May 21, 2010

Fee soothes sting of uncompensated care

A new “provider fee” now being collected from Colorado hospitals is returning federal matching dollars to help them reduce the cost of care for the uninsured and underinsured.

The fee, authorized under the Colorado Health Care Affordability Act co-sponsored by state Rep. Jim Riesberg of Greeley and passed last year, is also helping to expand and improve health-care delivery to tens of thousands who have no health insurance.

And for hospitals in Northern Colorado, the fee – which went into effect April 1 – is helping cover the growing cost of health care for indigent and Medicaid patients.

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“It’s helping to compensate us for the fact that our indigent care volume has increased 35 percent from 2008 to 2009,´ said Stephanie Doughty, Poudre Valley Health System’s chief financial officer. Doughty said without the new fee, PVHS was expecting only a 4 percent increase in federal and state reimbursement for treating the indigent.

“Now, we’re getting a 28 percent increase, so that more closely matches the volume of increase in our system,” she said. PVHS owns and operates Poudre Valley Hospital in Fort Collins and Medical Center of the Rockies in Loveland.

According to figures compiled by the Colorado Department of Health Care Policy and Financing, PVHS hospitals will realize combined net earnings of approximately $1.877 million from the fee and federal matching funds for fiscal year 2009-10.

Northern Colorado hospitals owned and/or operated by Phoenix-based Banner Health will realize combined net earnings of about $9.5 million. Those facilities include McKee Medical Center in Loveland, North Colorado Medical Center in Greeley, East Morgan County Hospital in Fort Morgan and Sterling Regional Medical Center.

“The additional funds paid back to hospitals from the total provider fee enable us to continue to meet our mission as nonprofit health-care hospitals in providing quality care to those in the communities we serve,” Banner said in a statement.

Estes Park Medical Center will have fiscal year 2009-10 net earnings of about $454,000.

Reimbursed for indigent care

The provider fee is based on a complicated reimbursement formula that takes into account numerous factors but basically pays more to hospitals that treat the highest percentages of Medicaid and indigent patients and less to those who do not.

“The fee is assessed on all patients seen but only comes back based on the number of Medicaid patients seen, so some will get back more than others,´ said Steven Summer, Colorado Hospital Association president and CEO.

Summer said the provider fee – which provides the basis for hospital compensation – is not based on a per-patient basis “and by law can’t be passed on to the patient.”

So patients will never see a line-item charge on their bill, and patient participation in the fee comes only through being counted in the numbers used to calculate it.

Summer said one major reason why CHA and most of the state’s hospitals supported the fee was its ability to be used to reduce the cost-shifting to paying patients to help cover the cost of indigent and Medicaid-paid care, as it has in several other states.

Summer notes that Medicaid – a health-care program for the poor paid for with state and federal dollars – covers only about 55 percent of provider costs.

“That (unpaid) cost is being incurred by hospitals,” he said. “This is to replace a portion of that. Instead of losing 45 cents on every dollar of Medicaid, now it’s only 15 cents.”

The provider fee is projected to bring in about $600 million in matching federal funds each year and is expected to provide Medicaid coverage for about 147,000 uninsured adult Coloradans who had no health care other than that provided in hospital emergency rooms.

“When those patients show up at hospital emergency rooms, the hospitals get paid zero,” Summer said. “Now, they’ll be showing up with some payment instead of no payment. So it’s a positive outcome.”

Doughty said the adoption of the fee came at a “critical time” for Colorado hospitals struggling to provide care in a down economy.

“(Legislators) knew hospitals were going to be critically challenged because of the economy,” she said. “The state’s budget had to be cut and hospitals were facing increasing indigent care because of the economy. This helps us to at least reduce our losses.”

Steve Porter covers health care for the Northern Colorado Business Report. He can be reached at 970-232-3147 or at sporter@ncbr.com.

A new “provider fee” now being collected from Colorado hospitals is returning federal matching dollars to help them reduce the cost of care for the uninsured and underinsured.

The fee, authorized under the Colorado Health Care Affordability Act co-sponsored by state Rep. Jim Riesberg of Greeley and passed last year, is also helping to expand and improve health-care delivery to tens of thousands who have no health insurance.

And for hospitals in Northern Colorado, the fee – which went into effect April 1 – is helping cover the growing cost of health care for indigent and Medicaid patients.

“It’s helping to compensate…

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