Amid the potential fiscal landmines safety net hospitals can expect, there's a silver lining: CMS will delay cuts to its disproportionate share funding.
As Colorado rolls out its state-run health insurance exchange and expands its Medicaid program, Peg Burnette, CFO of Denver Health, a safety net institution with 525 beds and $475.8 million in annual patient revenue, is watching closely.
Because Denver Health treats a high volume of uninsured and Medicaid patients—45% of its revenue comes from either Medicaid or CMS's disproportionate share hospital program—Burnette knows a lot is riding on how health reform plays out in her state and says she's pleased with what she's seen so far.
"Colorado is one of the states that has been ahead of the game with health reform with respect to the exchange," Burnette says.
To date, roughly 53,000 people have enrolled in a health plan through the online marketplace called Connect for Health Colorado, which Burnette says functions well and is easy to use. "Based on data that the federal government published, Colorado is at 54% of what was projected for enrollment. We are fourth in the U.S. as a result of that," she says.
In addition to launching its HIX, Colorado is one of 26 states—including Washington D.C.—that is expanding its Medicaid program, and, so far, about 86,000 residents have qualified under the new guidelines.
This could be good news for her organization, Burnette says. "We're very interested in the Medicaid piece, which is going to have a bigger impact initially… For a safety net provider like Denver Health, Medicaid is our single biggest payer… We are hopeful and believe that many of the patients we are seeing currently as uninsured patients will now qualify for Medicaid."
To encourage Medicaid enrollment, Denver Health employs staff to assist patients with getting through what can be a daunting application process.
Enrolling Medicaid Patients on Site
"For the Medicaid population there are some challenges. For example, there are folks who are homeless who qualify for Medicaid, but have a hard time navigating where to go or how to come into the system," Burnette says. "We can actually enroll people in Medicaid on site. Our patients come here in need of care and can walk right into the enrollment center and get enrolled."
Denver Health also has onsite navigators to help patients enroll in exchange products, including its own health plan, which it has had since 1997.
While treating more patients that have coverage through the exchange or Medicaid sounds good in theory, Burnette says it is also a potential financial hazard, because these newly covered individuals may now be responsible for out-of-pocket expenses that they can't afford.
A New Source of Bad Debt
"For safety net providers, there is a concern about the impact on bad debt… At the end of the day, it may be that [patients] have an out-of-pocket that they can't pay. In the past, that would have counted toward our disproportionate care, but that is no longer the case because they are counted as being insured. That is bad debt now that the hospital is going to have to pick up," Burnette says.
To mitigate its bad debt risk, Denver Health has a financial counseling program through which it educates patients about their liability and works to find payment solutions.
"When we identify someone with a high-deductible plan, we look at how upfront payments can be structured. Is there an amount that can be paid in advance? We are working with that patient from day one. We also do a lot of checking on our own to see if that patient has any benefits that they are not aware of. We make sure we completely understand what their benefits are," Burnette says.
Additionally, Denver Health has a program dedicated to educating its community about the financial implications of health reform.
A Silver Lining
"We have an outreach team of navigators who are doing calls and making visits to patients. We have patient education materials, banners, direct mailings, information on our website, employee trainings," Burnette says. "One of the things we do is inform patients about co-pays so they can be prepared. But, of course, we don't turn away a Medicaid eligible patient for lack of a co-pay."
Amid all the uncertainty and potential fiscal landmines safety net hospitals have to brace for with regard to HIX and Medicaid expansion, Burnette says there is one silver lining: CMS's decision in late December to delay cuts to its disproportionate share funding.
"Originally cuts were going to start on Oct. 1, 2013, before we even knew how many people were going to enroll in the exchanges," she says. "With the delay, we are really going to have some time to assess… It's definitely too soon to know what the impact will be, and that has always been the big question. The delay will give us time to have actual data, and we will look at it quarterly so we can see what is happening with our uninsured population, how many are going into Medicaid, how many are going to have insurance."
While the delay in DSH cuts allows more time to collect the data needed to move forward successfully in the new era of healthcare, Burnette says the changes coming out of the Patient Protection and Affordable Care Act are Denver Health's toughest challenge right now.
"I think health reform is our biggest challenge because although it represents a great opportunity, we have to stay on top of it because it is very complex, and we have to minimize the bad debt that comes out of it," she says.