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Healthcare Reform Puts a Squeeze on Revenue Cycle

Rene Letourneau, for HealthLeaders Media, June 26, 2013

According to the Centers for Medicare & Medicaid Services, the PPACA aims to reduce funding to the Medicaid DSH program by $17.1 billion between 2014 and 2020. The planned reductions are based on the assumption that the PPACA will result in more insurance coverage for low-income patients and, therefore, less uncompensated care. In reality, Zurack says, the cuts will be extremely damaging to hospitals that serve this population.

HHC is preparing for hundreds of millions of dollars in cuts to the revenue it presently receives through the DSH program. "Those were the cuts that were enacted as part of the Affordable Care Act to pay for the expansion. We are concerned that the new revenue potential for the exchanges will be lower than the disproportionate care cuts," Zurack says.

In the current fiscal year, HHC will receive $818 million in disproportionate share funding. That number is slated to be reduced by $150 million by FY 2017, and more cuts are on the way in subsequent years. "The federal dollar loss will be as much as $300 million by FY 2019," Zurack says. "It's the cuts to disproportionate share funding that are really, really hurting us. Because of that, there is no net benefit to us."

HHC is trying to offset the hit it will take to its DSH funding by attempting to enroll more patients into its MetroPlus health plan. "The health plan is going to participate in the exchanges. They are trying to make lemonade out of lemons and trying to get as many people as possible insured through our health plan. "Our MetroPlus health plan is applying for every product available on the New York state exchange. We are hoping to have a competitive product that our patients will join," Zurack says.

Zurack notes that HHC is also working with other payers to position itself well for the changes it anticipates with the PPACA. "We are trying to be strategic in our contracts with insurance companies … to get favorable rates so we can afford to care for all of the newly insured. … We are actively engaged with all of our payers with lots of conversations. This all mostly takes effect in 2014, which is not that far away, but we are trying to prepare."

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