Uncompensated Care
The plight of uncompensated care is of extreme concern, especially in regard to the impact on hospitals as frontline caregivers.
Select two different types of hospitals. Identify the institutional similarities and differences in dealing with uncompensated care delivery. Discuss ways in which uncompensated care delivery might impact organizational structure, management policies, and financial issues for each facility. Incorporate articles from peer-reviewed journals and the Federal Register as references for this assignment.
Office of the Federal Registry (n.d.) The daily journal of the federal government. Federal Register. Retrieved from: https://www.federalregister.gov
Two hospitals within the United States routinely treat (medically and surgically) their patients without regard to collection of any payment. They are Shriners and St. Jude Hospitals. Select one of these hospitals and discuss its services and target patient population. Review its annual report and report on the hospital's income sources and liabilities. Summarize by explaining the hospital's mission statement.
To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.
Submission Details:
- Your assignment should be addressed in a 2- to 3-page document.
Challenges and the PPACA.html
Challenges and the PPACA
The PPACA has faced legal challenges, with the most important Supreme Court decision recognizing the legislation as a tax. It must be acknowledged that the success of the legislation is based upon diverse enrollment of a wide spectrum of income levels and the individual mandate. The expansion of Medicaid also carries a ripple effect. While the notion of "affordable" resonates with many, to others, it's the antithesis of the commonly accepted definition of "affordable."
Most states have developed a statewide uncompensated care pool. This is a direct source of money used to pay hospitals for some portion of their uncompensated care delivery. The funding stream for the pool is usually from all hospitals within the state. Some states extract a higher percentage of money from those few hospitals that are still for profit. The individual mandate combined with the expansion of Medicaid reduces the amount of uncompensated care and isolated corporate charity care income tax reporting. The effect of the individual mandate and expanded roles of Medicaid reduces the burden of uncompensated care.
The government's role as a third-party payer continues to expand, currently providing reimbursement for over 55 percent of healthcare services. Partly to blame for high hospital costs are government regulations regarding hospital fee structure and limits. This rule stipulates that no hospital that accepts Medicare payment is permitted to charge patients more than the Medicare rate. As a direct result of this government rule, hospitals constantly inflate their Medicare rates. While a hospital inflates the Medicare rate, it does not mean the reimbursement rate is at the inflated Medicare rate value. The expansion of Medicaid and Medicare reduces the overall profit for the hospital. The PPACA contains a provision to increase reimbursement payments, maintaining financial solvency for hospitals.
In this last video you were presented with the various challenges presented with the implementation of the Patient Protection and Affordable Care Act (PPACA). Your discussions and assignments will be an application of the impact of uncompensated care and the Patient Protection and Affordable Care Act (PPACA). As you reflect on your organization, study these concepts impact and how the challenges are being attended too.
Additional Materials
media/transcripts/PPACA_Paper_FINAL (3).doc
REVIEW OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT
Johnathan Rose, Ph.D., MBA, MS, MS-Ed
305-331-1692
Vincent M. Bulzoni, Ph.D.
570-696-5126
Cathy Doughty, MS, CCHI
832-545-6239
Sriya Krishnamoorthy, Ph.D., MBA, MPH, CHES
219-232-6185
Rachaline Napier, MPH
614-499-0015
Pedro J. Pardo, Ph.D., MS, MT (ASCP)
352-281-7634
Donald M. Peace, Jr., Ph.D, FACHE
864-261-1030
Paula Stechschulte, PhD
419-930-7806
South University
709 Mall Blvd
Savannah, GA 31406
ABSTRACT
The Patient Protection and Affordable Care Act (PPACA) is one of the most pivotal pieces of legislation in our nation’s history. After a lengthy challenge in the federal courts, the Supreme Court deemed it constitutional. The impacts of the PPACA are expected to be sweeping, affecting individuals, small businesses, physicians, and hospitals, among others. The PPACA has over forty areas of direct interest for physicians, some of which are covered in this review. For small businesses, its impacts equate to health care relief for their employees and families through the use of health insurance exchanges, the availability of health care tax credits and wellness program grants. Finally, hospitals will benefit financially as newly insured join the patient base, creating a medical surge. In spite of these benefits, the PPACA brings with it significant funding requirements and has garnered limited or lack of support by a number of states as well as physicians and physician advocacy groups. While states have the right to opt out, it is believed the exercising of this right will result in a gap of coverage for millions of low-income residents. The process of health care reform will determine who truly benefits from the PPACA. The condensed format of this review is not intended to reduce the significance of the PPACA legislation or its impact on the nation’s population, health care delivery and economics. However, it is meant to instill a yearning for further investigation and a more intense monitoring of the implementation of the PPACA.
Keywords: The Patient Protection and Affordable Care Act (PPACA), Supreme Court, Health Care Reform, Nation’s Population Health, Health Care Delivery, Health Care Economics
Introduction
The Patient Protection and Affordable Care Act (PPACA) may well be the single most critical piece of American legislation in the modern era. Unlike Medicare and the Social Security Act that are entitlement programs, and thereby restricted by age and in some circumstances by health status, the PPACA targets virtually all U.S. residents.. This was made possible after a lengthy challenge in the Federal Courts forwarded by a group of 28 states. The case was ultimately decided by the US Supreme Court, which was initially split on the ruling. The Chief Justice consequently cast the deciding vote, deeming the act as constitutional. The critical element in his decision was that the mandated cost placed upon each citizen to purchase this or other healthcare coverage amounted to a ‘tax’, and thereby did not violate the Constitution.
History and intent of the act
The call for healthcare reform has been a mainstay of political rhetoric throughout the twentieth century to present and has been a controversial issue in virtually every presidential election cycle. The goal has always been to provide access to affordable, quality healthcare services for residents of the United States. The passing of the PPACA ushers the United States into a new era of health care delivery. Given our nation is currently faced with an aging population, a growing number of uninsured and underinsured residents, and a declining economy, the PPACA will hopefully be the vessel to weather this perfect storm.
The objective of the PPACA is to improve access to affordable, quality health care services for all members of the population; expressly the low income, underserved, uninsured, minority, health disparity, and rural groups. However, the PPACA, which provides open access to all members of the population, will generate an unprecedented demand on the existing delivery system: a medical surge. Equally important to note, an increased workforce will form a direct relationship to health care cost. As the dollars spent on health care continue to increase, a greater percentage of the nation’s gross domestic product (GDP) will be devoted to health care consumption.
Challenge to the PPACA
The PPACA has been met with a host of federal legal challenges, the focus of which has been Congress’ constitutional powers. Essential to establishing a position on the PPACA is an understanding of the legislation and the underpinnings of these legal challenges.
One of the key challenges of the PPACA is that the individual mandate set forth in § 1501 of the Act violates the Commerce Clause which gives Congress the power “to regulate commerce with foreign nations, and among the several States, and with the Indian Tribes”(U.S. Const. art. I, § 8 cl. 3). Simply stated, if Congress has the power to force people to buy insurance, its power is essentially unlimited, contrary to the ideal of the constitution to have a federal government with limited authority. The meaning and intent of three amendments to the Constitution are also challenged:
· The First Amendment is the basis of religious freedoms or prohibiting or interfering with such freedoms.
· The Fifth Amendment focuses on the individual mandate that no individual should be deprived of life, liberty, or property without due process of law.
· The Tenth Amendment recognizes the individual states’ autonomy.
Federal cost
The PPACA is estimated to have a net cost of $1.7 trillion over a ten-year period (2012 to 2022) with anticipated coverage for 94% of the U.S. population (Banthin, Harvey, & Hearne, 2012, July). The Congressional Budget Office (CBO) estimates that the PPACA will cost slightly less at $940 billion over the next 10 years (2012 to 2022). To put the cost of the PPACA in perspective, U.S. healthcare expenditures in 2010 totaled $2.6 trillion with 82% of the population covered ("Kaiser", 2011, April 15). To finance coverage for the newly eligible, states will receive 100% federal funding for 2014 through 2016, which will reduce to 90% federal financing by 2020 ("Kaiser", 2011, April 15).
Funding sources
Even with the high cost of the PPACA, the CBO approximates that there will be a $143 billion reduction in the federal deficit over the next 10 years (2010-2020) and a $1.2 trillion reduction in the federal deficit in the 10 years following that (2020-2030). The PPACA and deficit reduction will be funded through new taxes, fees, and penalties on individuals, businesses, and the health care industry (Harvey, Hearne, & Anders, 2012, March). A list of these taxes and offsets can be found on the Joint Commission on Taxation website at https://www.jct.gov/publications.html?func=startdown&id=3673 .
States right to opt-out
The Supreme Court determined the individual mandate in the PPACA to be constitutionally sound. This decision upheld the new Medicaid mandate and required states to agree to expand the state’s Medicaid program or potentially face cuts to new Medicaid funding from the federal government. This decision also enables states to opt out of the Medicaid expansion thereby hindering health coverage and endangering the viability of these reforms in the bill. The states choosing to opt out and decline to accept funds, base their decision on the fact that initial funding is temporary and the overall cost is excessive and unsustainable ("ALFA", 2012,).
According to Boteach (2012), if states opt out, then coverage gaps for millions of low income Americans will be created. Those most affected will include workers below the poverty line who will not be able to access insurance coverage through the Medicaid expansion and will also be prevented from qualifying for governmental subsidies that are supposed to provide aide to Americans’ with healthcare cost. The Congressional Budget Office (CBO) projects that in those states projected to opt out, approximately six million persons would be eligible for Medicaid coverage under the existing law (Palazzolo, 2012). Banthin and Jacobs (2012, March 15) acknowledged that approximately half of those persons earn 38% more than the federal poverty level and would be able to purchase their insurance through subsidies.
The major question on many minds is who will pay for the expansion in benefits. The source for payment will include an increase in premiums or an increase in burden to those who pay taxes in our country. Many are concerned that the extra burden on companies will actually slow economic growth. Much of the economic burden will be placed on businesses that would be forced to pay for these benefits (Cochrane, 2012).
Although there may be some personal benefits from this expansion, initially as many as 10 states considered opting out of the Affordable Care Act (Baum, 2012, July 6). In 2012 twenty-eight states challenged the legality of this expansion in court. The Court determined federal funding was coercive since the government was forcing states to accept funding, violating the basic concepts of federalism (Mariner, Glantz, & Annas, 2012). States in the suit argued that the negative effects of this action were significant. However, they belived they would continue to receive federal funding for this mandate. In effect, states do not want the federal government mandating healthcare law within their states. States feel that the federal government does not understand the needs and intricacies of their population in need. The expansion of Medicaid would significantly impact the costs to their taxpayers. Some states fear that this will also provide fewer choices for individuals and states and will reduce the health of everyone. Repealing this health care bill, specifically passing specific pieces of the legislation and removing hindrances to the market process could minimize these concerns. The Supreme Court’s decision that the federal government could not penalize states for not participating in the Medicaid expansion is set to begin in 2014.
As of July 2013, new projection indicated that about 30 million persons would likely remain uninsured after the PPACA is fully realized in 2014 because so many states are choosing to opt out. The current status of state’s plan for Medicaid expansion or alternative plans are as follows: sixteen are not participating, seven are leaning toward non-participation, one has developed an alternative expansion model, three are considering an alternative expansion model, nineteen are participating, and five are leaning toward participating in Medicaid expansion (The Advisory Board, 2013).
States choosing to opt out are Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, and Wisconsin. Those states that are leaning toward non-participation include: Alaska, Kansas, Nebraska, Utah, Virginia, and Wyoming. New York is considering participation and those who have committed include: Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Hampshire, New Mexico, North Dakota, Ohio, Oregon, Rhode Island, Vermont, Washington, and West Virginia. States that have found an alternative means of expansion include Arkansas, Indiana, Iowa, and Tennessee (Kaiser, 2013).
Cost to states
States are expected to recoup their costs through reimbursement of uncompensated care, changes to the healthcare system by improving efficiency and by encouraging preventative services that should decrease the costs of sick care (Taylor, 2012). Each person not covered under a state’s Medicaid program will save the U.S. Government $6,000 and those who are ineligible for Medicaid and choose to opt into an exchange program will cost taxpayers $3,000 dollars more than initially thought ("RTT Staff Writer", 2012). It is recognized that Medicaid expansions will increase coverage and reduce the number of uninsured Americans during this expansion process. Holahan and Dorn (2010) reported that prior to the PPACA; states spent $17.2 billion on the care of uninsured Americans. This compounds states’ economic woes when considering how rising costs of healthcare impact their budgets. By the year 2019, enrollment in Medicaid is expected to increase by an estimated 15.9 million individuals. States will see variation in coverage depending upon their coverage pattern and insured rates of participation. The cost will be borne by the federal government initially but then will be transferred, in part, to the states after the first four years.
Projected patterns of enrollment indicate that federal spending will increase by $443.5 billion and states will pay for an increase of $21.1 billion between the years 2014‐2019. Approximately 95 percent of this Medicaid expansion will be borne by the federal government and the taxpayers of the United States. Because the enrollment process will be phased in by 2014, costs are expected to be minimal and the federal matching rate for new enrollees is 100 percent. The impact on states will be more apparent by 2019 when full implementation is optimal and the federal match drops from 100 percent to 93 percent (Holahan & Headen, 2010). Holahan and Dorn (2010) reported that by expanding coverage under the PPACA and reducing the costs of care for the uninsured, the new healthcare law will positively impact state governments $70 to $80 billion dollars in the 2014 to 2019 time span.
The individual mandate
Effective January 1, 2014, almost every resident of the United States will be required to have health insurance. The two relevant pieces of legislation driving this requirement are the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, both enacted in 2010. Failure to comply with the laws is the individual mandate, which carries a financial penalty (Auerbach, et al., 2010). By the year 2016, once provisions are fully implemented, the financial penalty will range from $695 per year or 2.5% of their income, whichever is higher (Auerbach, et al., 2010). The Treasury Department will handle the mandate and the penalty will be assessed as a federal tax liability (Kliff & Klein, 2012, March 27). Arguments have been made for and against the individual mandate purporting the associated penalties may or may not be sufficient to encourage widespread healthcare insurance participation, particularly for those who are young and healthy.
The intent of an individual mandate is to elicit a higher level of personal responsibility among members of society (Seller, 1994, August). It is important to note that approximately 80 percent of Americans under the age of 65 years – about 250 million people – are insured through Medicaid, Medicare, employers, individual insurance, or other sources of coverage, all of which are automatically in compliance with the individual mandate. This coupled with exemptions for religious beliefs and residency status along with subsidies for low-income individuals suggests that the mandate will only penalize those who can afford insurance (those for whom carrying health insurance coverage would cost no more than 8% of their income) and consciously choose not to purchase it ("Kaiser", 2012; Auerbach, et al., 2010).
On July 17, 2013, the House (led by a Republican majority) voted to offer a grace period to all Americans who would be required to obtain coverage as dictated by the individual mandate by January 1, 2014. This would couple with the positive vote to delay the corporate provision for businesses with more than 50 employees. However, the Obama administration does not support the extension for the individual mandate and contends that the House legislation will be brushed aside by the Democratic Senate or vetoed by the President. While the argument can be made that neither mandate should be delayed due to financial and legal ramifications, there is some legitimacy that, if the corporate mandate has been granted a one-year stay, then the same should be true for the individual mandate (Alonso-Zaldivar & Kuhnhenn, 2013; Graham, 2013).
Age rating for preexisting conditions
Age is a key factor in determining health care utilization. Older adults are expected to utilize the health care system more, which results in higher cost for this population. Higher cost also equates to higher insurance premiums ("AHIP", 2012, March). To ensure premiums based on age are reasonable and affordable for the consumer, most states within the United States (U.S.) impose a limit on which insurance companies can base their premiums. This limit establishes a range or “band”, which insurance premiums cannot exceed. The band works by ensuring the highest rate of the premium can be no more than some multiple of the lowest rate. By applying this band to age, premium costs can be spread over a range of age groups.
Currently the age-rating band for most states (42 states), for the adult population (19 – 64 years) is approximately a 5:1 ratio or more; meaning that someone 55 and older can be charged up to five times the premium for health insurance than someone 25. Beginning January 1, 2014, the PPACA rating requirements will limit or reduce the premium adjustment factors for age to a 3:1 ratio for individuals and small businesses (Houchens, 2011). This new limitation benefits older adults, as the amount they can be charged will decrease considerably. However, it can increase premiums for individuals younger than 30 years.
Pre-existing conditions
Prior to enactment of the PPACA, individuals with pre-existing conditions could be charged more for their premiums or refused coverage by insurance companies (DeParle, 2010, July 29). The PPACA legislation now makes it illegal for insurance companies to refuse children under 19 with pre-existing conditions until 2014, at which time it will be illegal to discriminate against anyone with a pre-existing condition. As a mediator between now and 2014, a Pre-Existing Condition Insurance Plan (PCIP) has been established to cover individuals over the age of 19 who are currently medically indigent.
According to DeParle (2010, July 29), one of the benefits of this pre-existing condition exclusion is that an, “estimated 200,000 to 400,000 uninsured people with pre-existing conditions could be helped, doubling the number of Americans insured through existing high risk pools.” However, it is important to note that the PCIP has been established as an opt-in plan only at the state level. In other words, any given state government can choose not to initiate the PCIP. If a state chooses not to participate in this plan; a plan has been established by the Department of Health and Human Services for that state. Additional information about the PCIP program and each specific state’s participation in the program can be obtained by visiting the www.PCIP.gov website.
Impact on physicians
There are over 40 major areas of direct interest to physicians in the PPACA, not including specific Medicaid and private insurance elements that are also of likely general interest. An exhaustive review of each of these areas is beyond the scope of this analysis; however, this section highlights some of the PPACA provisions and timelines that impact office-based physicians; with emphasis on the three major roles: care givers, small-business owners, and employers (111th U.S. Congress, 2009, Dec 24; Public Law No. 111-148, 2010, March 23).
Lack of access and the uninsured
According to the U.S. Census Bureau (2012), the number of Americans lacking health insurance coverage has increased from 15.4 percent in 2008 to 16.7 percent in 2009, representing 50,674 million American uninsured (p. 111). The number of Americans without health insurance has a direct effect on physician practices. “Recent AMA estimates suggest physicians provided $24 billion in charity care in 2008, much of it to their uninsured patients” ("AMA", 2010, p. 4.). Provisions to address the uninsured went into effect in 2010 and they include: ensuring coverage availability for those with pre-existing conditions; prohibiting lifetime limits on benefits; cancelling (dropping) coverage when enrollees get sick; extending dependent coverage to age 26, creating state options to expand Medicaid and the Children’s Health Insurance Program (CHIP) coverage benefits; provisions for requiring coverage for preventive care; and supporting health coverage for early retirees. Many of the more comprehensive PPACA provisions, such as instituting state health insurance exchanges and mandating health insurance for all Americans, are expected to take effect in 2014 and beyond.
When fully implemented in 2019, the Congressional Budget Office (CBO) estimates the law will expand coverage to 31 million people, cutting the uninsured rate by more than half. The CBO also estimates the legislation will result in 16 million more people enrolling in Medicaid and CHIP, with another 23 million people obtaining coverage in the newly created Health Insurance Exchanges (Harvey, Hearne, & Anders, 2012, March). Beyond providing coverage for underserved populations, these measures can be viewed as a win-win solution for physicians. The increase in both the number of insured and conditions covered has the potential to increase patient populations for physicians’ practices. Conversely, with fewer uninsured, physicians can expect to see a related decrease in their financial burden for uncompensated care (Zuckerman & Berenson, 2010). Additionally, a reduction in the number of uninsured patients should also have a direct impact on the charitable care dollar amount provided by physicians.
Integrated delivery of health care
Beyond its major gains in coverage and access, the PPACA also addresses a renewed interest in integrated redesigned delivery of health care with the aim of improving health care quality. The goal is delivery system innovation and accountability with a focus on quality of care and outcomes. The initiative is directed towards a patient-centered model recognizing the patient in a holistic whole person fashion.
This goal will be accomplished through supporting delivery system innovations such as the accountable care organization. The goal of this organization is quality of care instead of sheer volume as compared with a fee-for-service model and the patient-centered medical home. The accountable care organization emphasizes taking care of each patient in a more holistic or as a whole person through a system of teamwork and collaboration.
Incentives to improve primary and preventive care
Starting in 2010, all new health insurance plans were required to cover preventive services at no charge to patients. In 2011 both Medicare and Medicaid plans added coverage for proven preventive health and wellness programs. Additionally, from January 1, 2011, to January 1, 2016, Medicare will also increase reimbursements for designated primary care services by paying a 10 percent bonus to eligible primary care physicians, nurse practitioners, clinical nurse specialists, and physician assistants in family, internal, geriatric, and pediatric medicine. To qualify for the 10 percent bonus, primary care services must account for at lea