State Legislative UpdateHFMA

February 18, 2014

Today’s UpdateWhat’s Happening in Western Pennsylvania

-Highlights from Hospital Council’s Flash Survey

State Budget Update

Healthy Pennsylvania: Medical Assistance Waiver

State Political Update

Federal Update

  No. of Facilities

Charity Care 4th QTR FY

12

Charity Care 4th QTR

FY 13 % ChangeWestern Pennsylvania 58 $483,313,170 $571,243,513 18.19%

Eastern 11 $36,688,748 $40,482,709 10.34%Northwest 17 $54,501,566 $90,676,485 66.37%Southwest 30 $392,122,857 $440,084,319 12.23%

  No. of Facilities

Bad Debt 4th QTR

FY 12

Bad Debt 4th QTR FY

13%

ChangeWestern Pennsylvania 58 $470,880,527 $445,857,606 -5.31%

Eastern 11 $51,703,789 $52,545,644 1.63%Northwest 17 $115,917,339 $92,538,873 -20.17%Southwest 30 $303,259,399 $300,773,089 -0.82%

  No. of Facilities

Uncompensated Care 4th QTR FY

12

Uncompensated Care

4th QTR FY 13

% Change

Western Pennsylvania 58 $954,193,697 $1,017,101,119 6.59%Eastern 11 $88,392,536 $93,028,353 5.24%Northwest 17 $170,418,905 $183,215,358 7.51%Southwest 30 $695,382,256 $740,857,408 6.54%

  No. of Facilities

Admissions 4th QTR FY 12

Admissions 4th QTR

FY 13%

ChangeWestern Pennsylvania 58 533,352 515,820 -3.29%

Eastern 11 58,533 56,556 -3.38%Northwest 17 99,779 94,773 -5.02%Southwest 30 375,040 364,491 -2.81%

  No. of Facilities

Inpatient Surgical

Operations 4th QTR

FY 12

Inpatient Surgical

Operations 4th QTR

FY 13%

ChangeWestern Pennsylvania 58 162,514 155,801 -4.13%

Eastern 11 15,381 14,242 -7.41%Northwest 17 25,270 24,682 -2.33%Southwest 30 121,863 116,877 -4.09%

  No. of Facilities

Outpatient Surgical

Operations 4th QTR

FY 12

Outpatient Surgical

Operations 4th QTR

FY 13%

ChangeWestern Pennsylvania 58 308,412 297,769 -3.45%

Eastern 11 50,015 48,432 -3.17%Northwest 17 55,459 53,908 -2.80%Southwest 30 202,938 195,429 -3.70%

  No. of Facilities

Emergency Room

Registrations 4th QTR FY 12

Emergency Room

Registrations 4th QTR FY 13

% Change

Western Pennsylvania 58 1,754,136 1,776,487 1.27%Eastern 11 242,115 240,199 -0.79%Northwest 17 435,144 437,194 0.47%Southwest 30 1,076,877 1,099,094 2.06%

  No. of Facilities

Operating Margin Ratio 4th QTR FY 12

Operating Margin Ratio 4th QTR FY 13

Western Pennsylvania 58 4.44% 1.81%Eastern 11 3.75% 2.39%Northwest 17 2.98% 1.82%Southwest 30 4.86% 1.72%

  No. of Facilities

Total Margin Ratio 4th QTR FY 12

Total Margin Ratio 4th QTR FY 13

Western Pennsylvania 58 4.76% 3.15%Eastern 11 4.77% 5.00%Northwest 17 2.62% 3.77%Southwest 30 5.25% 2.75%

State Budget UpdatePA is facing a nearly $2 Billion Deficit

Because of:A $100 to $200 million shortfall in revenuesNearly $1.2 billion to continue MA programs and to

meet the state’s pension obligationsIncludes Pennsylvania’s loss of more than $300

million in federal medical assistance percentages (FMAP) payments

Almost $100 million of those payments go to hospitals

State Budget UpdateGovernor Corbett’s Proposed Budget is $29.4

Billion

Total Impact on Healthcare is a reduction of $325 million

Majority of this is related to Nursing Homes-estimates are the cuts are approximately 4 percent in reimbursement

State Budget UpdateImpact on Hospitals

• Tobacco Settlement Funds- Budget does include funding for tobacco

settlement uncompensated care and health research

- Budget does not restore or include tobacco settlement funds list in this current fiscal year

Impact: $50.8 million

State Budget UpdateSupplemental PaymentsState budget provides level state funding for

supplemental payments to hospitals, but payments are lower because of FMAP reduction

Graduate Medical EducationProvides $4 million for 12 hospital residency

slots and loan repayment awards for 70 individuals as incentive for recruitment and retention of health care professionals in underserved areas

State Budget Update

Healthy Pennsylvania: Medical AssistanceEstimates savings of $125 million for

implementation of the Medicaid waiver effective January 1, 2015

Managed Care Payment DelayIncludes $394 million in savings for delaying

payments for managed care for one month

State Budget UpdateRestoring Tobacco Settlement Funding and

FMAT Funding:

HAP Proposes:Increasing the state cigarette taxEstablish a new tax on all other non-taxed

tobacco and nicotine products including e-cigarettes (would raise $53 million)

Assess ambulatory surgical centers in a manner similar to hospitals to raise new monies for the state’s General Fund

State Budget UpdateOther Budget Considerations:

No reductions to hospital rate-based or supplemental payments

Uphold the Quality Care Assessment agreement

Implement the MA waiver provisions by July 1, 2014

Source: Hospital and Healthsystem Association of

Pennsylvania

Healthy PennsylvaniaPennsylvania opted out of creating a

statewide insurance exchangePennsylvania became part of the Federal

insurance exchange As such, Pennsylvania did not expand the

exchange to include Medical Assistance recipients

Several economic impact studies show that expansion of the exchange would increase revenue to the state, create jobs and cover more Pennsylvanians

Healthy PennsylvaniaThe Governor and administration applied for

a waiver from the Centers for Medicare and Medicaid to expand the exchange but with modifications

Hearings were held in December, comments were accepted

The waiver application was submitted to CMS

CMS will also have a comment period. The waiver can be accepted, rejected or CMS and the Administration will enter into discussions and negotiations.

Healthy PennsylvaniaSome concerns:

Coverage would be delayed until January 2015

The plan is complex and could delay coverage and create barriers to access

Limits on care and services could increase hospital uncompensated care

Consumers and those with disabilities also have some concerns

The Political Scene

Governor’s Race

Republican: • Governor Tom Corbett

- Incumbent- Low Polling Numbers (as of today)

The Political SceneDemocratic Candidates for Governor:• Congresswoman Allyson Schwartz• Auditor Jack Wagner• Kathleen McGinty• Treasurer Rob McCord• Thomas W. Wolf• Jo Ellen Litz• (Former candidate John Hanger)

Federal-Political Update

Federal Mid-Term Elections: 2014

Entire House of Representatives are up for Election

Federal UpdateDebt Ceiling Discussion

Sequestration (2 percent cut continues)

Federal UpdateOther Considerations:

Impact of Health Insurance ExchangesRAC and Other Audits

Contact Information

Patricia J. RaffaeleVice President, Professional ServicesHospital Council of Western PAraffaelp@hcwp.org724/772-7202