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Hospitals face unknown reimbursements under health law

Published: Sunday, Dec. 8, 2013 5:30 a.m. CDT • Updated: Thursday, Dec. 12, 2013 9:32 a.m. CDT

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CRYSTAL LAKE – Illinois hospitals have $8 billion hanging in the balance.

If residents without health insurance follow the new law and begin seeking coverage Jan. 1, the potential financial blow could be avoided. But if too many residents continue to go uninsured and opt to pay fines or estimates about how much uninsured patients have cost hospitals are inaccurate, billions could be lost.

A potentially costly Medicare assumption was built into the Affordable Care Act that has health care providers anxious for the insurance plans entered into through the new state marketplace to kick in Jan 1.

Danny Chun, spokesman for the Illinois Hospital Association, said an $8 billion reduction in Medicare reimbursements for Illinois hospitals – and a $155 billion reduction nationally – will take place between 2010 and 2020.

The theory, he said, is hospitals will be able to offset that cost as they spend less on uninsured patients each year because the law requires all citizens to be covered. Illinois hospitals alone tallied more than $1.5 billion in uncompensated care in 2012.

“As more people get coverage the hospital’s uncompensated cost goes down, theoretically, over time,” Chun said. “But we haven’t seen the beginning of the coverage yet, so we’re not going to see the impact right away. We have to see how it plays out.”

While coverage under plans purchased through the state marketplace does not start until Jan. 1, the reduction in Medicare reimbursements began when the law was signed in 2010.

That has left hospitals such as those in the Centegra Health System needing to do more with less until the insurance plans are phased in. Centegra’s uncompensated care totaled $64.4 million this year.

Chris Westerkamp, vice president of revenue cycle for Centegra, said it is hard to pinpoint how the change will affect hospitals long term, but for now, health care providers have to be more reactive than proactive in adjusting.

“I think it is ongoing stress for Centegra and all hospitals to continue to drive best outcomes for patients while trying to reduce their costs,” he said. “It’s why we have a strong focus in wellness care and try to help people not just when they are sick.”

Area hospitals have been proactive in educating residents about insurance options through the Illinois Health Insurance Marketplace. One-on-one counseling in hospitals and community events at libraries and schools have been going on throughout the fall.

Estimates show that 32,058 McHenry County residents under 65 years old are uninsured, according to the McHenry County Health Department.

Though the available options greatly differ, plans are divided into four levels – bronze, silver, gold and platinum – that offer different levels of coverage and services based on factors such as age and income.

Even after more people become insured, hospitals have to take greater care in limiting readmissions, especially with Medicaid and Medicare patients. Hospitals will suffer greater reductions in Medicaid and Medicare reimbursements if those patients are readmitted within a certain time frame, even if it is for a different illness or disease.

Kumar Nathan, vice president of clinical effectiveness for Centegra, said the network’s hospitals have focused on preventative programs and home health care to not only limit readmissions but hopefully stop the need for any admission.

“We have so many programs to keep people well where they can learn about their disease and understand how to monitor it and check for symptoms,” Nathan said. “The focus is on keeping them well because if we do that everything else falls into place.”

In the recent “American Hospital Quality Outcomes 2014: Report to the Nation,” Centegra hospitals scored well in the treatment of some of the most common diseases Medicaid officials want hospitals to prevent from resulting in readmissions.

Centegra–McHenry received the highest rating in five categories, including heart attacks (in-hospital and within 30 days of care), heart failure, and pneumonia (in hospital and within 30 days of care) while Centegra–Woodstock hospital received the top rating for both in-hospital and within 30 days of care for a stroke.

Despite the efforts, it will become harder to prevent readmissions for those on Medicaid because of the expected increase in those covered by the program.

Medicaid has been expanded in Illinois to include individuals earning less than $15,856 a year or a household of two adults with a combined income of up to $20,628 as well as more families. The McHenry County Department of Health estimates that roughly 23,000 residents younger than 65 in McHenry County are eligible for low-cost insurance.

Westerkamp said hospitals cannot get caught up in the potential changes to reimbursements and instead need to focus on keeping costs low and improving services as more people will be willing to seek health care because of the new law.

“One of the top reasons people do not seek our services is because they were uninsured,” Westerkamp said. “Hopefully as more people become insured they will be more likely to come to us before the issue becomes a major or chronic problem.”

Those interested in insurance through the marketplace can access plans and information at www.getcoveredillinois.org.

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