Members agree that adequate, equitable and fair reimbursement is an ongoing challenge across the entire continuum of care that must be addressed to ensure a successful healthcare system in Hawaii. The number one challenge currently facing all three types of member organizations is reimbursement inadequacy by both Medicare and Medicaid.
Hawaii’s population is graying, with Medicare covering one in six residents. The program has been at the center of Federal negotiations regarding the national debt/fiscal cliff issue and is subject to a variety of cuts from the Affordable Care Act and subsequent legislation. Current Medicare reimbursements for hospitals average only 90 percent of costs. Based on this amount, we estimate that Hawaii hospitals lose approximately $80 million annually when serving the Medicare population, with this number projected to grow considerably due to Boomers becoming eligible and sequestration. Program cuts will negatively impact home health, hospice and durable medical equipment providers who rely on Medicare for the majority of their business. Similarly, reduction in payments to nursing facilities will reduce their ability to offset losses when serving the Medicaid population.
Due to the economic recession, enrollment in QUEST, Hawaii’s state Medicaid program, increased by 46% from July 2007 to July 2012, and now covers one in five Hawaii residents. Unfortunately, the cost to provide access to care for these individuals has left the State with insufficient resources to increase payments to healthcare providers. As a result, reimbursements for Medicaid services to Hawaii hospitals average only 70 percent of costs, leaving hospitals with a large financial shortfall. From fiscal year 2011 to 2012, uncompensated care costs for private hospitals rose from $81.7 million to $86 million.
The Association has developed a legislative and policy agenda that not only opposes cuts to reimbursement but identifies areas and develops initiatives which support improved Medicare and Medicaid reimbursement.
In the 2012 legislative session, HAH celebrated the passage of landmark legislation that will bring more than $46 million in federal funds to help hospitals and nursing facilities cover the costs associated with caring for our Medicaid and uninsured populations. Acts 156 and 217, the Nursing Facility and Hospital Sustainability Programs, are designed to draw down federal matching Medicaid funds to improve reimbursements that would maintain access to care for this population. No state funds and no taxpayer dollars will be used. Instead, the legislation raises funds from private facilities, an effort by HAH and its member facilities to proactively and voluntarily bring in more federal funds to needed programs.
These programs were implemented through the support and collaborative efforts of the Hawaii State Legislature, the Governor’s Office, and the Department of Human Services. These programs will support the ability of Hawaii hospitals and nursing facilities to continue delivering quality services to Hawaii’s most vulnerable populations. The failure to act would have likely led to additional facility closures. HAH is proud to have been a lead stakeholder in the crafting and passage of this legislation and looks forward to engaging in more future public-private partnerships to improve the quality of care throughout the state.
The expected result of this legislation is that for hospitals, Medicaid reimbursements will move from covering 70% of costs to 83%, and for long term care facilities, Medicaid reimbursement will move from losing $10 per patient per day to roughly covering costs. The sustainability bills were extended for one year in 2013 and are part of HAH’s 2013 legislative package.