Hospital Uncompensated Care Issues by xxm96653

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									   Hospital Uncompensated Care
              Issues



Jack Ashby, M.H.A.
  Hospital Research Director
  Medicare Payment
  Advisory Commission
       What is uncompensated care?
   Definition: Care provided by hospitals or other
    providers that is not paid for directly by patients or
    insurers
   Includes charity care (furnished without
    expectation of payment) and bad debts (provider
    has unsuccessfully attempted to collect)
   Includes entire or partial bills from the uninsured
    as well as unpaid copayments and deductibles


                                                   Jack Ashby
     What is uncompensated care?
              (continued)
Uncompensated care does not include:
  • The contractual allowances of government and
    private insurers

  • Lack of Medicaid payment for days beyond a
    length of stay limit

  • Courtesy discounts for employees, students,
    members of religious orders, etc.


                                            Jack Ashby
        How is uncompensated care
                measured?
   Hospitals measure their uncompensated care at
    charges (revenue foregone)
   Policymakers prefer a measure of costs
   Useful computed variables:
    - Uncompensated care costs as a percent of total
      costs
    - Share of uncompensated care costs covered by
      government subsidies
    - Uncompensated care losses as a percent of total
      costs

                                                Jack Ashby
 How much uncompensated care do
       hospitals provide?
   Uncompensated care costs: $21.6 billion and 6.1
    percent of total costs
   Uncompensated care losses: $19.0 billion and 5.3
    percent of total costs



Source: AHA Annual Survey, 2000.




                                                Jack Ashby
  Trend in uncompensated care costs
              and losses
                                          Proportion of
          Uncompensated care as        uncompensated care
           a percent of total costs       covered by
Year         Costs         Losses     government subsidies
1984          6.0%           4.6%             23.3%
1988          6.2            4.8              22.4
1992          6.0            4.9              18.9
1996          6.1            5.1              17.3
2000          6.1            5.3              12.1
Source: AHA Annual Survey.

                                                 Jack Ashby
       How does uncompensated care
         vary by type of hospital?
                       Uncompensated care as
                       a percent of total costs

Type of hospital        Costs          Losses

  Urban                   6.4%            5.3%
  Rural                   5.3             4.7

  Major teaching        10.0              7.4
  Other teaching         4.9              4.5
  Non-teaching           4.9              4.4
  Voluntary              4.7             4.4
  Proprietary            4.7             4.0
  Urban government      15.7             10.6
  Rural government       6.4             4.9
                                          Jack Ashby
   How concentrated is the provision
      of uncompensated care?
    Uncompensated care costs      Share of
    as a percent of total costs   hospitals
    0 to < 2                       13.4%
    2 to < 5                       43.0
    5 to < 10                      35.3
    10 to < 20                      6.8
    20 to < 30                      0.7
    30 to < 40                      0.4
    40 to < 60                      0.2
    60 and above                    0.2
Source: AHA Annual Survey.

                                              Jack Ashby
How concentrated is the provision of
 uncompensated care? (continued)
  Measure                      1992   2000

 Share of all uncompensated    45%     46%
 care costs furnished by the
 top 250 providers

 Of the amount furnished by    61%     53%
 the top 250 providers,
 share provided by
 government hospitals
Source: AHA Annual Survey.

                                      Jack Ashby
       Is there a relationship between
   uncompensated care and overall financial
                performance?
                          Uncompensated care
                             costs as a             Average
Type of hospital         percent of total costs   total margin

Major teaching                 10.0%                  1.5%
All other                       4.9                   5.4

Private                          4.7                   5.3
Urban government                15.7                  -1.3
Rural government                 6.4                   3.4
Source: AHA Annual Survey.

                                                         Jack Ashby
       Is there a relationship between
   uncompensated care and overall financial
          performance? (continued)
  Uncompensated care costs          Average
  as a percent of total costs     total margin
  0 to < 2                           4.0%
  2 to < 5                            4.6
  5 to < 10                           4.4
  10 to < 20                          4.2
  20 to < 30                          3.8
  30 to < 40                          3.1
  40 to < 60                          3.2
  60 an above                        -0.4
Source: AHA Annual Survey.

                                       Jack Ashby
What revenue sources do hospital use to
cover their uncompensated care costs?
    Payments from private insurers (cost shifting)
    Government subsidies
      - Operating subsidies
      - Dedicated taxes
      - Charity care pools
    Medicaid disproportionate share payments
    Medicare disproportionate share and indirect
     medical education payments
    Revenue from non-patient sources

                                                      Jack Ashby
         States with highest and lowest
          uncompensated care costs
              Highest                        Lowest
  Louisiana                  13.1%   Nebraska         2.0%
  New Mexico                 12.8    Minnesota        2.0
  Texas                      10.3    North Dakota     2.4
  Mississippi                 8.7    Wisconsin        2.6
  Nevada                      8.1    Oregon           2.9
  Oklahoma                    7.9    Washington       3.1
  Arkansas                    7.6    Michigan         3.2
  Florida                     7.5    Missouri         3.3
  California                  7.4    Rhode Island     3.4
  Alabama                     7.3    Iowa             3.9
Source: AHA Annual Survey.

                                                      Jack Ashby

								
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