“Health Care Reform – The Hospital Perspective in Western Pennsylvania”

Penn-Ohio Regional Healthcare Alliance

February 17, 2010

A. J. Harper

President

Hospital Council of Western Pennsylvania

Cost and Coverage

HB: Costs $1.1 trillion over 10 years and would provide coverage to 36 million more people.

SB: Costs $848 billion over 10 years and would provide coverage to 31 million more people.

Requirements for Individuals

HB: All Americans, except for dependents, people living overseas and those with religious objections, will be required to have health insurance by 2013 or will face a 2.5% income tax surcharge.

SB: All Americans, with the same exemptions, would be required to have coverage by 2014 or will be fined $95 in 2014, $350 in 2015 and $750 in 2016.

Subsidies to Payfor Insurance

HB: Individuals making less that $43,320 a year and a family of three earning less than $73,240 would be eligible for subsidies that would help cover the cost of premiums. The subsidy would cover up to 99% of the premium expense for the lowest income brackets and 88% for higher incomes.

Subsidies to Payfor Insurance (Cont.)

SB: A similar sliding-scale subsidy would be available to individuals earning less than $43,320 and a family of three earning less than $72,240 a year.

Age Rating

HB: Allows private insurers to price premiums up to twice as high for older people.

SB: Allows private insurers to price premiums up to three times as high for older people.

Children

HB: Ends state Children’s Health Insurance Program after 2013 and allows children to receive subsidies for private insurance.

SB: Continues the Children’s Health Insurance Program and increases federal funding for the program beginning in 2014.

Requirements for Businesses

HB: Companies with payrolls of more than $500,000 would be required to offer employees insurance or face a fine up to 8% of payroll.

SB: Companies with more than 50 workers would pay a fine of $750 for each full-time employee if any worker qualifies for a federal subsidy to defray insurance costs.

Public Option

HB: Includes a government-run health insurance program for individuals who work for small businesses or who do not get coverage through work. Like private insurers, the public plan would negotiate how much to pay medical providers.

Public Option (Cont.)

SB: Includes a similar public option, but also allows individual states to opt out by passing a law that is approved by the state legislature and signed by the governor.

Taxes and Spending Cuts

HB: Imposes a 5.4% surtax on couples earning more than $1 million a year and individuals making more than $500,000. Cuts Medicare and other federal programs by more than $400 billion over 10 years.

Taxes and Spending Cuts (Cont.)

SB: Creates a 40% tax on health insurance plans that cost more than $8,500 for an individual and $23,000 for a family. Increases Medicare payroll tax from 1.45% to 1.95% for workers with incomes of more than $250,000 a year. Cuts Medicare and other federal programs by more than $430 billion a year over 10 years.

Medicare Wage Index

• Pittsburgh MSA alone has lost more than $300 million from the wage index

• Western Pennsylvania has a lower wage index than 30 rural areas and several other areas across the country and in the state

• Continues to spiral downwards• Affects hospitals’ ability to retain and recruit

staff - especially clinical staff

What are we doingabout this issue?

• Working with hospitals in Altoona, Johnstown, Pittsburgh MSAs

• Data scrubbing for three years• Working with expert consultants representing us

in Washington on this issue• Grassroots advocacy campaign with Senators

and western PA delegation• Active media/communications outreach effort• Reaching out to the business community

Possible Legislative Solutions

• Reclassification of western PA MSAs (interim)• 10 percent solution (interim)• MedPAC Solution (permanent)• Working with congressional representatives to

champion interim fix • MedPAC language - in Senate Finance

Committee bill

Medical Assistance

• Issue focuses on FFS base rate payment to hospitals

• Disparity in MA payments across the state• HCWP developed a set of principles and

submitted these to the HAP Board• Economic Impact Study• “Like Patient, Like Procedure, Like Payment”

Medical Assistance Principles

• The plan should not reduce MA payment levels from any other hospital.

• The plan should require any new increase in MA payment to be used to address the disparity issue first, before providing any increase in base rate payment to any hospital above the median. (The disparity being that between those hospitals below the median and those above.)

• The plan is structured on the principle that hospitals with similar characteristics should be paid the same base rate for “like” services once case weights are applied to standardized base rates.

• The plan includes the concept that the first goal is to bring the lower paid hospitals to some “median” point within categories, initially with a transition to fully standardized base rates in a reasonable time frame.

• The plan should not allow for implementation of APR-DRGs until the disparity in base rates is corrected.

• The plan should not allow for implementation of APR-DRGs until other severity-based payment systems can be fully reviewed and discussed.

• Consideration should be given to also correcting the irrationality of pass-through payments to objective criteria for inpatient and outpatient disproportionate share and medical education.

Current Work on the Issue

• How do we pay for system redesign?• How do we make the system equitable?• HAP’s Public Payor Committee• MA Payment System Redesign/Modernization• HCWP strategies: legislative and legal

Examples of Disparate Rates

County

Hospital Name

January 1, 2008

Base Rate

Percent Difference Between Base

Rates

MA MCO and MA MA Discharges as % of

Total Discharges

Acute Care Beds

Allegheny Ohio Valley $3,049.87 11.62% 113 75.12% Philadelphia Roxborough Memorial $5,340.87 12.80% 97 Allegheny St. Clair Memorial $3,875.62 4.85% 295 98.08% Montgomery Bryn Mawr $7,677.02 3.98% 307 Armstrong ACMH $2,326.58 15.72% 134 122.51% Luzerne Hazleton General Hospital $5,176.94 13.28% 134 Tioga Soldiers and Sailors $2,654.80 50.99% 19.56% 79 Jefferson Punxsutawney $2,670.52 50.10% 15.20% 44 Schuylkill Miners Memorial Medical Center $4,008.37 5.51% 45 Fayette Uniontown $3,192.67 68.72% 25.67% 194 Butler Butler County Memorial $3,625.98 48.55% 11.91% 197 Chester Paoli Memorial $5,386.52 2.66% 185 Blair Altoona $3,153.30 15.78% 401 22.59% York York Hospital $3,865.60 15.69% 453 Centre Mount Nittany (Centre Community) $3,157.75 10.99% 188 28.13% Chester Brandywine Hospital $4,046.17 12.59% 158

Sample Comparison of Hospitals matched by bed size, MA volume and community characteristics.

County Hospital Name

January 1, 2008 Base Rate

Acute Care Beds

MCO MA & MA

Discharges as a % Total

Discharges

Appendectomy Case Weight

2.70566

Appendectomy W/O

Complications Case Weight

1.11386

COPD Case Weight

1.42217

Heart Failure and Shock

Case Weight 1.55585

Allegheny OHIO VALLEY $3,049.87 113 11.62% $8,251.92 $3,397.13 $4,337.44 $4,745.15

Philadelphia ROXBOROUGH MEMORIAL $5,340.87 97 12.80% $14,450.59 $5,948.99 $7,595.63 $8,309.60

Allegheny ST. CLAIR MEMORIAL $3,875.62 295 4.85% $10,486.11 $4,316.90 $5,511.79 $6,029.88

Montgomery BRYN MAWR* $7,677.02 307 3.98% $20,771.41 $8,551.13 $10,918.03 $11,944.29

Armstrong ARMSTRONG COUNTY MEMORIAL $2,326.58 134 15.72% $6,294.93 $2,591.48 $3,308.79 $3,619.81

Luzerne HAZLETON GENERAL HOSPTAL $5,176.94 134 13.28% $14,007.03 $5,766.38 $7,362.49 $8,054.54

Tioga SOLDIERS AND SAILORS $2,654.80 79 19.56% $7,182.98 $2,957.07 $3,775.58 $4,130.47

Jefferson PUNXSUTAWNEY $2,670.52 44 15.20% $7,225.52 $2,974.59 $3,797.94 $4,154.93

Schuylkill MINERS MEMORIAL MED CTR $4,008.37 45 25.67% $10,845.29 $4,464.76 $5,700.58 $6,236.42

Fayette UNIONTOWN $3,192.67 194 25.67% $8,638.28 $3,556.19 $4,540.52 $4,967.31

Butler BUTLER COUNTY MEMORIAL $3,625.98 197 11.91% $9,810.68 $4,038.84 $5,156.76 $5,641.49

Chester PAOLI MEMORIAL $5,386.52 185 2.66% $14,574.10 $5,999.83 $7,660.55 $8,380.62

Blair ALTOONA $3,153.30 401 15.78% $8,531.76 $3,512.34 $4,484.53 $4,906.07

York YORK HOSPITAL $3,865.60 453 15.69% $10,458.99 $4,305.73 $5,497.54 $6,014.29

Centre MOUNT NITTANY (Centre Community) $3,157.75 188 10.99% $8,543.79 $3,517.29 $4,490.85 $4,912.98

Chester BRANDYWINE HOSPITAL $4,046.17 158 12.59% $10,947.55 $4,506.86 $5,754.34 $6,295.23

Indiana INDIANA HOSPITAL $2,863.94 150 13.78% $7,748.84 $3,190.02 $4,073.00 $4,455.85

Clearfield DUBOIS REGIONAL MED CTR $3,611.40 154 21.99% $9,771.22 $4,022.59 $5,136.02 $5,618.79

Montgomery MONTGOMERY** $4,905.53 159 14.99% $13,272.70 $5,464.08 $6,976.50 $7,632.27

Carbon GNADEN HUETTEN $2,734.83 77 22.68% $7,399.51 $3,046.21 $3,889.39 $4,254.98

Columbia BLOOMSBURG $3,502.94 62 12.74% $9,477.78 $3,901.79 $4,981.78 $5,450.06

*Bryn Mawr was excluded from the calculation of basic statistics for hospitals with community based education because of its outlier base rate ($7677.07) and low % MCO & MA Volume (3.98%).

**Montgomery has the highest base rate of hospitals with community-based education residency programs.

***Medical Resident programs are primarily family medicine, internal medicine and similar programs.

What can you do?

• Legislators

• Business Leaders

• Meetings/Letters

Patricia Raffaele A. J. Harper

VP, Advocacy President

724-772-7202 724-772-7206

raffaelp@hcwp.org harpera@hcwp.org