charity care/ payment reform

 

 

 

Equity for the Uninsured and Safety-Net Providers


New York State pays hospitals $847 million a year to take care of people with no health insurance – money that is referred to as "charity care."  However, the current way that the State distributes this Charity Care funding is outdated, with almost no accountability for where the money goes and what it pays for.  We believe that Charity Care  funds for hospitals shoulddirectly pay for the care of uninsured patients.  There are hospitals that provide a lot of this care – and others that provide very little.  Money should flow based on which hospitals provide the care, but in the current system it does not.  With the passage of federal health reform – the Affordable Care Act – some of the federal dollars the State uses for charity care will be used to pay for the newly insured.  Some of the federal dollars will still be available to states that still have uninsured residents and use the money to pay for care of the uninsured and targeted to hospitals with high numbers of Medicaid patients.  If New York does not change its current charity care payment system, we could lose federal dollars.

CPHS, and an advisory group with support from a professor, tracked the current way charity care dollars are given out.  We also developed a proposal for a fairer and more accountable system for hospitals to be paid for care provided to the uninsured.  The most important principle we used is that the money follows the patient – it should only go to hospitals to pay for care of the uninsured.  The second principle is those hospitals which provide a greater percent of uninsured care should get a progressive bump in the dollars they receive.

Based on these principles, we developed specific changes that are needed in the way the State distributed Charity Care funding:

  • The first step was to start with a uniform reimbursement, the median statewide Medicaid reimbursement rate, as a leveler for all hospitals in the state.
  • The second step was to add to this median rate the regional costs for things like salaries and then to add more for the care of sicker patients.
  • The third step is to add more dollars on a progressive scale for hospitals that treat a higher percent of uninsured patients. 
  • The final step only occurs if the federal DSH dollars are greatly reduced; we proposed a way of combining the current pools to fund public and private hospitals.   This is very important because the 21 public hospitals in the state provide the lions' share of services for the uninsured.

In the past, there have been efforts to adopt a new charity care system with little success.  It is not only morally important to make these changes; it is also required by federal law.  Even with the law on our side, convincing hospital associations and some of their allies may be very difficult.  The more support we can gather for these proposals, the better the chance that we can influence two of the committees of the Medicaid Redesign Team that will be looking at Charity Care and access for the uninsured – the Health Disparities and Payment Reform Committees.  Any changes in charity care must go through the state legislature so that we will also be bringing these issues to them.

In a separate proposal, CPHS addresses additional funding for safety-net hospitals that provide a high proportion of care for Medicaid patients but do not provide as much care for the uninsured.  To ensure that these hospitals do not lose money as a result of our charity care recommendations, we propose a special increase in the Medicaid reimbursement rate to cover potential funding shortfall.  We also propose an increase in the dollar amount of the Charity Care pool which funds community health centers for the care of the uninsured.  This pool is much smaller than the hospital pool, even though health centers report the number of uninsured patients/visits and get paid for the care of the uninsured.  The Health Centers/D&TC's provide services for large number of uninsured patients.

Please support these proposals and allow us to list your name, your organization or your union's name as supporters of this call for equity.

 


Yes! I would like to sign on!

 

Charity Care Summary- February 22, 2012


Paying New York State Hospitals More Fairly for Their Care to Uninsured Patients: A Report to the Commission on the Public's Health System (CPHS)- can also be found on the Reports page


Charity Care Report Summary (16 pgs)
Introduction
New York has a long history of using public financing to help hospitals provide care to uninsured and underinsured patients.  The State remains committed to supporting those institutions that provide this care.  If you examine the way in which that money has been allocated, however, some inconsistencies arise.  The formulas that allocate bad debt and charity care funds are complex and opaque.  It is not clear how the allocation of money connects back to actual care provided to actual patients.  CPHS has long advocated for a more transparent system, where money indeed follows the patient.

In the current fiscal climate it becomes even more important that public funds are used for their intended purposes.  As funding for health care tightens, and as the allocation of public money is subject to increased scrutiny, it is time to revisit the formulas that drive the indigent care pool funding.  Under new federal law funding will be reduced and the means by which it is allocated will be re-evaluated.  These factors make it essential that we revisit the goals of New York's indigent care pool, and work to create a transparent funding methodology that assures that public dollars are being spent appropriately.

 

CPHS Charity Care Proposal
A new proposal for Charity Care in New York State. This proposal includes 3 major recommendations.


New York City Hospitals Charity Care Policies
Since 1983, New York State has been paying hospitals to provide care for the uninsured residents of the State. Allocation of the Indigent Care/Charity Care pools has been criticized for the inability to track actual care provided to patients. Instead, hospitals report based on an antiquated accounting methodology and they are paid based on a homogenized blending of claimed costs for care of the uninsured mixed in with the costs of bad debts.

In other states, the Charity Care pool is distributed on the basis of a hospital showing it had provided care to an uninsured patient. (See CPHS report). Efforts were made over the last more than twenty years to improve how hospitals report and are paid for uncompensated care.

It was not until 2007, when a 24-year old, employed but uninsured, young man was told to come back for brain surgery when he became eligible for Medicaid. Before eligibility was confirmed however, the young man died. This horrendous incident led the State Legislature to enact "Manny's Law" for the young man who died, which is formally titled the Hospital Financial Assistance Law (HFAL). The law required all hospitals to adopt and post a Charity Care policy, as well as inform patients about the availability of financial assistance. Questions are now raised about the way that hospitals are complying with this law.

As part of reviewing the questions about implementation, Disha Shah reviewed the web sites of each of the hospitals located in New York City to report on their Charity Care policies. Only some hospitals made their policy available on their web site. For three hospitals, there was no information available. Ms. Shah visited several hospitals to review how they were physically implementing their policy.
Disha Shah, CPHS summer student intern August 2011



Charity Care- In Some States
This paper compares and contrasts differences and similarities among several states and their management of Charity Care. The Commission on the Public's Health System (CPHS) is concerned about the allocation of charity care dollars to hospitals in New York State and this paper was produced to show how the allocation is done in other states.