What's New with HCFO - 02/15/2008 (Plain Text Version)In this issue: Challenges Facing the Health Care Safety Net
The recent closure of a Los Angeles safety net hospital and the current financial crisis at an Atlanta safety net hospital typify the challenges affecting the health care safety net’s ability to provide care to the nation’s most vulnerable populations. The health care safety net is composed of providers, hospitals, and community health centers (CHCs) that by mission or federal mandate provide care to individuals—often uninsured, underinsured, or Medicaid beneficiaries—who are unable to pay for medical care.1 CHCs provide primary care services, while safety net hospitals provide inpatient or emergency indigent care and often trauma or ambulance services that benefit the larger community.2 As state and federal public policymakers look to contain health care costs and expand coverage, they often reallocate funds away from the safety net. Thus, recent proposals to reduce Medicaid funding, workforce shortages, and state initiatives to increase coverage may unintentionally threaten the viability of the safety net and its ability to provide care. CHCs face workforce shortages and care coordination challenges Federally qualified CHCs are required to provide select primary care services, regardless of a patient’s ability to pay. Since 2002, the Bush administration has invested more than $645 million in CHCs and has expanded access to primary care to 4.5 million individuals.3 Although greater funding has increased the number of CHC sites and patients, CHC administrators find it challenging to recruit physicians to work in CHCs and note that a large portion of the allocated funds are used to recruit and compensate medical professionals.4 Moreover, although CHCs provide primary care, their patients—particularly uninsured and Medicaid patients—often do not receive necessary follow-up, diagnostic, specialty, or ancillary care, especially for mental health and substance abuse services, due to their inability to pay.5 Thus, patients with acute or emergent needs are often forced to seek care at safety net hospitals. To improve access to primary care, some safety net hospitals have also established CHCs on their campuses to provide outpatient services.6 Decreased funding and competition threaten safety net hospitals Safety net hospitals also face a variety of threats, including inadequate funding and an inability to compete for private pay patients in their primary service areas. Safety net hospitals may be public or private not-for-profit, but are characterized by their mission to provide medical services to individuals regardless of ability to pay.7 HCFO grantees, Gloria J. Bazzoli, Ph.D., of Virginia Commonwealth University, Richard C. Lindrooth, Ph.D., of the Medical University of South Carolina, and Romana Hasnain-Wynia, Ph.D., originally at the American Hospital Association’s Health Research and Educational Trust and now at Northwestern University, studied the effects of the 1997 Balanced Budget Act (BBA) and market factors on the health care safety net. In particular, they studied the impact of the BBA’s provisions designed to slow the growth of Medicare payments and the formation of hospital networks on hospitals, the structure of the safety net, and the quality of care provided by safety net hospitals. Bazzoli and colleagues found that hospitals that experienced financial challenges as a result of the BBA provided less uncompensated care. Moreover, the provision of uncompensated care by non-core safety net hospitals decreased and more of the provision of uncompensated care fell to safety net hospitals. In 2004, the National Association of Public Hospitals and Health Systems (NAPH) reported that uncompensated care accounted for 21 percent of its members’ total costs, compared to the average 5.5 percent of total costs for all hospitals.8 Moreover, one half of the NAPH membership reported negative operating margins.9 While hospital administrators often try to subsidize uncompensated care through payments from privately insured patients, only about 20 percent of their revenue is generated by private payers.10 Some safety net hospital administrators are unable to compete with nearby hospitals for privately insured patients because they do not have the resources to make capital investments or market hospital services.11 Federal cuts and state expansion efforts may positively or negatively impact safety net viability Safety net hospitals receive funding for uncompensated care from a variety of sources, including state and local governments, Medicaid, Medicare, indirect medical education (IME) payments, and disproportionate share hospital (DSH) payments.12 As both CHCs and safety net hospitals rely heavily on Medicaid as a source of revenue, state and federal legislation can impact the financial viability of the providers.13 Recently, the Centers for Medicare and Medicaid Services (CMS) proposed to reduce Medicaid spending by $11 billion dollars over the next five years.14 In an effort to reduce unnecessary costs, the rules would eliminate federal matches for graduate medical education (GME) and would restrict federal Medicaid matching funds received by government-owned hospitals to the real cost of the medical service.15 Critics of the proposal contend that such cuts would increase pressure on the safety net, decrease access to care for the poor, and jeopardize physician GME.16 Moreover, state’s efforts to increase coverage through the expansion of existing public programs—such as Medicaid and SCHIP—may either detract from safety net funding (as some states redirect Medicaid funds to coverage initiatives) or relieve pressure on the safety net by decreasing the number of uninsured requiring safety net services. Which impact is more likely remains to be seen. Some coverage expansion efforts, for example, are targeted to specific populations, such as children and women, and may exclude individuals who rely on safety net services for care. HCFO grantee Anthony T. Lo Sasso, formerly of Northwestern University and now at the University of Illinois at Chicago, examined whether the safety net “crowded out” (replaced) either public or private insurance for children below the age of 14 and childless adults between the ages of 18 and 64. He found that there was minimal crowd out of children, likely due to SCHIP and Medicaid, and that there was some crowd out of childless adults for CHC services, but less so for safety net hospital services. (For more complete research findings, please view http://www.hcfo.net/pdf/findings0604.pdf). Growing number of uninsured will likely increase demand for safety net services The number of uninsured is expected to increase as more people are unable to afford private insurance and federal policymakers limit eligibility and funding for public insurance.17 As such, the demand for safety net care, including prescription drugs, mental health, dental care, and specialty services, is likely to increase.18 Without the ability to cope with financial and workforce constraints, the safety net may not be able to provide care to a growing percentage of the U.S. population. As Marion E. Lewin and Raymond J. Baxter note, “Health care reform and insurance expansion are again front-burner issues for states and the federal government. As part of that laudable goal, states and communities must look at ways to ensure that the poorest and most vulnerable citizens are not left worse off than they were, as a result of these changes.”19 The following selected grants from HCFO’s portfolio may help inform policymakers about how community and policy factors influence the safety net. For other grants related to health care costs see www.hcfo.net. Title: The Impact of Pay for Performance on Hospitals that Care for Minorities and the Poor The researchers will examine the impact of financial incentives to improve quality on hospitals that care for minority or other underserved populations. The Centers for Medicare and Medicaid Services have implemented pay for performance (P4P) demonstrations, and are considering implementing P4P nationally. However, the impact of P4P has not been widely evaluated. Hospitals that care for underserved populations may have greater potential for quality improvement; conversely these facilities lack the tools and resources to improve quality and compete for the additional resources. The researchers will examine changes in quality for hospitals in the Medicare Premier P4P Demonstration that serve disadvantaged populations (minority and poor); these changes will be compared with changes in hospitals in the demonstration that do not serve disadvantaged populations and with hospitals that serve disadvantaged hospitals not in the demonstration (and not subject to P4P). The objective of the project is to provide more information about the impact of P4P on hospitals that serve disadvantaged populations, and help policymakers to design incentive systems that encourage higher quality care without disproportionately harming hospitals that care for these populations. Title: Effects of the Balanced Budget Act and Market Forces on the Health Safety Net The project assessed the effects of the 1997 Balanced Budget Act (BBA) and other important market factors on the U.S. hospital safety net. Specifically, the researchers examined: the local structure of the hospital safety net by examining the changing roles and involvement of hospitals in safety net care, the operation of safety net hospitals by studying staffing intensity, and the outcomes of care for indigent patients as measured by selected quality of care indicators. The discussion below summarizes policy relevant findings in each of these areas. Title: The Safety Net and Employer-Provided Health Insurance There is extensive literature on the extent to which public health insurance coverage through Medicaid induces less private health insurance coverage. However, little is known about the effect of other components of the health care safety net in crowding out private coverage. The researchers’ goal was to examine the impact of the health care safety net on the health insurance coverage of children. They conducted an individual-level analysis of health insurance coverage using data from the Current Population Survey for the years 1990-2000 combined with a long panel of state level data on hospital uncompensated care and free and reduced price care offered by Federally Qualified Health Centers (FQHCs). They focused on two distinct groups for the analyses: children aged 14 and under and single, childless adults aged 18 to 64. Title: Uninsured in America: Individual and Community Factors Does an individual’s community have an impact on the decision to purchase health insurance in the private market? A team of University of Washington researchers examined whether community-level characteristics, such as unequal income distribution, segregation in housing, and availability of safety net services, affect the decision to purchase private health insurance, as well as access to care of uninsured persons. Access was measured using estimates of services available to uninsured or vulnerable populations in the community (e.g., the community's "safety net"), as well as whether the availability of safety net services influences low-income individuals' and families' decisions about whether or not to purchase individual insurance. In addition, the researchers estimated the probability of purchasing individual insurance, delaying or not obtaining care, utilizing outpatient services, and having a regular source of care. They used the Community Tracking Study Household Survey, along with data from HCFA, the American Hospital Association, the Census Bureau, the Area Resource File, the Urban Institute's "Assessing the New Federalism" project, and George Washington University data on the percent of medically underserved persons served by federal and state funds or programs. The project’s objectives were to: 1) assess how individual, community, and state-level factors affect the decision to remain uninsured or to purchase individual health insurance and whether those factors explain lower rates of individual insurance purchased by minorities; and 2) describe access problems experienced by the uninsured.
1 “What is a Safety Net Hospital?” National Association of Public Hospitals and Health Systems. Also see www.naph.org/Content/ContentGroups/Publications1/WhatIsASafetyNetHospital.pdf |