GNYHA

Healthcare Financial Management AssociationNew York Hospitals and the 2010 State

and Federal LandscapeMarch 18, 2010

LaGuardia Marriott

GNYHA

Agenda

New York Hospitals

• Financial Picture • Outlook for Future

New York State Outlook

National Health Reform

2

GNYHA

New York Hospitals

3

GNYHANew York Hospital and Insurer Margins

Over the last 8 years, NY hospitals have incurred losses of $466 million while NY insurer profits exceeded $10.3 Billion

*Does not reflect $500 million in 2009 Medicaid cuts or proposed 2010 cuts

4

GNYHANew York Hospitals

Disproportionately Reliant on Medicaid and Medicare

New York State New York City

Greater New York Hospital Association 5

64% Medicaid/Medicare 69% Medicaid/Medicare(National number is 56%)

GNYHAMedicaid cuts are huge but pressure is coming from all overRelatively flat Medicare paymentsIncreasing bad debt due to recession, increased patient cost sharingIncreased audit recoveriesPayment reductions for

•Never events•Readmissions•Observation level

6

GNYHAHospitals turn to private

payers to subsidize government program losses

Upward pressure on private sector

revenues increases

As budget constraints suppress

public sector revenues

7

GNYHAAbility to cost shift is not

unlimitedBudgetary

constraints reduce public sector

revenues

Providers respond by increasing prices for private payers where

possible

Insurers increase premiums, tighten payment practices

Calls for premium regulation

Premium regulation leads to pressure on provider prices

8

GNYHATight Medicare and

Medicaid Budgets Will Continue

State Economy

•Decreased tax revenue•Increased Medicaid enrollment•Increasing elderly population

National Health Reform•Medicaid expansion•Low income subsidies•Medicare cuts•DSH cuts

9

GNYHA

New York State

10

GNYHAProposed 2010 Medicaid

Cuts($ in Millions)

11Note: Providers losses account for the typical cash-flow lag in State savings, the loss of Medicaid Federal matching funds, and, for hospitals, the impact on Medicaid managed care, Workers’ Compensation, and No Fault rates.

Almost $1

Billion

GNYHAEnrollment Growth Accounts for

Almost All of New York’s Medicaid Spending Growth

Greater New York Hospital Association 12

GNYHANew York Medicaid Enrollment

Has Grown Sharply

And Government Has Paid for Part of this Growth Through Provider cuts!

Greater New York Hospital Association 13

Medicaid enrollment has

grown 60%

GNYHA

GNYHA Budget Advocacy

Reduce size of cuts

Get rid of readmissions

cut

Support Soda Tax

Mitigate redistributional

effects to “reforms”

Secure Enhanced

FMAP

14

GNYHA

NY Managed Care Advocacy

2007 Bill•Limited ability of plans to deny claims for services which were preauthorized•Cooling off period•Extension of external to certain out-of-network services

2009 Bill•Shortened prompt pay timeframes•Limited plan ability to deny for late submission•Limited denials for COB•Extended provider rights to external appeal•Shortened timeframes for authorizing post -acute home care•Prohibited treating par hospitals as non-par when physician is non-par•Limits overpayment recoupment to two years except for fraud/abuse situations

15

GNYHA

2010 State ActionA09988/S6983 - Prohibition on reimbursement reductions due to failure to notify

• Reduce penalty for timely filing• Collection of coinsurance and deductibles• Insurer prompt pay fines should go to bad debt and charity care

Breslin bill?

Prior approval of premiums

Malpractice Reform

16

GNYHA

National Health Reform

17

GNYHA

Road to Reform

House • Bill passed

11/07/09

Senate • Bill passed

12/24/09

Reconciliation• House must pass

Senate bill, both houses pass reconciliation bill

18

GNYHASenate Bill -Achieving Coverage Expansion

Medicaid Expansion

Insurance Reform

Insurance Mandates

Insurance Exchange

Insurance Subsidies

19

GNYHA

Medicaid Expansion100% FMAP for non-expansion states, phases down

National expansion to

133% FPL

20

GNYHA

Insurance ReformsTemporary High Risk Pool for people with preexisting conditionsGuaranteed issue and renewal

Dependent coverage to age 26

Minimum MLRs of 85%/80%

No annual/lifetime maximums

Community Rating and Premium Review

Administrative simplification

Standardization of benefits (4 options)

Caps on Deductibles

Healthcare Compacts

21

GNYHA

Insurance Mandates•Subject to penalties of $95 in 2014, $495 in 2015, $750 2016•Capped at > of $2,250 per household or 2% of income•Exemptions if premiums exceed 8% of income

Individuals must have qualified

coverage

•Subject to penalties of $750 per employee or $3K/subsidized employee•Employers who impose waiting periods pay penalties of $400-$600

Employers with more than 50

employees must offer coverage

22

GNYHA

Insurance Subsidies

Subsidies for Individuals

•Premium credits available to individuals and families between 100 and 400% FPL•Sliding scale such that required premium contributions are between 2.8% and 9.8% of income•Cost sharing subsidies between 100 and 300% FPL

Subsidies for Employers

•Tax credits for small businesses with no more than 25 employees and annual average wages < $50,000•Temporary reinsurance for employers covering retirees between 55 and 65 ($5 billion)

23

GNYHAResults of Coverage

ExpansionUninsured in Millions

Insured % of U.S. Residents (including unauthorized immigrants)

24Source: Congressional Budget Office.

GNYHA

GNYHA Concerns

Provider Cuts

Market Basket

Geographic variation

DSH

FMAP

Readmissions

25

GNYHAHospital Cuts

2010-2019, $ in Billions

26Source: Congressional Budget Office.

GNYHAGNYHA Conclusion: Support

ReformLengthy

implementation means there’s time

to fix problems

Size of deficit means cuts are coming anyway

Failure of Clinton reform and

subsequent BBA Cuts

Important to support

administration

27