Should Voluntarily Uninsured Patients Lose Charity Care?

Now that the Affordable Healthcare Act’s healthcare marketplaces and policies are in effect, hospitals are considering whether those who decline health coverage should benefit from charitable care.

The issue of whether to discontinue charity care for the voluntarily uninsured is tricky and, according to some, more a question of whether their denial of insurance indicates unwillingness to pay or an inability to pay. Some patients fall into the gap between Medicaid coverage and affordable subsidized care, while others who may be eligible for subsidized insurance are still unable to afford the high deductibles featured in lower-tier plans.

Other questions include whether patients were aware of available coverage options or if they were able to sign up during open enrollment. On the other hand, a significant though unsubstantiated concern about charitable care programs is that uninsured patients will be dissuaded from enrolling in a healthcare plan if they know that charitable care is an option. This could result in greater financial difficulty for hospitals receiving less government assistance to cover uninsured patients, particularly in states that declined Medicaid expansion.

For the moment, many hospitals are considering the effects of a change and have therefore not made any updates to their charitable care policies. Hospitals that have changed their programs have done so in a number of ways:

  • Reducing income threshold for additional assistance
  • Requiring a “nominal” contribution for care
  • Requiring patients to apply for coverage before they can benefit from charitable care (note: this is an existing practice in most hospitals)
  • Disqualifying aid to patients that refuse to enroll in coverage for which they are eligible (including Medicaid)

Regardless of hospitals’ decisions, all hospitals are required to clearly state their charitable care policies in compliance with the ACA and they must make “reasonable efforts” to qualify patients for aid before pursuing them for collections.

As hospitals absorb the financial changes of full ACA implementation, healthcare vendors must be prepared for any changes in payments. PRN Funding’s dynamic healthcare factoring options help healthcare vendors working with hospitals, doctors’ offices, and other healthcare facilities to shore up their cash flow by converting open invoices into immediate cash. Contact PRN Funding today to learn how healthcare factoring can help your company and to get started right away.

Healthcare Sector Adds Jobs in May

Despite nationwide reports of healthcare systems eliminating jobs, the sector added 34,000 jobs last month according to the Bureau of Labor Statistics.

The healthcare sector has added jobs for 131 consecutive months, or nearly 11 straight years, despite the recession and fears that the Affordable Care Act would cause the sector to shrink. Last month’s growth was twice the standard rate at nearly three percent, most of which was concentrated in ambulatory services.

One element of continuing job growth is the increase in demand for services created by larger numbers of insured patients. At the same time, the decrease in uninsured patients due to marketplace policies and Medicaid expansion has reduced healthcare spending for charity care and covering self-pay patients.

Year over year spending has dropped significantly from 2007-2008 levels, but has remained consistent over the last several years.

PRN Funding offers healthcare factoring solutions to a variety of companies in the healthcare sector. If a lack of working capital is keeping your company from hiring the staff you need, learn how healthcare factoring can transform your cash flow and help your healthcare company compete. Contact us today to get started!

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Survey: ER Visits Increase During Early 2014

A survey completed by the American College of Emergency Physicians shows that emergency room visits have increased since January 1.

Approximately 46 percent of ER respondents noted an increase in patient visits and another 27 percent reported constant rates. Nearly a quarter of respondents reported decreased patient visits. According to the survey, the patient demographic is shifting toward fewer patients with private insurance but more patients with Medicaid coverage. The increase is also not restricted to certain states or any geographic area.

While proponents of the Affordable Care Act hoped that the law would decrease ER visits by expanding insurance coverage, studies of Oregon’s and California’s healthcare system overhauls in the last several years indicate that the expectation may have been unrealistic. At the same time, the survey suggests that the ACA has in fact played a role in the shifting numbers over the last three months.

The first and most significant reason is that coverage does not equal or lead to access. Many newly insured patients have little access to a primary care physician or clinic for regular care, either because they are not informed about their options or because PCPs in the area are already overwhelmed with volume. The Association of American Medical Colleges estimates that the PCP-patient gap will reach 30,000 next year and continue growing after that.

Emergency care is equally difficult to access in many states. The American College of Emergency Physicians released their 2014 Report Card which gave 21 states an F rating in the “Access to Emergency Care” category.

That said, patients who do have access to emergency rooms – insured or uninsured – may choose the setting because they cannot be turned away; because they are experiencing potentially serious symptoms; or because they need immediate care when other providers are unavailable (that is, on evenings and weekends).

A potentially significant drawback of the ACEP’s survey is the limited number of respondents: many states had too few responses to register as a percentage of the total responses, and in the top participating state – California – only 10 percent of facilities submitted responses. This indicates a great deal of missing data that could impact the survey’s findings. In addition, the survey’s focus on only the first three months of 2014 makes it insufficient to make any far-reaching assumptions about continuing trends.

If ER visits continue to increase it could create greater demand for healthcare vendors to cover staffing and equipment shortages. PRN Funding’s healthcare factoring programs can prepare your healthcare company for future growth by giving you immediate access to working capital. Learn more about our healthcare factoring services and apply today to get started!

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Medicaid Expansion Reduces Uninsured Hospital Visits

States that chose to expand their Medicaid services under the Affordable Care Act are seeing significant reductions in uninsured hospital visits.

A review of publicly traded hospitals’ earnings calls by The Washington Post shows that uninsured (self-pay) hospital visits dropped between 28 and 33 percent at some of the largest hospital systems in the country in states that took advantage of the federally-funded Medicaid expansion. At the same time, Medicaid admissions increased anywhere from 4 to 22 percent at those same facilities.

The story is less encouraging in the 24 states that refused Medicaid expansion. Non-expansion states saw upticks in both self-pay ER visits and uninsured admissions, and some actually had decreased Medicaid admissions. Hospitals have pushed for Medicaid expansion, arguing that even Medicaid’s lower reimbursement rates are better than what they (often do not) collect from uninsured patients.

Many states have also dragged their feet in preparing for the ACA’s broader implementation of presumptive eligibility, a system by which hospitals can preemptively enroll families with qualifying income in a Medicaid program to provide them care up-front. The state Medicaid agency then processes the complete application, putting many otherwise uninsured families on the path to coverage.

There are troubling financing implications for the uneven expansion of Medicaid around the country. The increase of self-pay patients in non-expansion states increases the amount of potentially uncollectible funds owed to those hospital systems and facilities, which also raises the risk to a healthcare factoring company.

Factors collect from insurance, Medicaid, and Medicare, but not from individual patients; therefore, more self-pay accounts reduce the number of valid invoices that a hospital can factor to offset the gap in federal reimbursements. If the above numbers continue their current trajectories, there is a very real possibility that healthcare factoring companies may tighten their requirements for working with clients in non-expansion states – or decline to work with them altogether.

We will continue to provide updates on Medicaid expansion and its impact on facilities in both expanded and non-expanded states.

PRN Funding offers healthcare factoring services to vendors providing a variety of healthcare services to hospitals and other healthcare facilities. Learn more about the different healthcare factoring options we provide and fill out our easy online application to begin.

Does Medicaid Expansion Increase ER Visits?

A study of Oregon’s 2008 Medicaid expansion has been touted as a huge blow to President Obama’s claims that Medicaid expansion through the ACA would reduce ER visits, but a parallel study of California’s 2010 Low-Income Health Program suggests that the situation is not so simple.

Medicaid expansion

Oregon: Medicaid expansion drives up costs

The Oregon study, published in Science by economists Amy Finkelstein of MIT and Kate Baicker of Harvard, measured emergency room visits of more than 20,000 residents living in the Portland area – one group of patients without insurance, and one group newly enrolled in Medicaid. Researchers determined that the Medicaid patients visited emergency rooms 1.4 times over 18 months, while the uninsured group visited 1.02 times in the same period. They further determined that nearly half of the increased visits were for complaints that could have been treated by a primary care physician (PCP), or were for emergency complaints that could have been prevented by PCP care.

Overall, ER spending in the Oregon study was estimated to have increased by $120 per covered patient. The researchers attribute this to a structural flaw in Medicaid’s design that reduces cost-sharing for covered patients to zero or near-zero, encouraging more unnecessary visits and raising state spending for Medicaid claims. State governments have responded by drastically reducing their reimbursements to medical providers, and PCPs have further responded by turning away new Medicaid patients.

Their conclusion is that Medicaid patients are more likely to visit the ER than to search for a PCP who will accept them, which then raises the cost of care even more.

San Diego: ER visits appear to be falling – with patient education

However, Paul Sisson of the San Diego Union-Tribune reported yesterday that a similar expansion of California’s Medicaid programs in 2010 has resulted in a two percent decrease of emergency room visits from July 2011 to September 2012. Nearly 50,000 San Diego-area residents enrolled in California’s Low-Income Health Program from mid-2011 to the end of 2013. There is only about a year of available data, and ER administrators have not noted significant changes in visits, but the results thus far are encouraging to doctors and health care researchers in the state.

A key difference between San Diego’s program and Portland’s is the access enrolled patients have to PCPs. In San Diego, new patients in the LIHP were counseled about their healthcare options and connected to a local PCP with whom they had a preliminary visit. These visits were designed to build a relationship so the patient would visit their doctor instead of the emergency room in the event of an illness.

In addition, county employees reached out to the community clinics where they sent their patients to make sure they were able to make same-day appointments. The UCLA Center for Health Policy Research studied ER use by LHIP participants and noted that their ER visits decline as they become accustomed to having insurance.

In Oregon, on the other hand, there is no record of patient education to suggest that patients knew about or had access to alternative healthcare options. As stated by UCLA Center for Health Policy Research director Gerald Kominski,

That behavior of seeking primary care in the ER has been reinforced for a period of years,
and it doesn’t change immediately just because you give somebody an insurance card.

Long-term effects of Medicaid expansion remain to be seen (as do short-term effects in states that have just implemented their own expansions), but these two contrasting studies make a compelling argument that patient education is necessary to fully reap the potential benefits of expanded low-income insurance programs.

Is your cash flow suffering because of slow hospital payments? PRN Funding’s healthcare factoring programs can help you close the cash flow gap and keep your business running smoothly. Learn more about invoice factoring with PRN Funding and contact us today to get started.

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September Layoffs Largely Concentrated in Healthcare

The once recession-proof healthcare industry took a large hit in September, reporting more layoffs than any other industry for the month.

Hospital layoffs

Healthcare providers let go more than 8,000 employees, including administrative staff as well as doctors and nurses, in an ongoing effort to reduce costs. Some notable reductions are Vanderbilt University Medical Center’s 1,000-employee cut and Cleveland Clinic’s 3,000-employee buyout plan. Reductions are projected to continue into next year, cutting into the past year’s gains in private hospital employment.

The layoffs are a response to a variety of funding cuts and changing hospital conditions, including new reductions established by the Affordable Care Act. Medicare and Medicaid reimbursements in particular have fallen sharply due to sequestration and additional penalties associated with the Hospital Readmissions Reduction Program, which cuts reimbursement to hospitals with excessive readmissions for applicable conditions. Other factors include:

  • Research funding from the National Institutes of Health was cut five percent due to sequestration;
  • Increasing numbers of patients are aging into Medicare, which reimburses at lower rates than private insurance;
  • Despite the ACA’s expansion of Medicaid, 26 states have chosen not to expand the program and accept greater funding (Vanderbilt cites this as a primary cause of their cuts);
  • Private insurance policies are paying out lower amounts, passing costs on to patients with higher deductibles and co-insurance;
  • Inpatient stays have shortened since the recession began, decreasing in length by four percent from 2007-2011.

Healthcare consultants, however, point out that hospital layoffs are a shortsighted solution that many facilities will have to reverse as more patients take advantage of their access to affordable healthcare and seek treatment they may have otherwise eschewed.

There are alternative solutions for facilities looking to shore up their cash flow. Medical receivables factoring gives hospitals immediate access to cash that they can use to meet their expenses without cutting employees they will likely need to call back in the next few months. PRN Funding has more than a decade of experience in the healthcare industry and can help meet the unique needs of providers. Apply today to learn more and get the cash ball rolling.

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Hospitals Shed Light on the ACA Blame Game

Following Cleveland Clinic’s announcement last month of more than $300 million in budget cuts, we addressed the ongoing blame game over the Affordable Care Act in the mainstream media. Members of the mainstream media have been slow to take up the question, but this week the Plain Dealer asked the question: Is Obamacare really to blame for cuts at the Cleveland Clinic and other hospitals?

Frustrated business person overloaded with work.

The Cleveland Clinic has previously attributed their budget decision to “a number of factors”, as have other hospital systems considering or implementing similar cuts. Now, hospitals spokespersons and health care analysts have provided a more in-depth explanation of exactly how the Affordable Care Act will affect hospital systems going forward.

Medicare

Hospitals already handle a large annual gap between the health care they provide to Medicare recipients and the reimbursement limits that the Centers for Medicare and Medicaid Services place on various services. The ACA includes an additional Medicare spending reduction of $716 billion over the next ten years. Some of the cuts are specifically directed at hospitals, such as the Hospital Readmissions Reduction Program.

Another portion of the pending cuts to hospitals is $22 billion over ten years from the Disproportionate Share Payments (DSH), which cover charity care in hospitals with large numbers of uninsured patients. Hospitals expect to compensate for this particular cut with insurance payments from previously uninsured patients who will have access to coverage through the federal health exchange. These cuts come in addition to other reductions approved by Congress since the ACA passed in 2010.

Medicaid

The ACA expanded Medicaid coverage to include patients earning up to 138 percent of the federal poverty level, in an attempt to provide an affordable health care option to parts of the population too poor to pay a monthly premium even with tax subsidies to help. To ease state concerns about the costs of expansion, the federal government will pay all new Medicaid costs through 2016, when they will scale back their coverage to 90 percent.

However, when the Supreme Court upheld the ACA’s individual mandate they failed to uphold the obligation of the states to expand their individual Medicaid programs. In states such as Ohio and North Carolina where the government has chosen not to expand, hospitals will not be able to recoup the loss of Medicaid DSH funds cut through the ACA. With fewer newly eligible Medicaid patients than projected, hospitals are forced to contain their costs through other means.

Bad debt

Hospitals must already contend with bad debt from patients who do not cover the portion of their invoices beyond coverage limits, as well as costs they swallow from providing charity care. The Medicare and Medicaid restrictions described above will contribute to this ongoing problem but interestingly enough, so will the health plans available to patients in the online marketplaces.

The affordability of health care is a complex matter that goes beyond the cost of the monthly premium. Insurers balance low premiums such as those available in Bronze or Silver plans with higher deductibles and out-of-pocket costs, meaning that a patient who seeks care at the hospital will end up with a higher portion of the bill once that care is provided. As much as a third of uncollectible hospital bills are estimated to belong to patients with health care.

Still, hospitals are optimistic that higher numbers of insured patients will create a net gain, as they will be able to reduce their bad debt expenses for uninsured patients and will instead receive payment for at least part of services provided directly from the insurer.

The Cleveland Clinic is one large example of how the Affordable Care Act may affect hospital operations, yet they also offer an important caveat against framing the discussion of other facilities’ budget decisions solely within the context of the ACA.

If you provide services to a hospital or medical facility, healthcare factoring can help you maintain a positive cash flow without falling victim to uncertain hospital payment terms. PRN Funding offers a variety of healthcare factoring programs designed to meet the unique needs of healthcare vendors. The application process is fast and easy – contact us to start today.

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