The American College of Healthcare Executives’ third annual survey found that the chief concerns of community hospital CEOs involve financial issues, especially transition from volume to value (risk-based payment) and Medicaid payment. Financial concerns trumped other areas such as quality, patient safety, government mandates and personnel shortages.
A former chairman of the Medicare Payment Advisory Commission (MedPAC), noted the ongoing aversion of providers to risk-based payment in a recent post in Health Affairs, citing the low percentage of accountable care organizations that have volunteered to accept risk. He noted that policymakers should make alternative payment models mandatory; make alternative payment models and risk bearing more attractive; make fee for service less attractive; or strengthen incentives for Medicare beneficiaries to seek out low-cost/high-value providers. (“Medicaid, Value Transition Lead Hospital Financial Concerns: Survey,” HFMA Weekly News, February 5, 2016)
The survey findings came soon after the Healthcare Financial Management Association (HFMA) issued an analysis of healthcare provider accounting for revenues, expenses and accruing losses in risk contracts.
“Providers, payers, and other organizations are increasingly entering into contracts or assuming new payment models that expose the parties to the uncertainty of financial gain or loss. All organizations that are involved in risk-bearing arrangements must ensure that their accounting practices keep pace with their contractual obligations as they evolve,” said the president and CEO of HFMA in a written statement. (“Medicaid, Value Transition Lead Hospital Financial Concerns: Survey,” HFMA Weekly News, February 5, 2016)
CEO concerns about Medicaid payment appear to be related to a recent finding that Medicare and Medicaid underpayments totaled $51 billion in 2014, far more than the total national hospital uncompensated care costs which decreased to $42.8 billion in 2014 (see last week’s blog post).
Hospitals received payment of only 90 cents for every dollar spent caring for Medicaid patients, and 61 percent of hospitals received Medicaid payments that were less than cost in 2014, according to a Medicare and Medicaid report published by the American Hospital Association.
Finance experts have expressed concerns that the Affordable Care Act’s Medicaid eligibility expansion will reduce the numbers of uninsured but exacerbate hospital financial shortfalls in other areas. The recent Medicaid cost data appears to support those concerns.
Upcoming funding changes related to Medicaid also worry hospital executives. Medicaid disproportionate share hospital (DSH) payments, intended to offset uncompensated care costs for Medicaid and uninsured patients, totaled $18 billion ($8 billion in state funds and $10 billion in federal funds) in 2014. The Medicaid DSH payments cuts are scheduled to begin with a $2 billion reduction in FY 2018. The cuts were legislated as an offset for ACA funding.
A report from the Medicaid and CHIP Payment and Access Commission (MACPAC) found that more than one-third of DSH payments go to hospitals that do not meet the federal standard for their numbers of Medicaid and uninsured patients. MACPAC recommended that Congress shift more DSH allotments to states and hospitals that serve a disproportionate share of Medicaid and low-income patients and that have higher levels of uncompensated care.
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