In Monday's editorial on health care reform the NYT's opines:
Just as Social Security grew from a modest start in 1935 to become a bedrock of the nation's retirement system, this is a start on health care reform, not the end. A lot will depend on whether future presidents and Congresses stick to the savings and deficit targets set in the legislation; on how aggressively states administer the new exchanges; on how health care professionals and institutions respond to the challenges of changing their ways...
Much has been written about the health care reform bill law. I will attempt to describe what it will mean to our hospitals and how they might respond to the challenges and opportunities provided in HR4872, The Health Care Education Reconciliation Act of 2010.
Sorry about the length of this diary, but there's a lot of innovative ideas contained in this law. As long as this diary is I've left out several provisions in the law that our providers will need to address. I hope this gives you some insight into some of less noted, but important, sections of the new law.
To those of us who work or who have worked in health care the issue of access is always paramount. There are several ways to look at access. There is the access available to you by your personal resources or work benefits, and there is the access to find the right provider at the right time in the right setting. The new health care reform law addresses both of these access concerns.
Most of us have read about the tax subsidies to purchase health care, the employer mandate and the expanded Medicaid benefit that will hopefuly insure 32 million Americans currently without health insurance. I am curious to understand what the new law will mean to providers and how they will respond to the incentives and challenges provided by the new law.
I worked at an urban teaching safety net health care network. Annually, we provided (approximately) 350,000 clinic visits, 100,000 ER visits and 14,000 admissions. The network consisted of 1 acute care inpatient facility, 1 large diagnostic and treatment ctr, 12 offsite clinics, 3 school-based clinics and many on-site outpatient clinics. The last year I worked our budget was $280,000,000 ($40,000,000 came to the network through the NYS bad debt and charity care pool.) I retired a few years ago.
This is how I imagine the leadership team I was part of responding to the new law. I'm now imagining us at our Wednesday Senior Cabinet meeting and my boss is calling on me:
LC (Exec Dir): I've tasked Mike to look at the new health care law to describe the key features and how the law will affect us, and what our response should be.
Me: First, let me say that whoever is Governor between 2014-2016 has had the political Gods shining on him/her because Medicaid funding for new recipients will be 100% provided by the federal government. Currently, with NYS at 50% fed funding, that's a lot of money coming NYS way. But for our network, assuming no significant demographic and health status changes in our catchment area, and if we respond adequately to this law, we will have fewer inpatient admissions, fewer ER visits and more outpatient and offsite clinic visits. From a revenue perspective, that could mean less money from inpatient operations and much more from OPD operations.
CB (Director of Outpatient Services): This sounds interesting, Mike, got any details?
Me: Plenty CB, and your managers are going to be plenty busy, too. You too Dr. F (Director Medical Services)
Me: Let's take a look at the Emergency Department first. 30% of our ER visits are from self-pay/no-pay patients and, we know many are repeat visits with chronic conditions who use our hospital as their primary care provider. About 1/2 of these self-payers will now be eligible for Medicaid or private insurance of some kind either through health care exchanges, co-ops or some other mechanism. With insurance available to them we can educate them to use our clinics and get them treated more timely. The other half of our uninsured ER visits are undocumented immigrants who will be left out until Comprehensive Immigration Reform passes. (Note: Fed law permits Medicaid to pay for emergency services rendered to undocumented immigrants, however, the undocumented does not become eligible for Medicaid, Medicaid only pays the hospital bill and eligibility then terminates. From what I can tell HCR is silent on this.)
LC: Mike, can we use our financial counselors here at the hospital to expedite the Medicaid or private insurance enrollment process?
Me: Good question LC. As you know, our financial counselors, through an arrangement with the NYC Dept of Social Services, are deputized to help assist our patients in the Medicaid application process. I'm sure DSS will allow us to work with the new eligibles, too. When I say new eligibles, I mean individuals with incomes up to 133% of the Fed Pov level. The new exchanges that will be set up to access and purchase health care will be hiring "Navigators". These navigators will assist potential insurance purchasers to, well, navigate the exchanges. Once the exchanges are set up, we should seek to formalize a relationship between our financial counselors and the exchange navigators. Our financial counselors could identify our patients who appear to be eligible for subsidized insurance and route them to the exchange through the navigator. This wouldn't just be for our ER patients but for the OPD self pay patients as well. We have about 90,000 OPD Self Pay visits annually, and we can look forward to converting those patients to Medicaid or other insurance, too.
CB: How do we identify patients who might be eligible for the exchanges?
Me: Well, CB, it's based on income and citizenship. Depending on salary levels you can qualify for premium credits and cost sharing subsidies to acquire health insurance through the exchanges. For those with incomes between 133% - 400% of the Fed Pov Level, tax credits are available. Our financial counselors are already trained to identify people who need assistance. The really good news is that our hospital is surrounded by a variety of small business owners who may now want to insure their employees. The other thing, CB, is that the new law requires that an internet website be set up to explain the exchanges and to help identify health care options. It would be great if our financial counselors could access that website while helping our patients.
LC: So from what you're telling me, Mike, it looks like we can redirect formerly uninsured patients from our ER to the clinic setting and get them a doctor they can recognize. Of course there will always be new patients coming to our ER but now we have through the law the resources to get them covered. Hopefully, our future ER patients will truly be patients requiring urgent care. We'll need to think through staffing in the ER with this new law. It costs us 2 times as much to treat an ER patient compared to a clinic patient. I'll be glad when we actually treat our patients in the right setting.
Me: Exactly, LC. But speaking about resources, I think we'll need to hire more financial counsellors.
LC: Sounds like it; any money in the new law for financial counsellors?
Me: Good question. Allows me to segue into OPD services. The new law creates funding to vastly expand community health centers. There is money for expansion, construction and operations. We've spoken in the past about converting our Diagnostic and Treatment Center into a Federally Qualified Health Center, but for various reasons we couldn't quite pull the trigger on it. Now we might be able to do it. There are provisions in the bill to support career development, too, so that might help us out with converting the D&TC.
LV (HR Director) My ears just perked up a bit, Mike, what is that about workforce development?
Me: Yes, LV, this pertains to Dr F as well; they're attempting to address the nurse shortage (Note: Nursing schools are having difficulty keeping a teaching staff) and other health professional shortages through scholarships and loans.
CB: Lots of stuff here, Mike, anything else on the OPD side?
Me: Sure, LC. The laws provides for funding to beef up school based health programs. Since we're in 3 schools already, we could probably expand on that. They're looking for a nurse managed health ctr model in the schools.
Dr F: That sounds good. We've been trying to address the childhood asthma problem by getting our foot in the door at the schools. This should help with that effort.
CB: Dr F, we'll need to look at our ability to provide the level of primary care services that will be required under this bill.
Me: Well, the law looks to reallocate GME (Graduate Medical Education)slots to states that don't have a good intern/resident to population ratio. I'm not sure how we stack up in that analysis, but something to look into. For all these things we'll have a better idea once the regulations are published.
LC: What about reimbursement rates, Mike?
Me: On the OPD side, very good news. For our Peds and Medicine primary care operations, the law allows for enhanced reimbursement rates. As you know, our Medicaid rate is capped at $67 plus capital. Now, we'll be paid the Medicare rate which is much more generous than Medicaid rates. One other, harder to measure change, is that companies in the exchange have to adhere to a patient friendly medical loss ratio, meaning that they have to spend 85% of their premium dollar on health care, only 15% on administration. That should help with revenue.
LC: I guess not so much on the inpatient side?
Me: Well, LC, you might have heard from the political discussions that Medicare will be cut to the detriment of our Medicare patients. Actually, there's a lot of good stuff for Medicare patients, but our inpatient Medicare rates are cut two ways: First, the annual market basket update (inflation) is reduced by 1%. Plus, the Medicare Disproportionate Share add-on is reduced by 75%. (Note: disproportionate share add ons recognize hospitals that treat sicker and poorer patients. Through a formula, hospitals rates are increased.)
LC: 75%!!
Me: Yes, LC, but the DSP is an add-on to the base rate, so the cut is only applied to the DSP amount. Unfortunately for us, we get a large DSP piece. The good news is that it's possible to recoup some of that depending on the level of uncompensated care we continue to provide.
LC: Isn't there DSP for Medicaid, too?
Me: We take a steeper hit in inpatient Medicaid DSP, but for the early years the cut is not too significant.
LC: Anything else on the inpatient side?
Me: Oh yeah -- You know how we have Medicare patient readmission issues. Well, we're not going to get reimbursed for those inpatient readmissions. We need to get a handle on those readmit patients and understand the factors leading to those readmissions.
ET: (Director of Quality Assurance/Utilization Review) We can pull charts on patients with a history of readmisions and begin a sytematic analysis of their health status to see if we're missing anything that would prevent a readmission. Mike, can you identify those patients?
Me: Yes, I'll get the stats department on it. We can identify them through our Patient Accounting Database and Reporting Systems (PADBARS).
Dr F: You know, we need to beef up our discharge planning operation and stay on top of our discharged patients better.
Me: Funny you should mention that Dr F. We can apply to organize ourselves into an Accountable Care Organization. If we qualify we can share in the savings associated with delivering more cost efficient care to our Medicare patients.
LC: What do we have to do, Mike?
Me: To qualify we need to agree to be held accountable for the overall care of the Medicare patient, have adequate primary care services, define processes to promote evidence-based medicine, report on quality and costs, and coordinate care.
LC: Anything else Mike before you wrap it up?
Me: Still lots more LC. They're looking to pay safety net hospitals like us using a global capitated payment model, but I'll need to see the regs on that. Also, the law looks to establish a national pilot program to develop and evaluate paying a bundled payment for acute, inpatient hospital services, physician services, outpatient services and post-acute services for an episode of care from 3 days prior to an admission to 30 days post discharge. Besides thinking through the patient accounting aspects of this, we'll need to analyze our costs of treating patients eligible for bundled payments to make sure treatment is appropriate and necessary.
Dr F: I'll organize a team to track our care regimens under those parameters.
Me: Also Dr F, through the bill they want to create an "Independence at Home Demonstration Program" to provide high need Medicare beneficiaries with primary care services in their home and allow participating teams of health professionals to share in any savings if they reduce preventable hospitalizations, prevent hospital readmissions, improve health outcomes, improve the efficiency of care and achieve patient satisfaction.
CB: We can do that; we have a home visit system in place through the Directly Observable Therapy program. We can learn and build on that experience.
LC: I thought there wasn't much of an emphasis on cost reduction in this law, Mike, hasn't there been all this talk about bending the cost curve? It seems to me that there's significant quality and cost emphasis in this law.
Me: Yes absolutely LC. It's paramount that we evaluate our patient care delivery systems from top to bottom and reorganize accordingly.
LC: Looks like we'll be busy over the next few years.
PS (Only avowed Republican in the group): Mike, you didn't mention the death panels.
The rest of us: Groan
Me: Time to retire again