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Healthcare Financial Management Association
New York Hospitals and the 2010 State and Federal Landscape
March 18, 2010LaGuardia Marriott
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Agenda
New York Hospitals
• Financial Picture • Outlook for Future
New York State Outlook
National Health Reform
2
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New York Hospitals
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New York Hospital and Insurer Margins
Over the last 8 years, NY hospitals have incurred losses of $466 million while NY insurer profits exceeded $10.3 Billion
*Does not reflect $500 million in 2009 Medicaid cuts or proposed 2010 cuts
4
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ANew York Hospitals
Disproportionately Reliant on Medicaid and Medicare
New York State New York City
Greater New York Hospital Association 5
64% Medicaid/Medicare 69% Medicaid/Medicare(National number is 56%)
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AMedicaid cuts are huge but pressure is coming from all over
Relatively flat Medicare paymentsIncreasing bad debt due to recession, increased patient cost sharingIncreased audit recoveriesPayment reductions for
•Never events•Readmissions•Observation level
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AHospitals turn to private
payers to subsidize government program losses
Upward pressure on private sector
revenues increases
As budget constraints suppress
public sector revenues
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Ability to cost shift is not unlimited
Budgetary constraints reduce
public sector revenues
Providers respond by increasing prices for private payers where
possible
Insurers increase premiums, tighten payment practices
Calls for premium regulation
Premium regulation leads to pressure on provider prices
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ATight Medicare and
Medicaid Budgets Will Continue
State Economy
•Decreased tax revenue•Increased Medicaid enrollment•Increasing elderly population
National Health Reform•Medicaid expansion•Low income subsidies•Medicare cuts•DSH cuts
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New York State
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AProposed 2010 Medicaid
Cuts($ in Millions)
11Note: Providers losses account for the typical cash-flow lag in State savings, the loss of Medicaid Federal matching funds, and, for hospitals, the impact on Medicaid managed care, Workers’ Compensation, and No Fault rates.
Almost $1
Billion
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AEnrollment Growth Accounts for
Almost All of New York’s Medicaid Spending Growth
Greater New York Hospital Association 12
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New York Medicaid Enrollment Has Grown Sharply
And Government Has Paid for Part of this Growth Through Provider cuts!
Greater New York Hospital Association 13
Medicaid enrollment has
grown 60%
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GNYHA Budget Advocacy
Reduce size of cuts
Get rid of readmissions
cut
Support Soda Tax
Mitigate redistributional
effects to “reforms”
Secure Enhanced
FMAP
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NY Managed Care Advocacy
2007 Bill•Limited ability of plans to deny claims for services which were preauthorized•Cooling off period•Extension of external to certain out-of-network services
2009 Bill•Shortened prompt pay timeframes•Limited plan ability to deny for late submission•Limited denials for COB•Extended provider rights to external appeal•Shortened timeframes for authorizing post -acute home care•Prohibited treating par hospitals as non-par when physician is non-par•Limits overpayment recoupment to two years except for fraud/abuse situations
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2010 State Action
A09988/S6983 - Prohibition on reimbursement reductions due to failure to notify
• Reduce penalty for timely filing• Collection of coinsurance and deductibles• Insurer prompt pay fines should go to bad debt and charity care
Breslin bill?
Prior approval of premiums
Malpractice Reform
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National Health Reform
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Road to Reform
House • Bill passed
11/07/09
Senate • Bill passed
12/24/09
Reconciliation• House must pass
Senate bill, both houses pass reconciliation bill
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Senate Bill -Achieving Coverage Expansion
Medicaid Expansion
Insurance Reform
Insurance Mandates
Insurance Exchange
Insurance Subsidies
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Medicaid Expansion100% FMAP for non-expansion states, phases down
NY to receive enhanced FMAP only on childless adults between 100 and 133% FPL
National expansion to
133% FPL
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Insurance Reforms
Temporary High Risk Pool for people with preexisting conditionsGuaranteed issue and renewal
Dependent coverage to age 26
Minimum MLRs of 85%/80%
No annual/lifetime maximums
Community Rating and Premium Review
Administrative simplification
Standardization of benefits (4 options)
Caps on Deductibles
Healthcare Compacts
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Insurance Mandates
•Subject to penalties of $95 in 2014, $495 in 2015, $750 2016•Capped at > of $2,250 per household or 2% of income•Exemptions if premiums exceed 8% of income
Individuals must have qualified
coverage
•Subject to penalties of $750 per employee or $3K/subsidized employee•Employers who impose waiting periods pay penalties of $400-$600
Employers with more than 50
employees must offer coverage
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Insurance Subsidies
Subsidies for Individuals
•Premium credits available to individuals and families between 100 and 400% FPL•Sliding scale such that required premium contributions are between 2.8% and 9.8% of income•Cost sharing subsidies between 100 and 300% FPL
Subsidies for Employers
•Tax credits for small businesses with no more than 25 employees and annual average wages < $50,000•Temporary reinsurance for employers covering retirees between 55 and 65 ($5 billion)
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Results of Coverage Expansion
Uninsured in Millions
Insured % of U.S. Residents (including unauthorized immigrants)
24Source: Congressional Budget Office.
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GNYHA Concerns
Provider Cuts
Market Basket
Geographic variation
DSH
FMAP
Readmissions
25
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Hospital Cuts 2010-2019, $ in Billions
26Source: Congressional Budget Office.
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GNYHA Conclusion: Support Reform
Lengthy implementation
means there’s time to fix problems
Size of deficit means cuts are coming anyway
Failure of Clinton reform and
subsequent BBA Cuts
Important to support
administration
27