State hospitals and health care providers are still calculating the impact of impending cuts to their funding. But, they warn, providers will not shoulder the cuts alone. Eventually, the cost of the services will be borne by average people through higher insurance premiums.
"There's always a constant issue of cost shifting," said Susan Bryant, director of community relations at New London Hospital. "If something costs the same for two different patients, how do you make up the difference when you're not reimbursed for the service for one of them?"
On Friday, Health and Human Services Commissioner Nicholas Toumpas laid out a series of cost-cutting measures needed to fill an expected $43 million shortfall in the department's budget for fiscal year 2010. The shortfall was due mostly to higher-than-expected caseloads. Medicaid reimbursements for hospitals, child-care subsidies and nursing homes were among the areas hardest hit.
"It's a big cost shift that will be picked up to some extent by hospitals and other providers that will have to increase their fees for those that are able to pay," said Dr. Jim Squires, president of the nonprofit Endowment for Health.
Beginning in April, the state will suspend indirect medical education payments to hospitals, which goes to training medical residents. That will reduce costs by about $2.7 million in fiscal years 2010 and 2011, about half of that from the general fund. The state will save an additional $3.8 million by suspending payments for high-cost catastrophic care. An additional $8.2 million will come from changing the reimbursement rate for radiology services.
State Sen. Kathleen Sgambati, a Tilton Democrat and chairwoman of the Senate Health and Human Services Committee, said people tend to look to cuts at hospitals first because the hospitals have larger budgets than other health care providers.
"They have the largest bottom line, but that doesn't mean they can afford them better than other providers," Sgambati said. "Hospitals' costs are fixed, so they have to share losses with other payers in order to meet their own bottom line."
Sgambati said part of the problem is that the HHS has to turn to its own constituents to fund its shortfall.
"I'd like to take a look across state government, to see if there are other options," she said.
Education payments
The impact of the cut in indirect medical education payments will be greatest at Dartmouth-Hitchcock Medical Center, which trains about 330 residents a year. Frank McDougall, vice president for government relations at Dartmouth-Hitchcock, and those cuts plus cuts in catastrophic care will cost the hospital about $2.3 million a year. The hospital is still working out how much money it will lose on radiology.
"More than ever, we're the state's safety net provider," McDougall said. "We're seeing more Medicaid patients, the sickest of the sick, and we're getting paid less and less. That's not sustainable in any way, shape or form."
McDougall said that in 2001 Dartmouth-Hitchcock subsidized $2.3 million worth of care. In 2009, the cost of providing care was $57 million more than the hospital was paid.
McDougall said Dartmouth-Hitchcock already has among the lowest costs for providing health care, compared with other major academic medical centers. But it also has among the lowest profit margins, because of low public reimbursement rates in New Hampshire and Vermont.
Typically, the hospital tries to make up the difference by negotiating higher rates with commercial insurance companies. McDougall worries that the hospital may eventually have to cut specialties - for example, the large number of children's services that are not available anywhere else in the state.
"Those are the things we worry about at night," he said.
In the long term, McDougall said, New Hampshire must find new revenue sources. (next page »)
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Comments
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By RBaker - 02/09/2010 - 3:42 pm.
to vote
Medicaid EZ Reform
By RBaker - 02/09/2010 - 5:48 amMedicaid EZ Reform
Democrats and Republicans have crossed there arms to any real healthcare reform. The question is how do we fund Medicaid and stop members from abusing the system.
The perception from most people is that individuals on Medicaid have nothing to lose.
Understand that I am not an expert on Medicaid so this is only a model of possibilities for funding and not a comparison to the actual Medicaid benefit plan.
My idea changes the current model by changing the amount of office visits from 18 to 12 per calendar year with prior authorization needed after the limit is met and requires authorization for E|R visits which will encourage members to visit the urgent care facilities. A hospital cannot deny treatment on ones ability to pay so requiring authorizations is a formality. If a Medicaid member feels that they absolutely need to be seen at the E|R then they should go. The difference now is if the Member does not obtain an authorization the visit must meet medical necessity. A state review team would examine each claim and decide whether the member could have gone to there PCP or an Urgent care facility for treatment. The first time it is found that the visit did not meet the criteria the State would send an educational letter that outlines what services can be provided through there PCP or an Urgent care facility.
Prescriptions other than generic would also require authorization. Under the dental coverage any member who does not take advantage of the States two cleanings would be subject to limited coverage for extractions only encouraging members to take care of there teeth.
The second part of my idea is that all Medicaid members will have a maximum $1000.00 family deductible. The State of NH will take ten percent of every dollar used by the member and apply this toward the deductible. Second E|R visit that do not meet medical necessity requirements would be subject to limitations in coverage. Instead of the ten percent the state applies toward the members deductible, E|R visits would be subject to twenty percent toward a separate E|R deductible with a maximum of $200.00. The combined deductibles would not exceed $1200.00 for any family in one calendar year . E|R visits approved members would not be subject to twenty percent charge.
$1200.00 may seen like a small amount for some but for a person on Medicaid every dollar matters. These steps will reduce unnecessary visits and hold members accountable for there healthcare and lift the burden off the tax payers
At the year end the State will send out a tax form that members file with there income taxes. On the 1040EZ form below earned income credit the IRS will add a box for state Medicaid deductible. The deductible amount applied by the state would be subtracted from the earned income credit and return to that state. Medicaid members who have paid in income taxes but chose not to file could be levy by the state for current and future income tax earnings. The State would also have the power to put a lean against any persons estate for unpaid healthcare.
The incentive for Medicaid members is if you want a large tax refund then only use services if you really need them. Now can we get both parties to work together and pass the 1040EZ approach to Medicaid reform?
I would love for others to toss out some ideas in a constructive way. As a tax payer I think we need to do everything we can do to help solve this problem. Hopefully my ideas will start the wheels spin
Robert L Baker
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