Hospital officials say budget would have severe effect
Changes to the Medical Assistance program that Gov. Ed Rendell has included in his 2005-2006 state budget proposal would, if approved, have a severe effect on western Pennsylvania hospitals and their patients, officials say. Rendell’s proposed changes to the program, known more commonly as Medicaid, include requiring more Medicaid recipients to make higher copayments on many prescription drugs, and placing caps on the number of prescriptions and hospital/doctor visits a recipient can make annually, among other things.
Local hospital officials and those with regional and statewide hospital organizations say that placing restrictions will affect the most chronically ill Medicaid recipients.
Additionally, Patricia Raffaele of the Hospital Council of Western Pennsylvania (HCWA) said many people who are on Medicaid need frequent medical attention, and if those who exceed the Medicaid limits that Rendell is prescribing can’t afford to pay, hospitals will get stuck with the bill, she said.
She added that patients will suffer because hospitals cannot afford to bear the economic burden.
Dan Simmons, senior vice president and treasurer of Mon Valley Hospital, said Rendell’s proposed changes to Medicaid will “definitely have an effect on hospitals.
“We take care of people first and worry about the money second,” said Simmons.
However, he said that tight budgets make it more difficult to provide that care.
“There are a lot of chronically ill people on Medicaid, and we have to take care of them,” he said.
While the state administers the Medicaid program in Pennsylvania, the federal government contributes the lion’s share. Of the $14 billion that the state and federal government will spend on the program this year, the state’s share is $4.2 billion and is expected to rise to $4.5 billion next year.
Rendell has pointed out that the cuts he has proposed are a response to rising health-care costs and the federal government’s planned funding cuts for the program.
Under Rendell’s plan, no one will lose Medicaid coverage; however, the governor proposes that changes be made to Medicaid’s “general assistance” and “adult” programs, both of which affect people over age 21.
According to the governor’s proposal, recipients enrolled under the general assistance program would be limited to three prescriptions per month. The current limit is six.
In addition, recipients would have to pay a $6 co-payment on generic drugs and a $12 co-payment on brand-name drugs, whereas they now pay $3 for both generic and brand-name drugs.
Recipients also would be limited to one admission to the hospital per year for “inpatient physical health services” and one admission per year for “inpatient medical rehabilitation” services. Admissions for those services currently are unlimited.
For recipients enrolled under Medicaid’s adult program, six prescriptions are covered each month. The cost of prescriptions would be the same as under the general assistance program, according to Rendell’s proposal.
In addition, recipients would be limited to two admissions for “acute inpatient hospital physical health services” per year and one admission per year for “inpatient medical rehabilitation.”
A working family of four with an annual income of $7,600 or less can qualify for Medicaid, although the children would remain eligible at higher incomes.
At current eligibility rules, about 100,000 more people are expected to join the Medicaid rolls next year.
The changes Rendell proposes are designed to save $384 million, while still growing Medicaid spending by $285 million to serve the expected increase in recipients – without a tax increase.
But, Walter Wayne, chief financial officer of HCWA, said the plan would only increase the amount of uncompensated care that hospitals provide.
He said 56 hospitals in western Pennsylvania – including Uniontown, Brownsville General, Highlands, Greene County Memorial, Mon Valley and Excela Frick Hospital in Mount Pleasant – had to write off $258 million in uncompensated care last year.
Wayne said that $258 million includes charity care (cases in which the hospital knows the patient is unable to pay but treats him or her anyway) and bad debt (cases in which the hospital finds it is unable to collect money from its patients after treatment is given).
“It’s a tough situation, and it will only get worse if changes are made to Medicaid,” Wayne said.
Recent trends, according to Wayne, show that hospitals lose more money every year. During the July 2003 to June 2004 fiscal year, individual hospitals lost, on average, $4.6 million due to uncompensated care, he said.
That number is up from the July 2002 to June 2003 fiscal year, in which local hospitals lost, on average, $3.7 million each due to uncompensated care, he said.
In addition, Wayne said 20 of the 56 regional hospitals reported a loss in net-operating revenue.
Wayne said Medicaid is partly responsible for the loss, because hospitals generally are able to collect only 75 cents for every dollar billed to Medicaid for inpatient services and 50 cents for every dollar billed to Medicaid for outpatient services.
John Andursky, chief financial officer at Highlands Hospital in Connellsville, said any cut to Medicaid will make an already difficult situation worse.
“Medicaid really doesn’t provide sufficient reimbursement to hospitals as it is,” he said.
Mike Evans, CEO at Brownsville General Hospital, said hospitals are being asked to do more with less every year.
“Any cut hurts and jeopardizes our ability to sustain ourselves and provide good, quality care for patients,” he said.
According to Evans, about 15 percent of the hospital’s patients receive Medical Assistance.
“We live in a poor area,” he said.
Evans said people who are severely sick and need help will come to the hospital regardless of whether Medicaid pays for their visit.
“We can’t turn people away,” he said.