Nothing in federal law says that hospitals with tax breaks for providing a community benefit must spend money to provide free medical care or subsidize other healthcare services. The standards by which hospitals earn tax breaks are lax, and have been so for more than four decades.
Nonetheless, tax-exempt hospitals must now publicly disclose the amount they spend on such subsidies. The Internal Revenue Service required the disclosure after Congressional scrutiny of the not-for-profit hospital sector, and the first data become available last year. This week, Modern Healthcare reported the latest figures with data provided by GuideStar, a not-for-profit watchdog.
As we reported, hospital margins do not appear to determine what hospitals spend on free medical care for low-income patients (known as charity care) or the subsidized services that federal officials have deemed community benefits, according to an analysis of 2010 reporting to the Internal Revenue Service.
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As Congress and the White House wrangle over a compromise to avert the fiscal cliff, the anxiety (for hospitals) and expectation (among experts) regarding possible Medicare cuts is clear, as my colleague Jessica Zigmond reported.
Now, new reports on state budgets suggest continued strain on Medicaid (another major insurer) despite a modest recovery under way.
State budgets have recovered slowly from the last recession. Medicaid, which is jointly financed by states and the federal government, accounts for the single largest state expense. Medicaid paid $152.5 billion to hospitals in 2010, or nearly one-fifth of spending on U.S. hospitals that year.
Even the good news about state budgets comes with a caveat. For the first time since the downturn, state revenue in the coming year will exceed revenue states collected in 2008—but only without adjustment for inflation, the National Association of State Budget Officers reported last week. (It is “a turning point,” the group said.)
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Talks continue over New York state's Nov. 9 request to Medicaid officials for emergency cash assistance for hospitals with extraordinary expenses or lost revenue from superstorm Sandy.
In the meantime, New York state is advancing hospitals cash, the Greater New York Hospital Association said.
The state's request to Medicaid—for $427 million—would award more to hospitals that suffered more damage or disruption from the storm. Five damaged New York hospitals still cannot admit patients five weeks after the storm made landfall. (You can see inside one closed hospital, the Long Beach Medical Center in this video feature).
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The week began with the start of Medicare's penalties for hospitals with higher-than-average rates of heart attack, heart failure and pneumonia patients who leave the hospital only to return within 30 days.
But Medicare is not the only payer to penalize hospitals for repeat visitors. Medicaid, in some states, also cuts hospital payments based on readmissions. As we reported in late September, changes to Medicaid policy have increased financial incentives for hospitals to reduce hospital admissions.
Now Massachusetts Medicaid is scheduled to increase its readmission penalties starting Nov. 1. The state began in 2011 to cut payments by 2.2% for hospitals with excess readmissions.
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Diversity is a big issue in healthcare and not just with patients, caregivers and executives. It turns out there's diversity in financial incentives that are part of the accountable care organization phenomenon.
In Maryland, doctors will be paid bonuses later this year tied to quality reporting under a new shared-savings payment model. The experiment includes the state's five largest insurers and Medicaid managed care.
In Minnesota, early results of bundled payments for heart attacks did not yield savings, but similar payments for diabetes, hypertension, coronary artery disease and hip and knee replacements appear on track to share savings with providers in Illinois and Pennsylvania who have had success reducing potentially avoidable complications.
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Not-for-profit hospitals cannot escape a weak economy, and the sector won't get through the next few years as easily as it did the Great Recession.
That's essentially what analysts said last week in reports from two of the major ratings agencies.
As I have reported previously, hospitals came out of the worst recession since the Great Depression with solid margins. Hospitals protected those margins by holding onto cash and cuts to spending on labor, supplies or services.
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The healthcare reform law's Medicaid expansion would provide coverage to roughly 11.5 million adults who live below the poverty line but are currently ineligible for the safety-net insurance, the Urban Institute estimates. But should states choose not to expand Medicaid, those adults would be left out of the reform law's push to reduce the number of uninsured.
With income below the poverty line, they would be paradoxically too poor to qualify for subsidies under the law to buy commercial health plans. Those subsidies are available for those with income above the poverty line up to 400% of that threshold. (Not everyone will be able to hold on to subsidized insurance as income fluctuates with a change in jobs or hourly work schedules.)
For hospitals, fewer insured would undermine one proposed benefit of the Patient Protection and Affordable Care Act: fewer unpaid medical bills.
Here's a look at the states, ranked by the number of adults who are currently ineligible for Medicaid yet living below the poverty line, as estimated by the Urban Institute's Health Policy Center.
Source: Urban Institute
*Urban Institute researchers advise caution for Vermont's estimate of <1, which has a standard error of more than 30%.
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Not all of those who gain insurance under the healthcare reform law will stay insured if Florida and other states decide to forgo a Medicaid expansion by 2014, as I reported last week.
So what does it mean to be insured only part-time? Unsurprisingly, research suggests it means less access to primary care and more medical debt that hospitals, doctors and households hope to see reduced by the reform law.
Those who end up insured part of the time were less likely than those insured nonstop to see a regular doctor, get their blood pressure checked or undergo routine cancer screening, a Commonwealth Fund survey found.
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Here's one consequence of the Supreme Court's healthcare-reform decision: States with low Medicaid eligibility thresholds that choose not to expand Medicaid would leave poor adults to churn between subsidized commercial insurance and no insurance whatsoever.
Yesterday's decision created a potential gap in coverage for poor adults. Here's how: The Supreme Court said that the federal government cannot enforce an expansion of Medicaid eligibility by threatening to cut off all Medicaid funding to states that fail to expand. That leaves states free to ignore Medicaid expansion under the law.
Poor adults were expected to benefit most from Medicaid expansion, which opens the safety-net insurer to everyone with incomes below 133% of the federal poverty guidelines starting in 2014.
As of January, eligibility for poor, working parents in 33 states is capped below 100% of the federal poverty guideline ($23,050 for a family of four), a survey by the Henry J. Kaiser Family Foundation shows. Adults without children are completely ineligible for Medicaid in all but eight states, but can receive limited health benefits or premium support in 17 states, the Kaiser Family Foundation said.
Meanwhile, subsidies for commercial insurance are available for those with incomes between 100% and 400% of the federal poverty guidelines.
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The collective deficit for state budgets for the coming year is the smallest yet since the recession ended, a new survey shows.
But at $54 billion, the gap underscores how states continue to struggle from the economic downturn, write Elizabeth McNichol, Phil Oliff and Nicholas Johnson at the Center on Budget and Policy Priorities, which conducted the survey.
State deficits “remain large by historical standards, as the economy remains weak and unemployment is still high,” they say.
As if to prove the point, the survey comes as Illinois lawmakers voted to slash Medicaid spending to address the state's budget woes, the Associated Press reports.
States may not fully recover for another seven years, should state tax revenue grow at last year's 8.3% rate, said the researchers. That's because of the “deep hole” states are in since the recession. Here's what the 2007-2009 recession looks like compared with the prior one:
Source: Center on Budget and Policy Priorities
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The collective deficit for state budgets for the coming year is the smallest yet since the recession ended, a new survey shows.
But at $54 billion, the gap underscores how states continue to struggle from the economic downturn, write Elizabeth McNichol, Phil Oliff and Nicholas Johnson at the Center on Budget and Policy Priorities, which conducted the survey.
State deficits “remain large by historical standards, as the economy remains weak and unemployment is still high,” they say.
As if to prove the point, the survey comes as Illinois lawmakers voted to slash Medicaid spending to address the state's budget woes, the Associated Press reports.
States may not fully recover for another seven years, should state tax revenue grow at last year's 8.3% rate, said the researchers. That's because of the “deep hole” states are in since the recession. Here's what the 2007-2009 recession looks like compared with the prior one:
Source: Center on Budget and Policy Priorities
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