Last year, Cleveland's MetroHealth, the local safety net system, provided $130 million in care for the uninsured, says John Corlett, vice president of government relations and community affairs. The 731-bed MetroHealth Medical Center, which also has 17 clinic locations in the local area, last year got a $36 million subsidy from the local government, and about $28 million from disproportionate share funding from CMS.
The balance, some $66 million, came from the health system's margin. That's not exactly a drop in the bucket for a system that takes in nearly $800 million in revenue each year.
"So that's how life was before the waiver," says Corlett. "Going forward, we'll enroll up to 30,000 uninsured adults and get paid through this Medicaid waiver."
Fortunately, through work with the Centers for Medicare & Medicaid Services and local government officials, life will be different, because the portion of the care burden borne by MetroHealth's margin will be greatly reduced in 2013.
That's because CMS recently approved the launch of MetroHealth Care Plus, essentially a Medicaid waiver demonstration project. It will provide a medical home and health coverage to up to 30,000 uninsured residents of Cuyahoga County, where MetroHealth is located. That designation allows MetroHealth to access $64 million of annual federal Medicaid matching funds that will fill that $66 million hole in the budget quite nicely, according to Corlett. Meanwhile, the anticipated drop in DSH funding over time will be cushioned as well.
Unfortunately, the scheme is unlikely to survive past the end of December. That's because Ohio has decided to budget for the Medicaid expansion called for in the Patient Protection and Affordable Care Act, which would supplant the waiver program. But for hospitals and health systems similar to MetroHealth in the roughly half the states that have decided to let the federal government set up their exchange, such a waiver, if granted, might have a much longer shelf life.
Nevertheless, Corlett says the program is worth doing not only because it provides new funding for the uninsured, but because it allows MetroHealth to expand many working relationships with outside health providers that it will need as shared risk ramps up in coming years.
"We'll be financing care from providers outside MetroHealth," says Corlett. "So we will reimburse them because they're augmenting our primary care services."
MetroHealth Care Plus, which is how the new initiative will be branded to consumers and providers, is also providing a pharmacy benefit, which is a new expense.
"We will have to learn over time how significant that expense will be," Corlett says.
The program requires MetroHealth to become an insurer in fact, if not in name, because it effectively must finance care and take on risk for a population of up to 30,000 previously uninsured, who do not have to access care at MetroHealth, necessarily.
"An actuary worked with us to develop per-member, per-month figures, but we'll have a better sense in three months of how much we're spending outside and how much stays inside," says Corlett, noting that initial projections indicate that about 25 cents of every dollar the system will spend on this population will go outside the system to federally qualified health centers and other ancillary providers.
The fact that MetroHealth Care Plus will be paying outside entities is early practice for the types of shared risk contracts many healthcare organizations will have to take on as both government and commercial payer sources look to force providers to take risk surrounding quality of care.
Though hospitals and health systems in other states should investigate such a waiver, especially if their state will not be setting up its own insurance exchange, Corlett says it won't come easy.
First, the matching funds could only be used if the hospital were to designate funds (in this case, the county subsidy) toward caring for the uninsured population. MetroHealth was able to designate its county subsidy because represented state or local funds not previously used in the Medicaid program.
Technically, a state could contribute additional funding to get the matching funds MetroHealth got in this case, but that's unattractive for the same reasons some governors are resisting the Medicaid expansion—their state budgets are riddled with healthcare expense already.
Corlett says state and CMS officials granted the waiver in part because they were intrigued with a program at MetroHealth called Partners in Care, which was essentially a patient-centered medical home for the uninsured. That program will now morph into MetroHealth Care Plus.
"We reasoned that if we invested more in primary care and care coordination, that if we applied that PCMH team approach and care coordinators, we could over time reduce utilization of the ED and inpatient portion of the hospital," says Corlett.
"Because we were in effect, the insurer, that benefit could accrue to us. After a year or so, we noticed our patients enrolled in Partners in Care did use less ED, and when they went for inpatient care, their costs weren't as high."
MetroHealth also started to see better health outcomes around diabetes and hypertension, for example, and all of its 15 local primary care "health centers" are now certified as Level III medical homes by the NCQA.
Corlett predicts enrollment will ramp up rather quickly. One of the unique features MetroHealth negotiated with CMS was the ability to auto-enroll a large number of patients at the beginning. Patients previously in the system's DSH program who had completed an application in past 90 days could be auto-enrolled.
"That was about 7,500 patients," says Corlett. "They can disenroll if they want, but they have to opt out."
He says the initial reaction from the uninsured has been such that it won't take long to hit the 30,000-member ceiling.
"It's in our interest to."
Corlett says although Ohio is expanding Medicaid, which means its waiver will be short-lived, he encourages safety net hospitals in other states to look into something similar, if they have the wherewithal and meet the requirements.
"If a state chooses not to expand, the waiver exists, and I would think that in states that choose not to expand and that also have large urban public hospitals, it would be an alternative they might want to look at."
Philip Betbeze is the senior leadership editor at HealthLeaders.