Hospital officials pushing for health law revision

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Just weeks before state health exchanges open for enrollment Oct. 1, groups representing the hospital industry are lobbying the Centers for Medicare and Medicaid Services to revise an amendment to the federal Patient Protection and Affordable Care Act that could leave them on the financial hook.

While the amendment's full impact is unclear, hospital officials say it likely will add to their growing financial pressures -- pressures that have led to local layoffs and have prompted one southwestern Pennsylvania community hospital to cut services.

At issue is a 90-day grace period afforded under ACA during which health exchange patients who have stopped paying their insurance premiums continue to have health coverage.

Under the original wording in the 2010 law, insurers would be financially responsible if a patient couldn't pay.

That later was changed so that insurers can terminate coverage after 30 days -- which means hospitals could be saddled with any bad debt for care provided in the final 60 days of the grace period.

"CMS's approach ... unfairly burdens providers who treat these patients because they will not get paid by the [health plan] for covered services and will have to wait to try to obtain direct payment from the patient," wrote executives of the American Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges in a letter to CMS Administrator Marilyn Tavenner.

"The reality is that it will be extremely difficult to collect payment from low-income patients who already are having trouble paying their ... premiums."

Local hospital officials say this issue arises as Western Pennsylvania hospitals continue to provide more and more care for which they receive no payment.

From January to March, 55 hospitals in the region reported a total of $391.6 million in charity care, according to a survey done by the Hospital Council of Western Pennsylvania. That's a 6.31 percent increase over the same period a year earlier.

At the same time, hospitals' operating margins decreased from 4.02 percent to 1.69 percent -- and that's before sequestration-related Medicare cuts kicked in.

With the amendment, "The hospitals will continue to provide care for patients as though they have insurance," said Denis Lukes, the hospital council's vice president of payor relations and reimbursement.

That leaves hospitals vulnerable financially, he added, if the insurer or employer retroactively denies coverage because the patient hasn't paid the premium. "Will the hospital even know that the patient has not paid their premiums? That part we don't know the answer to."

The grace period issue adds to escalating revenue pressure on hospitals, he said. Insurers now classify more hospital stays as observations rather than admissions, which means lower reimbursement payments. Medicare and Medicaid payments are being cut and, in a growing trend, patients with high-deductible health plans are finding they can't afford to pay their portion of the bill.

"Then the hospital has to go through a process to collect payment, and that can be expensive," he said. More than any single thing, "it's the accumulation of all these reductions" that worry hospital officials.

The strain has begun to show, as several local hospitals and health systems -- from UPMC and the West Penn Allegheny Health System, to Washington Hospital and Excela Health in Westmoreland County -- have announced staff layoffs in recent months.

Last week, Uniontown Hospital cited declining patient admissions and reimbursements in announcing it would be closing four departments by year's end: the in-house Progressive Care Center skilled nursing facility, the geriatric behavior health unit, outpatient rehabilitation services and the diabetes center.

While some alternatives are available in the Uniontown area, the closing of the diabetes center "is due to inadequate reimbursement from third-party payers and the lack of grant funding to support this service," said James Proud, human resources and marketing vice president, in a statement. Although the cutback affects 70 positions, the hospital hopes to avoid significant layoffs by placing workers in alternative jobs and not filling existing vacancies.

Hospitals such as Uniontown are under the most pressure because of their dependence on government-funded programs. President and CEO Paul Bacharach said 78 percent of the patients seen at Uniontown are either on Medicare or Medicaid.

But with mounting financial pressures and Pennsylvania still balking at expanding Medicaid under the Affordable Care Act -- and thus reducing hospitals' uncompensated care -- he said other hospitals may soon have to consider additional cutbacks as well.

"I suspect we're going to see that more and more as the pressures we are feeling start to become more apparent to providers," he said.

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Steve Twedt: or 412-263-1963.


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