Guest column: The rest of the story on Collier hospital care data

Alan Levine, Health Management Associates Florida President, on NewsMakers 2-17-13.

Alan Levine, Health Management Associates Florida President, on NewsMakers 2-17-13.

Editor’s note: NCH Healthcare System CEO Dr. Allen Weiss’ “Straight Talk’’ column in the Daily News reported NCH delivers 97 percent of the XX hospital care in Collier County. The Daily News asked HMA, which, like NCH, runs two Collier hospitals, for comment.

By Alan Levine

Naples

Senior Vice President,

Florida Group President

Health Management Associates

The State of Florida publishes the annual Florida Hospital Financial Data Book, which provides the state’s data on how much care each hospital provides to the poor. This data is reported as the percentage of total patient days each hospital provides to Medicaid and charity patients.

Virtually every government entity, including the IRS, the Centers for Medicare and Medicaid Services and the State of Florida recognize that the uncompensated cost of Medicaid is a community benefit and as such, hospitals report this information. For instance, the IRS Form 990, Schedule H is required to be completed by hospitals which are exempt from paying taxes, such as NCH, and line 7(b) of this form provides the opportunity for the hospital to receive credit for Medicaid as a community benefit.

Because of the multitude of ways the government compensates hospitals for the Medicaid shortfall and the cost of care for the uninsured, all of the state’s calculations for “care for the poor” or “uncompensated care” are based on inclusion of Medicaid days, charity days and a portion of the hospital’s bad debt.

If there is a claim by NCH that it provides 97 percent of the charity care in the county, that would not be a fair comparison, and departs from the State of Florida’s own mechanisms for measuring who cares for the poor.

According to the state’s published data, NCH provides 18.23 percent of its patient days to Medicaid and charity, while the two Physicians Regional hospitals provide 15.4 percent. Clearly, both hospitals are committed, relative to their size, to caring for the poor. We applaud NCH for this, as we would hope they would us.

We also applaud NCH for achieving a $26 million profit last year, just as Physicians Regional achieved a $16 million profit. It is important for the community that both systems be financially sound. And importantly, Physicians Regional is the only hospital system in Collier County that contributes local, state and federal tax dollars to support schools, firefighters, police and other public infrastructure needs. In addition, we applaud our colleagues at both systems for the voluntary work, and contributions, both systems make to various community organizations.

NCH is substantially larger than Physicians Regional, so comparisons of raw data that don’t take into consideration the denominator would not be a fair portrayal of Physicians Regional’s commitment.

This online document provides some background on the issue of charity and uncompensated care: http://www.communitycatalyst.org/projects/hap/free_care?id=0009.

Importantly, it notes that many hospitals capture the care they provide to the poor as bad debt rather than charity. This is why the state’s formula for how it pays hospital’s for the cost of uninsured care includes a portion of bad debt. In order for a patient to qualify for “charity,” he or she must complete an application, provide evidence of their income, and then be approved for charity.

What does this mean? Really, nothing to the patient. The “charity” classification is done to assist the hospital in accessing reimbursement through state mechanisms, like the $1 billion Low Income Pool, which funds hospitals for uncompensated care. Many hospitals choose not to put their patients through the application process, and instead opt to deeply discount the cost, and write the rest off to bad debt. The net result for the patient is the same. He receives the care.

But the hospital simply accounts for it differently — through bad debt rather than charity.

Again, there is variation between how hospitals do this, and thus, the state does not use “charity” as a metric on its own for determination of which hospitals are carrying the burden. In determining how funds are paid to hospitals for providing uncompensated care for the poor, the formula uses medicaid days, charity days and a portion of bad debt.

Because of this, some of our hospitals, like NCH, receive funding to help offset some of this cost. For this reason, reporting of charity without also reporting the revenue received by the hospital to help offset the cost of charity, is not fully accurate. And because the funding mechanisms for this care come through Medicaid, the state only reports the data to be inclusive of Medicaid and Charity.

AHCA’s specific policy, which is approved by the federal government, provides guidelines that each state uses to calculate the cost of caring for low income individuals (http://www.fdhc.state.fl.us/Medicaid/medicaid_reform/lip/Archive/docs/2006/AGENDAITEM5a.pdf see bottom of page 16 and top of page 17 of this link for more detailed information regarding the policy).

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