A new study commissioned by the Massachusetts Hospital Association says the state's hospitals are straining under a burden of uncompensated care that now averages 7.3% of net patient revenues and is projected to exceed 10% in 1998.
At the same time, the state's mechanism for reimbursing providers for free care is paying only about 45 cents for every dollar of uncompensated care, and that's projected to dip to lower than 20 cents for the median hospital under the current funding and reimbursement formulas, according to the study, which was put together by the national accounting and consulting firm Deloitte & Touche.
Those are among the calculations laid out for lawmakers in the study of the future of the state's uncompensated-care pool, the vehicle by which hospitals and some primary-care clinics have been repaid for charity care since 1985. The MHA is lobbying hard to restructure the pool.
A legislative commission, which includes members from government, business and the insurance industry, began hearings on the issue late last month. Last week the commission heard testimony from hospital executives.
"This study demonstrates that hospitals have become the principal funders of free care in Massachusetts," said MHA President Ronald Hollander. "This situation poses a threat to access to care and cannot be sustained. The safety net must be reformed."
The MHA has argued that the formula for contributing funds to the pool-assessments on healthcare services-has placed the funding responsibility squarely on hospitals while at the same time falling short of supplying the reimbursement level required to meet eligible free-care claims.
And that gap between funding and need, according to the study, has been growing by 10% a year. Although the pool is capped at $330 million a year, eligible uncompensated-care expenses totaled $474 million in 1995 and are projected at $521 million in 1996 and $630 million by 1998.
The state's current formula for paying hospitals out of the pool favors facilities with the highest share of total uncompensated-care expenses, assuring that inner-city hospitals such as Boston City Hospital (now part of the merged Boston Medical Center) and Cambridge (Mass.) Hospital remain financially viable, the study said.
However, as the statewide free-care burden rises and the top handful of high-charity hospitals continues to be reimbursed at more than 90% of eligible costs, the rate of reimbursement for other hospitals is projected to plummet.
The study predicted that 30% of the state's hospitals would get no reimbursement for their uncompensated-care expenses by 1998.
A Democrat-sponsored healthcare-reform law was enacted over the veto of Massachusetts Gov. William Weld, a Republican. The law calls for expansions in eligibility for Medicaid coverage that are intended to reduce the number of uninsured residents (Aug. 5, p. 17). A tobacco tax was imposed to pay for the program.