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Billion-dollar questions

Hospitals face unknown reimbursements under health law

Published: Wednesday, Dec. 25, 2013 5:30 a.m. CDT

Illinois hospitals have $8 billion hanging in the balance.

If residents without health insurance follow the new law and begin seeking coverage Jan. 1, the potential financial blow could be avoided. But if too many residents continue to go uninsured and opt to pay fines – or estimates about how much uninsured patients have cost hospitals are inaccurate – billions could be lost.

A potentially costly Medicare assumption was built into the Affordable Care Act that has health care providers anxious for the insurance plans entered into through the new state marketplace to kick in Jan 1.

Danny Chun, spokesman for the Illinois Hospital Association, said an $8 billion reduction in Medicare reimbursements for Illinois hospitals – and a $155 billion reduction nationally – will take place between 2010 and 2020.

The theory, he said, is hospitals will be able to offset that cost as they spend less on uninsured patients each year because the law requires all citizens to be covered. Illinois hospitals alone tallied more than $1.5 billion in uncompensated care in 2012.

“As more people get coverage the hospital’s uncompensated cost goes down, theoretically, over time,” Chun said. “But we haven’t seen the beginning of the coverage yet, so we’re not going to see the impact right away. We have to see how it plays out.”

While coverage under plans purchased through the state marketplace does not start until Jan. 1, the reduction in Medicare reimbursements began when the law was signed in 2010.

Locally, the $155 billion reduction in Medicare payments nationwide will – over 10 years – have an $88 million impact on Cadence Health, which operates Delnor Hospital in Geneva and Central DuPage Hospital in Winfield, said Tammy Pressley, director of community, government and public affairs for Cadence.

Additionally, she said, the automatic federal spending cuts this year – the sequester – further reduced Cadence’s reimbursements by $26 million over 10 years.

“Suffice it to say there is tremendous downward pressure on Medicare reimbursements,” Pressley said. “That does challenge hospitals to continue to provide excellent care with lowered reimbursements.”

Last year, Pressley said, Cadence Health’s uncompensated care – charity care, Medicare and Medicaid shortfalls and accounts written off due to patients’ inability to pay – totaled $137 million. The health system will look for the charity care to decrease as the implementation of the Affordable Care Act progresses, she said.

Area hospitals have been proactive in educating residents about insurance options through the Illinois Health Insurance Marketplace. At Cadence, for example, Pressley said staff members had a half-day training session on the topic so they can refer individuals to the appropriate resources. Cadence also has provided information about the Illinois Health Insurance Marketplace on its website.

“As the federal site becomes more functional, we’re having more questions,” Pressley said.

Estimates show that 69,419 Kane County residents younger than 65 years old are uninsured, according to the Kane County Health Department.

Although the available options differ greatly, plans are divided into four levels – bronze, silver, gold and platinum – that offer different levels of coverage and services based on factors such as age and income.

Even after more people become insured, hospitals have to take greater care in limiting readmissions, especially with Medicaid and Medicare patients. Hospitals will suffer greater reductions in Medicaid and Medicare reimbursements if those patients are readmitted within a certain time frame, even if it is for a different illness or disease.

CDH is one of only seven hospitals in Illinois that hasn’t been penalized in the two years this program has been in place, Pressley said.

“One of the key things that we do is assess patients when they come to us for risk of readmission,” she said, noting preventative measures might include home visits and monitoring whether patients have followed up with their primary care physician and are taking their prescription medicines.

Those interested in insurance through the marketplace can access plans and information at www.getcoveredillinois.org.

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