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2014, weighted by net patient revenue

$9,194,968 $14,147,257 Uncompensated Care

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Importance of Medicaid DSH: Views of SNH Executives

  • Role of Medicaid DSH in SNHs and communities
  • Help cover UC cost of care for uninsured patients
  • Help “backfill low Medicaid rates”
  • Support community services (e.g., trauma and burn services)
  • Fund services particularly needed by Medicaid and uninsured

patients (e.g., mental health and addiction services, birthing services, AIDS clinics, social determinants of health)

  • Impending federal DSH cuts would have major implications for SNHs
  • Reduce community programs, services or staff
  • Move away from mission of caring for the poor:

“The survival instinct outweighs the mission at some point…..[DSH cuts would cause SNHs] to go away from what they do and to look like the rest

  • f non-profits”
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SLIDE 13

Conclusions and Policy Implications

  • Within 1st year of ACA, SNHs in Medicaid expansion states associated with:
  • Larger decreases in UC costs compared to SNHs in non-expansion

states

  • Negative operating margins and higher UC costs than non-SNHs in

expansion states

  • Despite increased coverage under ACA, SNHs still care for uninsured
  • SNH executive emphasized importance of DSH payments to their

financial health and mission of caring for the poor

  • Raises fundamental questions:
  • Do we want to continue to support SNHs that specialize in serving the

poor?

  • If yes, should support continue through Medicaid DSH payments, or

alternatively, should Medicaid pay better rates for patient care?

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SLIDE 14

For Additional Information

Contact: Christal Ramos cramos@urban.org Reference: MACPAC 2017 Report to Congress: https://www.macpac.gov/publication/march-2017-report-to-congress-on- medicaid-and-chip/ MACPAC profiles of interviewed DSH hospitals: https://www.macpac.gov/publication/profiles-of-disproportionate-share- hospitals/

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SLIDE 15

Characteristics of all vs. included hospitals

All hospitals (n=6571) Included hospitals (n=2502) Ownership Govt, non-federal Not-for-profit For-profit Govt, federal 1278 (20.1%) 3284 (51.69%) 1734 (27.3%) 57 (0.9%) 537 (21.5%) 1584 (63.3%) 381 (15.2%) 0 (0%) Type Acute, short-term Psychiatric Rehab Acute, long term 4805 (75.6%) 488 (7.7%) 273 (4.3%) 450 (7.1%) 2502 (100%) 0 (0%) 0 (0%) 0 (0%) Medicaid expansion status 2014 expansion state Early expansion state 1001 (15.2%) 791 (12.04%) 946 (37.8%) 0 (0%) Safety net Safety net hospitals 1229 (18.7%) 329 (13.2%)

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SLIDE 16

Difference in Mean Total Charity Care, Pre (2011-2013) and Post (2014) ACA

$165,320 $619,707

  • $2,554,217
  • $4,713,690
  • $5,000,000
  • $4,000,000
  • $3,000,000
  • $2,000,000
  • $1,000,000

$0 $1,000,000 Non-Safety Net Safety Net Non-Expansion Expansion *Non-Safety Net DD coefficient: -2719536, p=0.00 #Safety Net DD coefficient: -5333397 p=0.00 Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2011-2014

*

#

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SLIDE 17

Difference in Mean Total Bad Debt, Pre (2011-2013) and Post (2014) ACA

$188,845 $85,203

  • $1,272,387
  • $856,116
  • $1,400,000
  • $1,200,000
  • $1,000,000
  • $800,000
  • $600,000
  • $400,000
  • $200,000

$0 $200,000 $400,000 Non-Safety Net Safety Net Non-Expansion Expansion *Non-Safety Net DD coefficient: -1083653, p=0.00 Safety Net DD coefficient: --941320 p=0.196 Source: AHA Survey, 2013-2014; Medicare Cost Reports, 2011-2014

*