Free care adds up

Hos­pi­tals’ un­com­pen­sated costs up 10%

Modern Healthcare - - The Week In Healthcare - Joe Carl­son

Hos­pi­tals in 2009 pro­vided $75.6 bil­lion worth of care for which they were not fully com­pen­sated in 2009, a 10% in­crease from the $68.8 bil­lion re­ported the year be­fore, ac­cord­ing to fig­ures pro­vided by the Amer­i­can Hos­pi­tal As­so­ci­a­tion.

Ob­servers say the jump in free care is tied to changes in in­surance cov­er­age stem­ming from the se­vere eco­nomic down­turn.

The un­paid care statis­tic is com­posed of four cat­e­gories of costs: bad debt, char­ity care and re­im­burse­ment short­falls in the Medi­care and Med­i­caid pro­grams. All fig­ures are based on es­ti­mates of the ac­tual cost of care, which are com­puted as a per­cent­age of hos­pi­tal gross charges.

The AHA lumped bad debt and char­ity care fig­ures into one num­ber: $39.1 bil­lion in 2009, a 7% in­crease from the $36.4 bil­lion in un­com­pen­sated care pro­vided the year be­fore. In 2008, un­com­pen­sated care costs rose 7%, and in 2007 the in­crease was 9%.

Un­com­pen­sated care costs in 2009 also con­sumed a larger share of to­tal hos­pi­tal costs, ris­ing to 6% of ev­ery dol­lar spent by hos­pi­tals in 2009. In the two prior re­ces­sion years, 2007 and 2009, un­com­pen­sated care rep­re­sented 5.8% of hos­pi­tal spend­ing.

Caro­line Steinberg, vice pres­i­dent of trends anal­y­sis for the AHA, said the rise in un­com­pen­sated care was not sur­pris­ing “given what was go­ing on in the econ­omy,” in­clud­ing the ris­ing un­em­ploy­ment and unin­sur­ance rates and the in­creases in emer­gency room care.

Mean­while, un­der­pay­ments by govern­ment pay­ers rose starkly in 2009, ac­cord­ing to the AHA fig­ures. The Medi­care short­fall rose to $25 bil­lion, an al­most 15% in­crease from the prior year. In 2008, Medi­care short­falls in­creased just 2%.

Med­i­caid un­der­paid hos­pi­tals by $11.3 bil­lion, a 9% in­crease from the year be­fore. In 2008, Med­i­caid short­falls were flat.

Keith Moore, pres­i­dent and CEO of McMa­nis Con­sult­ing, said the Med­i­caid short­fall fig­ures were in line with what he would ex­pect, given the chal­lenges faced by the state gov­ern­ments that help fund them. “The state bud­gets are in cri­sis. Mean­while, their Med­i­caid rolls are grow­ing,” Moore said. “So a lot of states are mak­ing ad­just­ments in how they re­im­burse their Med­i­caid” providers.

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