Excess Medicaid funds sit unused

DENVER — Hospitals could have used a $24.8 million pot of excess funds this year that was generated by a program to get matching federal Medicaid funds, rather than letting it sit unused, according to an audit conducted by the state.

A spokeswoman in the state auditor’s office declined to comment further on the audit and directed questions about it to other state offices. In all, it appears more than $52 million in excess funds has accumulated in the Medicaid Hospital Provider Fee program over a three-year period.

A consultant is being paid up to $912,000 in the next five years to address some issues of the program, according to the state Department of Health Care Policy and Financing.

Hospitals pay into the Medicaid Hospital Provider Fee program in part based on projections of how many people on Medicaid will use it in a given year and how many new Medicaid patients they expect. The program started in 2009 as part of the Colorado Health Care Affordability Act, a law designed to reduce costs of uncompensated care to hospitals and to expand health-care coverage to Colorado residents who don’t have it.

Local hospitals and the Colorado Hospital Association trade group support the Medicaid Hospital Provider Fee program, which many say “levels the playing field” to get Medicaid-reimbursement money to the hospitals who treat the most Medicaid patients. In general, hospitals that treat more Medicaid patients end up getting more money from the program, which collects it from hospitals that treat fewer Medicaid patients.

Longmont United Hospital is happy to be $6 million ahead for fiscal year 2012, which ended June 30, with the Medicaid Hospital Provider Fee program, said Neil Bertrand, chief financial officer at the hospital. Approximately 6 percent of the annual total of patients treated at Longmont United is through Medicaid, Bertrand said.

The provider fee helps level the disparity in communities with higher Medicaid and charity-care costs, Bertrand said. In general, Bertrand estimates the hospital gets back $1.34 for every $2 spent in a Medicaid case.

“I happen to work with the hospital that has the higher charity care. It still doesn’t cover the shortfalls, but it helps offset our costs,” Bertrand said.

Centura Health, parent of Avista Adventist Hospital in Louisville, also supports the program. Avista saw a $3.4 million surplus in the fees generated by the program in fiscal year 2012. The hospital is working with the Colorado Hospital Association and the Colorado Department of Health Care Policy and Financing to try to improve the “rather complex process of data collection and program administration,” said Wendi Dammann, vice president of corporate communications for Centura Health LLC, parent company of Avista.

“We feel the provider fee is an effective strategy for increasing coverage for Coloradans and strengthening our Medicaid program,” Dammann said.

Exempla Good Samaritan Medical Center in Lafayette saw a $1.9 million deficit in fees generated by the program in fiscal year 2012. Hospital administrators “support the efforts that result in greater access to affordable health-care services, particularly to individuals who are poor and vulnerable,” said Todd Conklin, chief financial officer of Exempla Healthcare, parent company of the Lafayette hospital, in an emailed statement.

“The state audit report showed that the provider fee has proved to be a successful means for increasing health-care coverage for our most vulnerable citizens and bolstering Medicaid in Colorado overall,” Conklin said.

“Because of the provider fee, many thousands more Coloradans have health coverage today, without adding any costs to Colorado taxpayers.”

Boulder Community Hospital saw no gain or loss from the program in fiscal year 2012, so the program has neutral impact, said Bill Munson, chief financial officer.

“It’s been more meaningful for the populations with more indigent care,” Munson said.

An oversight committee that includes hospital representatives decides whether to carry the money over from year to year or refund it back to hospitals, said Tom Nash, vice president of financial policy for the Colorado Hospital Association. By state statute, the money only can be used for the purpose for which it was collected, said Marc Williams, a spokesman for the Department of Health Care Policy and Financing.

“I haven’t heard one hospital complain about it. It’s a very transparent process. Everybody knew that there was more money than we really needed,” Nash said. “The amount carried over from year to year is very small.”

In fiscal year 2010, the first year of the program, $38 million was refunded to hospitals of a $43.9 million surplus, according to the audit report. In fiscal year 2011, $22.5 million in excess fees were collected and kept, according to the audit report. In fiscal year 2012, $24.8 million in excess fees were collected and kept, according to the report.

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