forecasting the impact of healthcare reform presented by: richard l. rollins
DESCRIPTION
Forecasting the Impact of Healthcare Reform Presented by: Richard L. Rollins Rollins Capital Strategies f or West Virginia HFMA, January 23, 2014. Agenda. Change in Uninsured Population Expansion of Medicaid Change in Gross Revenue Bad Debts and Charity Care Medicare Payment Updates . - PowerPoint PPT PresentationTRANSCRIPT
Forecasting the Impact of Healthcare Reform
Presented by:Richard L. Rollins
Rollins Capital Strategiesfor
West Virginia HFMA, January 23, 2014
Rollins Capital Strategies 2
AGENDA
•Change in Uninsured Population
•Expansion of Medicaid
•Change in Gross Revenue
•Bad Debts and Charity Care
•Medicare Payment Updates
Rollins Capital Strategies 3
AGENDA (CONTINUED)•Other Adjustments
•Disproportionate Share
•Exchange Reimbursement
•Commercial and Other Payor Contractuals
•Summary
Rollins Capital Strategies 4
PATIENT PROTECTION AND AFFORDABLE CARE ACT
• Signed Into Law 3-23-10
• The Anticipated Impact of PPACA is Profound and Far Reaching
• In Order to Plan for Impact, You Must Understand the Specific Changes That Will Occur
Rollins Capital Strategies 5
CHANGE IN UNINSURED POPULATION
•Based on March, 2012 Congressional Budget Office Estimates, Prior to Supreme Court Decision
•Assumes That Medicaid Will be Expanded Per PPACA Requirements
CHANGE IN UNINSURED POPULATIONProjected Population 2013 2014 2015 2016 2017 2018Medicaid/CHIP 34,000,000 35,000,000 34,000,000 32,000,000 32,000,000 31,000,000
Employer 156,000,000 157,000,000 157,000,000 159,000,000 160,000,000 160,000,000
Non-Group/Other 25,000,000 25,000,000 27,000,000 28,000,000 28,000,000 31,000,000
Uninsured 56,000,000 56,000,000 56,000,000 56,000,000 57,000,000 58,000,000
Total 271,000,000 273,000,000 274,000,000 275,000,000 277,000,000 280,000,000
Source: March, 2012 CBO estimate on the impact on uninsured (Prior to Supreme Court decision)Assumes that State will expand Medicaid per PPACA Requirements
Projected Change in Uninsured 2013 2014 2015 2016 2017 2018Medicaid/CHIP - 13,000,000 15,000,000 17,000,000 16,000,000 16,000,000
Employer - (2,000,000) (2,000,000) (4,000,000) (5,000,000) (5,000,000)
Non-Group/Other - (1,000,000) (1,000,000) (2,000,000) (2,000,000) (3,000,000)
Exchange - 8,000,000 12,000,000 20,000,000 22,000,000 23,000,000
Uninsured - (18,000,000) (24,000,000) (30,000,000) (31,000,000) (31,000,000)
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REALLOCATION OF UNINSURED2013 2014 2015 2016 2017 2018
Medicare 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medicaid 0.00% 72.22% 62.50% 56.67% 51.61% 51.61%Blue Cross 0.00% -9.55% -7.17% -13.38% -12.95% -14.79%Commercial 0.00% -2.01% -1.51% -2.81% -2.72% -3.11%Other Government 0.00% -3.54% -2.65% -4.95% -4.79% -5.48%Other 0.00% -1.56% -1.17% -2.19% -2.12% -2.42%Self Pay 0.00% -100.00% -100.00% -100.00% -100.00% -100.00%Exchange 0.00% 44.44% 50.00% 66.67% 70.97% 74.19%Total - - - - - -
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CHANGE IN GROSS REVENUE
•Assumes That Gross Revenue Will be Reallocated But Will Not Change in Total
•Assumes No Change in Historical Use Rates
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INPATIENT GROSS REVENUEBefore Reform 2013 2014 2015 2016 2017 2018Medicare $62,743,146 $67,468,549 $72,471,595 $77,766,935 $83,369,948 $89,296,774Medicaid 6,459,706 6,733,882 7,019,199 7,316,567 7,626,494 7,949,508Blue Cross 13,648,399 14,227,691 14,830,524 15,458,819 16,113,648 16,796,130Commercial 2,868,005 2,989,735 3,116,411 3,248,437 3,386,040 3,529,453Other Government 5,055,144 5,269,704 5,492,984 5,725,694 5,968,232 6,221,012Other 2,235,422 2,330,302 2,429,038 2,531,944 2,639,196 2,750,977Self Pay 4,961,721 5,172,316 5,391,469 5,619,879 5,857,934 6,106,043Total $97,971,543 $104,192,179 $110,751,219 $117,668,274 $124,961,492 $132,649,898
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INPATIENT GROSS REVENUEWith Reform 2013 2014 2015 2016 2017 2018Medicare $62,743,146 $67,468,549 $72,471,595 $77,766,935 $83,369,948 $89,296,774Medicaid 6,459,706 7,934,598 8,463,342 9,022,601 9,270,826 9,633,934Blue Cross 13,648,399 14,068,838 14,664,940 15,056,088 15,701,223 16,313,294Commercial 2,868,005 2,956,354 3,081,616 3,163,810 3,299,375 3,427,992Other Government 5,055,144 5,210,868 5,431,654 5,576,529 5,815,476 6,042,178Other 2,235,422 2,304,284 2,401,918 2,465,982 2,571,647 2,671,896Self Pay 4,961,721 3,509,786 3,080,839 2,609,229 2,672,040 2,842,468Exchange 0 738,902 1,155,315 2,007,099 2,260,957 2,421,362Total $97,971,543 $104,192,179 $110,751,219 $117,668,274 $124,961,492 $132,649,898
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OUTPATIENT GROSS REVENUEBefore Reform 2013 2014 2015 2016 2017 2018Medicare $91,539,225 $95,705,286 $100,065,922 $104,630,475 $109,220,939 $114,016,483Medicaid 22,897,532 23,939,627 25,030,392 26,172,165 27,320,419 28,519,972Blue Cross 47,713,106 49,884,588 52,157,488 54,536,676 56,929,369 59,428,956Commercial 9,170,502 9,587,863 10,024,716 10,481,998 10,941,876 11,422,299Other Government 11,821,515 12,359,526 12,922,665 13,512,139 14,104,958 14,724,262Other 2,894,288 3,026,011 3,163,885 3,308,208 3,453,349 3,604,975Self Pay 19,446,110 20,331,124 21,257,475 22,227,144 23,202,318 24,221,058Total $205,482,278 $214,834,025 $224,622,544 $234,868,806 $245,173,228 $255,938,005
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OUTPATIENT GROSS REVENUEWith Reform 2013 2014 2015 2016 2017 2018Medicare $91,539,225 $95,705,286 $100,065,922 $104,630,475 $109,220,939 $114,016,483Medicaid 22,897,532 28,659,352 30,724,359 32,919,691 33,833,351 35,201,643Blue Cross 47,713,106 49,260,174 51,504,624 52,943,839 55,295,820 57,513,674Commercial 9,170,502 9,456,652 9,887,527 10,147,288 10,598,611 11,019,832Other Government 11,821,515 12,128,254 12,680,855 12,922,178 13,499,918 14,014,873Other 2,894,288 2,923,740 3,056,955 3,047,323 3,185,796 3,291,277Self Pay 19,446,110 13,796,120 12,147,128 10,319,746 10,583,514 11,275,320Exchange 0 2,904,446 4,555,173 7,938,266 8,955,281 9,604,902Total $205,482,278 $214,834,025 $224,622,544 $234,868,806 $245,173,228 $255,938,005
Rollins Capital Strategies 13
BAD DEBTS AND CHARITY CARE
•Assumes That the Change in Uninsured Will Translate to a Commensurate Change in Self Pay Gross Revenue
•This Will Then Translate to a Commensurate Reduction in Bad Debt and Charity Levels
Rollins Capital Strategies 14
BAD DEBTS AND CHARITY CARE (CONTINUED)
•Assumes That Individuals Purchasing Coverage Through the Exchange Will Continue to Produce Bad Debts
•Primarily a Result of High Deductible/Coinsurance Plans
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BAD DEBTS AND CHARITY CARE2013 2014 2015 2016 2017 2018
Gross Revenue on Self Pay to Exchange - $8,197,534 $11,420,976 $14,918,048 $15,804,699 $16,209,373
Net Revenue on Self Pay to Exchange - $2,763,458 $3,763,765 $4,800,008 $4,948,665 $4,939,489
Exchange Coinsurance % 0.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Exchange Coinsurance - 829,037 1,129,130 1,440,003 1,484,600 1,481,847
Exchange Uncollectible % 0.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Exchange Bad Debts - 207,259 282,282 360,001 371,150 370,462
Reduction in Uncollectible Accounts - $7,990,275 $11,138,694 $14,558,047 $15,433,549 $15,838,851
Amount Allocated to Bad Debts - $7,239,162 $10,091,619 $13,189,542 $13,982,743 $14,349,945
Amount Allocated to Charity Care - $751,113 $1,047,075 $1,368,506 $1,450,806 $1,488,906
Bad Debt % Before Reform 7.94% 7.94% 7.94% 7.94% 7.94% 7.94%
Bad Debt % With Reform 7.94% 5.65% 4.91% 4.17% 4.14% 4.22%
Charity Care % Before Reform .82% .82% .82% .82% .82% .82%
Charity Care % With Reform .82% .59% .51% .43% .43% .44%
Rollins Capital Strategies 16
MEDICARE PAYMENT ADJUSTMENTS
•Medicare Payments Will be Reduced Regardless of the Change in Uninsured
•Adjustments Are Based on IPPS Final Rule
MEDICARE PAYMENT UPDATEInpatient 2013 2014 2015 2016 2017 2018Market Basket Before Reform (1) 3.60% 1.50% 1.90% 1.90% 1.90% 1.90%
Market Basket Adjustment -0.10% -0.30% -0.20% -0.20% -0.75% -0.75%
Productivity Adjustment (2) -0.70% -0.50% -0.60% -0.70% -0.70% -0.70%
Market Basket With Reform 2.80% 0.70% 1.10% 1.00% 0.45% 0.45%
(1) 2013 and 2014 based on IPPS Final Rule. 2015-2017 is assumed to equal average of last 3 years.(2) Productivity adjustment is based on the ten-year rolling average of the multi-year productivity factor published
by the Bureau of Labor and Statistics.
Outpatient 2013 2014 2015 2016 2017 2018Market Basket Before Reform (1) 2.60% 2.50% 2.70% 2.70% 2.70% 2.70%
Market Basket Adjustment -0.10% -0.30% -0.20% -0.20% -0.75% -0.75%
Productivity Adjustment (2) -0.70% -0.50% -0.60% -0.70% -0.70% -0.70%
Market Basket With Reform 1.80% 1.70% 1.90% 1.80% 1.25% 1.25%
MEDICARE INPATIENT PAYMENTBefore Reform 2013 2014 2015 2016 2017 2018Blended Amount (with Capital) $7,138.92 $7,246.01 $7,383.68 $7,523.97 $7,666.93 $7,812.60
Medicare Discharges 3,222 3,331 3,441 3,550 3,660 3,769
Medicare Case Mix Index 1.2878 1.2878 1.2878 1.2878 1.2878 1.2878
Inpatient Payment Before Reform $29,621,473 $31,086,686 $32,717,622 $34,399,310 $36,133,092 $37,920,339
With Reform 2013 2014 2015 2016 2017 2018Blended Amount (with Capital) $7,083.76 $7,133.35 $7,211.82 $7,283.93 $7,316.71 $7,349.64
Medicare Discharges 3,222 3,331 3,441 3,550 3,660 3,769
Medicare Case Mix Index 1.2878 1.2878 1.2878 1.2878 1.2878 1.2878
Inpatient Payment With Reform $29,392.601 $30,603,368 $31,956,079 $33,301,875 $34,482,587 $35,673,250
Difference Due to Reform ($228,872) ($483,318) ($761,542) ($1,097,435) ($1,650,505) ($2,247,089)
MEDICARE OUTPATIENT PAYMENTBefore Reform 2013 2014 2015 2016 2017 2018Contractual % Before Reform 75.23% 75.59% 75.90% 76.20% 76.49% 76.79%
Contractuals Before Reform $68,696,270 $72,172,417 $75,773,976 $79,553,541 $83,376,319 $87,379,660
Inpatient Payment Before Reform $22,842,955 $23,532,869 $24,291,946 $25,076,935 $25,844,619 $26,636,823
With Reform 2013 2014 2015 2016 2017 2018
Contractual % With Reform 75.43% 75.97% 76.46% 76.95% 77.56% 78.16%
Contractuals With Reform $68,873,041 $72,535,474 $76,333,796 $80,344,766 $84,542,884 $88,938,894
Inpatient Payment With Reform $22,666,184 $23,169,812 $23,732,126 $24,285,709 $24,678,055 $25,077,589
Difference Due to Reform ($176,771) ($363,057) ($559,820) ($791,225) ($1,166,565) ($1,559,234)
OTHER ADJUSTMENTSMedicare Readmission Adj. 2013 2014 2015 2016 2017 2018Medicare IP Payment With Reform $27,612,531 $30,867,491 $32,220,203 $33,565,998 $34,746,710 $35,937,373
Readmission Adj. Factor (1) 0.9979 0.9979 0.9979 0.9979 0.9979 0.9979
Adjusted Payment With Reform $27,554,545 $30,802,669 $32,152,540 $33,495,510 $34,673,742 $35,861,905
Difference Due to Reform ($57,986) ($64,822) ($67,663) ($70,488) ($72,968) ($75,468)
Value-Based Purchasing 2013 2014 2015 2016 2017 2018DRG Payments With Reform $27,612,531 $28,749,972 $30,020,761 $31,285,053 $32,394,259 $33,512,814
Reduction to Fund VBP -1.000000% -1.250000% -1.500000% -1.750000% -2.000000% -2.000000%
VBP Adjustment Factor (1) 1.002498% 1.253123% 1.503747% 1.754372% 2.004996% 2.004996%
Net Adjustment 0.002498% 0.003123% 0.003747% 0.004372% 0.004996% 0.004996%
Difference Due to Reform $690 $898 $1,125 $1,368 $1,618 $1,674
(1) 2013 and 2014 based on IPPS Final Rule. 2015-2017 assumes the same relationship of adjustment factor to reduction to fund in 2014.
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MEDICARE DISPROPORTIONATE SHARESource: IPPS Final Rule 2013 2014 2015 2016 2017 2018DSH Reimbursement Before Reform $1,360,948 $1,428,267 $1,503,200 $1,580,464 $1,660,122 $1,742,237Estimated Medicare DSH (in Billions) - 12.77 13.47 14.22 15.00 15.8225% of Total - 3.19 3.37 3.55 3.75 3.96Factor 1 (Remaining 75% Pool) - 9.58 10.11 10.66 11.25 11.87Assumed Annual Growth 0.00% 0.00% 5.50% 5.50% 5.50% 5.50%
Estimated % Uninsured 20.66% 13.92% 11.68% 9.45% 9.39% 9.64%Uninsured as % of Base Year 100.00% 67.36% 56.52% 45.75% 45.42% 46.66%Required reduction 0.00% -0.10% -0.20% -0.20% -0.20% -0.20%
Factor 2 100.00% 67.26% 56.32% 45.55% 45.22% 46.46%
Factor 3 (Factor 1 * Factor 2) - 6.44 5.69 4.86 5.09 5.51
Hospital Specific Factor 0.000000% 0.010505% 0.010505% 0.010505% 0.010505% 0.010505%Hospital Portion of Factor 3 - 676,833 597,886 510,210 534,368 579,237
25% of DSH Before Reform - 357,067 375,800 395,116 415,031 435,559
Medicare DSH (With Reform) - $1,033,900 $973,686 $905,326 $949,398 $1,014,796Difference Due to Reform - ($394,367) ($529,514) ($675,139) ($710,724) ($727,441)
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MEDICAID CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $29,357,238 $30,673,509 $32,049,591 $33,488,732 $34,946,913 $36,469,480
Gross Revenue With Reform 29,357,238 36,593,950 39,187,701 41,942,292 43,104,177 44,835,577
Contractual % Before Reform 84.43% 84.84% 85.24% 85.64% 86.04% 86.42%
Contractual % With Reform 84.43% 84.66% 85.05% 85.43% 85.84% 86.24%Contractual Before Reform 24,785,146 26,023,896 27,320,638 28,678,741 30,066,979 31,518,336
Contractual With Reform 24,785,146 30,980,731 33,328,181 35,829,335 37,002,047 38,665,915
Difference Due to Reform $0 $963,606 $1,130,568 $1,302,967 $1,222,196 $1,218,518
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MEDICAID DISPROPORTIONATE SHARE2013 2014 2015 2016 2017 2018
DSH Reimb. Before Reform $2,997,000 $2,997,000 $2,997,000 $2,997,000 $2,997,000 $2,997,000Decrease % Due to Reform (1) 0.00% 5.05% 5.94% 5.83% 17.14% 17.14%DSH Decrease Due to Reform - 151,349 178,022 174,725 513,686 513,686Medicaid DSH With Reform - $2,845,652 $2,818,978 $2,822,275 $2,483,314 $2,483,314Difference Due to Reform - ($151,349) ($178,022) ($174,725) ($513,686) ($513,686)
(1) DSH decrease % based on AHA estimates
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EXCHANGE REIMBURSEMENT
•Will the Exchange Pay Based on Existing Commercial Rates, or
•Discounted Commercial Rates, or
•Rates Similar to Medicare or Medicaid
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EXCHANGE REIMBURSEMENT2013 2014 2015 2016 2017 2018
Exchange Revenue With Reform - $3,643,349 $5,710,488 $9,945,365 $11,216,238 $12,026,264
Medicare Contr. % With Reform (1) 0.00% 66.29% 67.05% 67.82% 68.69% 69.53%
Exchange Contr. With Reform - 2,415,145 3,828,605 6,745,360 7,704,282 8,361,482
Exchange Net Rev. With Reform - 1,228,204 1,881,883 3,200,006 3,511,956 3,664,782
Difference Due to Reform - $1,228,204 $1,881,883 $3,200,006 $3,511,956 $3,664,782
(1) For purposes of presentation, it is assumed the Exchange will pay based on Medicare like rates.
Rollins Capital Strategies 26
COMMERCIAL AND OTHER PAYOR CONTRACTUALS
•Ability to Cost Shift Will be Lessened
•Commercial Carriers Will Likely Attempt to Lessen Impact of Previous Cost Shifting
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BLUE CROSS CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $61,361,505 $64,112,279 $66,988,011 $69,995,494 $73,043,017 $76,225,086
Gross Revenue With Reform 61,361,505 63,329,013 66,169,564 67,999,927 70,997,043 73,826,969
Payment Incr. Before Reform 0.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Payment Incr. With Reform 0.00% 2.00% 2.00% 2.00% 2.00% 2.00%Contractual % Before Reform 8.61% 9.49% 10.36% 11.22% 12.07% 12.92%
Contractual % With Reform 8.61% 10.37% 12.09% 13.78% 15.44% 17.07%
Contractuals Before Reform 5,282,830 6,083,045 6,938,898 7,853,744 8,819,219 9,847,861
Contractuals With Reform 5,282,830 6.565,235 8,000,285 9,371,170 10,961,377 12,598,847
Difference Due to Reform $0 ($1,265,457) ($1,879,834) ($3,512,994) ($4,188,132) ($5,149,103)
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COMMERCIAL CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $12,038,507 $12,577,597 $13,141,127 $13,730,436 $14,327,916 $14,951,752
Gross Revenue With Reform 12,038,507 12,413,006 12,969,143 13,311,097 13,897,985 14,447,824
Payment Incr. Before Reform 0.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Payment Incr. With Reform 0.00% 2.00% 2.00% 2.00% 2.00% 2.00%Contractual % Before Reform 7.54% 8.43% 9.31% 10.18% 11.04% 11.90%
Contractual % With Reform 7.54% 9.32% 11.06% 12.77% 14.45% 16.09%
Contractuals Before Reform 907,449 1,059,907 1,223,105 1,397,690 1,582,254 1,779,036
Contractuals With Reform 907,449 1,156,396 1,434,378 1,699,869 2,007,954 2,325,094
Difference Due to Reform $0 ($261,081) ($383,258) ($721,518) ($855,630) ($1,049,986)
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OTHER GOVERNMENT CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $16,876,659 $17,629,231 $18,415,649 $19,237,833 $20,073,190 $20,945,274
Gross Revenue With Reform 16,876,659 17,339,122 18,112,510 18,498,707 19,315,395 20,057,051
Contractual % Before Reform 51.98% 52.91% 53.81% 54.70% 55.57% 56.43%
Contractual % With Reform 51.98% 52.91% 53.81% 54.70% 55.57% 56.43%Contractual Before Reform 8,773,082 9,327,082 9,909,931 10,523,243 11,155,056 11,818,643
Contractual With Reform 8,773,082 9,173,595 9,746,804 10,118,936 10,733,934 11,317,451
Difference Due to Reform $0 ($136,621) ($140,012) ($334,818) ($336,674) ($387,032)
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OTHER INSURANCE CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $5,129,710 $5,356,313 $5,592,923 $5,840,152 $6,092,545 $6,355,952
Gross Revenue With Reform 5,129,710 5,228,025 5,458,873 5,513,305 5,757,442 5,963,173
Payment Incr. Before Reform 0.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Payment Incr. With Reform 0.00% 1.00% 1.00% 1.00% 1.00% 1.00%Contractual % Before Reform 41.84% 42.95% 44.05% 45.13% 46.18% 47.22%
Contractual % With Reform 41.84% 43.51% 45.14% 46.73% 48.26% 49.75%
Contractuals Before Reform 2,146,063 2,300,777 2,463,768 2,635,512 2,813,701 3,001,131
Contractuals With Reform 2,146,063 2,274,910 2,464,308 2,576,124 2,778,677 2,966,963
Difference Due to Reform $0 ($102,422) ($134,591) ($267,459) ($300,078) (358,612)
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SELF PAY CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $24,407,831 $25,503,441 $26,648,944 $27,847,023 $29,060,253 $30,327,101
Gross Revenue With Reform 24,407,831 17,305,906 15,227,968 12,928,975 13,255,554 14,117,788
Contractual % Before Reform 18.00% 18.00% 18.00% 18.00% 18.00% 18.00%
Contractual % With Reform 18.00% 18.00% 18.00% 18.00% 18.00% 18.00%Contractual Before Reform 4,394,028 4,591,265 4,797,485 5,013,170 5,231,582 5,459,647
Contractual With Reform 4,394,028 3,115,502 2,741,420 2,327,543 2,386,336 2,541,560
Difference Due to Reform $0 ($6,721,771) ($9,364,911) ($12,232,421) ($12,959,453) ($13,291,226)
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SUMMARY2013 2014 2015 2016 2017 2018
Bad Debts - $7,239,162 $10,091,619 $13,189,542 $13,982,743 $14,349,945
Charity Care - 751,113 1,047,075 1,368,506 1,450,806 1,488,906
Medicare Inpatient (228,872) (483,318) (761,542) (1,097,435) (1,650,505) (2,247,089)
Medicare Outpatient (176,771) (363,057) (559,820) (791,225) (1,166,565) (1,559,234)
Medicare Readmission Adjustment (57,986) (64,822) (67,663) (70,488) (72,968) (75,468)
Value Based Purchasing 690 898 1,125 1,368 1,618 1,674
Medicare DSH - (394,367) (529,514) (675,139) (710,724) (727,441)
Medicaid 963,606 1,130,568 1,302,967 1,222,196 1,218,518
Medicaid DSH - (151,349) (178,022) (174,725) (513,686) (513,686)
Exchange Contractuals - 1,228,204 1,881,883 3,200,006 3,511,956 3,664,782
Blue Cross Contractuals - (1,265,457) (1,879,834) (3,512,994) (4,188,132) (5,149,103)
Commercial Contractuals - (261,081) (383,258) (721,518) (855,630) (1,049,986)
Other Government Contractuals - (102,422) (134,591) (267,459) (300,078) (358,612)
Other Insurance Contractuals - (136,621) (140,012) (334,818) (336,674) (387,032)
Self Pay Contractuals - (6,721,771) (9,364,911) (12,232,421) (12,959,453) (13,291,226)
Difference Due to Reform (462,940 $238,718 $153,101 ($815,835) ($2,585,096) ($4,635,052)
Rollins Capital Strategies 33
CHANGE IN UNINSURED POPULATION
• Question: What Happens if Commercial Insurance Cancellations are Higher and the Change in Uninsured is Lower Than CBO Estimate?
• Answer: Train Wreck
CHANGE IN UNINSURED AND EXCHANGE IF CBO ESTIMATES ARE INCORRECT
Assumptions 2013 2014 2015 2016 2017 2018Assumed Increase in Commercial Insurance Cancellations
- 100% 100% 100% 100% 100%
Assumed Decrease in CBO Estimate of Change in Uninsured
- 75% 75% 75% 75% 75%
Adjusted Change in Uninsured 2013 2014 2015 2016 2017 2018Medicaid/CHIP - 13,000,000 15,000,000 17,000,000 16,000,000 16,000,000
Employer - (4,000,000) (4,000,000) (8,000,000) (10,000,000) (10,000,000)
Non-Group/Other - (2,000,000) (2,000,000) (6,000,000) (4,000,000) (6,000,000)
Exchange - 5,000,000 6,000,000 12,000,000 12,500,000 13,750,000
Uninsured - (12,000,000) (15,000,000) (15,000,000) (14,500,000) (13,750,000)
Total - - - - - -
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REALLOCATION OF UNINSURED2013 2014 2015 2016 2017 2018
Medicare 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Medicaid 0.00% 108.33% 100.00% 113.33% 110.34% 116.36%Blue Cross 0.00% -28.66% -22.93% -53.51% -55.35% -66.71%Commercial 0.00% -6.02% -4.82% -11.24% -11.63% -14.02%Other Government 0.00% -10.62% -8.49% -19.82% -20.50% -24.71%Other 0.00% -4.69% -3.76% -8.76% -9.07% -10.93%Self Pay 0.00% -100.00% -100.00% -100.00% -100.00% -100.00%Exchange 0.00% 41.67% 40.00% 80.00% 86.21% 100.00%Total - - - - - -
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INPATIENT GROSS REVENUEWith Reform 2013 2014 2015 2016 2017 2018Medicare $62,743,146 $67,468,549 $72,471,595 $77,766,935 $83,369,948 $89,296,774Medicaid 6,459,706 7,934,598 8,463,342 9,022,601 9,270,826 9,633,934Blue Cross 13,648,399 13,909,985 14,499,356 14,653,358 15,288,797 15,830,458Commercial 2,868,005 2,922,973 3,046,821 3,079,182 3,212,710 3,326,532Other Government 5,055,144 5,152,031 5,370,325 5,427,364 5,662,721 5,863,343Other 2,235,422 2,278,266 2,374,797 2,400,021 2,504,097 2,592,814Self Pay 4,961,721 4,063,963 3,947,326 4,114,554 4,367,758 4,658,490Exchange 0 461,814 577,657 1,204,260 1,284,635 1,447,553Total $97,971,543 $104,192,179 $110,751,219 $117,668,274 $124,961,492 $132,649,898
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OUTPATIENT GROSS REVENUEWith Reform 2013 2014 2015 2016 2017 2018Medicare $91,539,225 $95,705,286 $100,065,922 $104,630,475 $109,220,939 $114,016,483Medicaid 22,897,532 28,659,352 30,724,359 32,919,691 33,833,351 35,201,643Blue Cross 47,713,106 48,635,761 50,851,760 51,351,002 53,662,271 55,598,393Commercial 9,170,502 9,325,441 9,750,337 9,812,577 10,255,345 10,617,364Other Government 11,821,515 11,896,981 12,439,045 12,332,217 12,894,879 13,305,484Other 2,894,288 2,821,470 2,950,025 2,786,438 2,918,243 2,977,580Self Pay 19,446,110 15,974,455 15,563,508 16,273,445 17,299,974 18,478,997Exchange 0 1,815,279 2,277,587 4,762,960 5,088,228 5,742,061Total $205,482,278 $214,834,025 $224,622,544 $234,868,806 $245,173,228 $255,938,005
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BAD DEBTS AND CHARITY CARE2013 2014 2015 2016 2017 2018
Gross Revenue on Self Pay to Exchange - $5,465,023 $7,138,110 $7,459,024 $7,392,520 $7,189,614
Net Revenue on Self Pay to Exchange - $1,842,305 $2,352,353 $2,400,004 $2,314,698 $2,190,902
Exchange Coinsurance % 0.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Exchange Coinsurance - 552,692 705,706 720,001 694,409 657,271
Exchange Uncollectible % 0.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Exchange Bad Debts - 138,173 176,426 180,000 173,602 164,318
Reduction in Uncollectible Accounts - $5,326,850 $6,961,683 $7,279,024 $7,218,918 $7,025,297
Amount Allocated to Bad Debts - $4,826,108 $6,307,262 $6,594,771 $6,540,315 $6,364,895
Amount Allocated to Charity Care - $500,742 $654,422 $684,253 $678,603 $660,402
Bad Debt % Before Reform 7.94% 7.94% 7.94% 7.94% 7.94% 7.94%
Bad Debt % With Reform 7.94% 6.41% 6.04% 6.05% 6.16% 6.29%
Charity Care % Before Reform .82% .82% .82% .82% .82% .82%
Charity Care % With Reform .82% .67% .63% .63% .64% .65%
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EXCHANGE REIMBURSEMENT2013 2014 2015 2016 2017 2018
Exchange Revenue With Reform - $2,277,093 $2,855,244 $5,967,219 $6,372,862 $7,189,614
Medicare Contr. % With Reform 0.00% 66.29% 67.05% 67.82% 68.69% 69.53%
Exchange Contr. With Reform - 1,509,466 1,914,303 4,047,216 4,377,433 4,998,712
Exchange Net Rev. With Reform - 767,627 940,941 1,920,003 1,995,429 2,190,902
Difference Due to Reform - 767,627 940,941 1,920,003 1,995,429 2,190,902
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BLUE CROSS CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $61,361,505 $64,112,279 $66,988,011 $69,995,494 $73,043,017 $76,225,086
Gross Revenue With Reform 61,361,505 62,545,746 65,351,116 66,004,360 68,951,068 71,428,851
Payment Incr. Before Reform 0.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Payment Incr. With Reform 0.00% 2.00% 2.00% 2.00% 2.00% 2.00%Contractual % Before Reform 8.61% 9.49% 10.36% 11.22% 12.07% 12.92%
Contractual % With Reform 8.61% 10.37% 12.09% 13.78% 15.44% 17.07%
Contractuals Before Reform 5,282,830 6,083,045 6,938,898 7,853,744 8,819,219 9,847,861
Contractuals With Reform 5,282,830 6.484,035 7,901,330 9,096,158 10,645,495 12,189,599
Difference Due to Reform $0 ($1,967,523) ($2,599,327) ($5,233,549) ($5,918,225) ($7,137,973)
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SELF PAY CONTRACTUALS2013 2014 2015 2016 2017 2018
Gross Revenue Before Reform $24,407,831 $25,503,441 $26,648,944 $27,847,023 $29,060,253 $30,327,101
Gross Revenue With Reform 24,407,831 20,038,418 19,510,834 20,387,999 21,667,732 23,137,487
Contractual % Before Reform 18.00% 18.00% 18.00% 18.00% 18.00% 18.00%
Contractual % With Reform 18.00% 18.00% 18.00% 18.00% 18.00% 18.00%Contractual Before Reform 4,394,028 4,591,265 4,797,485 5,013,170 5,231,582 5,459,647
Contractual With Reform 4,394,028 3,607,423 3,512,444 3,670,356 3,900,741 4,165,334
Difference Due to Reform $0 ($4,481,180) ($5,853,069) ($6,116,211) ($6,061,679) ($5,895,302)
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SUMMARY2013 2014 2015 2016 2017 2018
Bad Debts - $4,826,108 $6,307,262 $6,594,771 $6,540,315 $6,364,895
Charity Care - 500,742 654,422 684,253 678,603 660,402
Medicare Inpatient (228,872) (483,318) (761,542) (1,097,435) (1,650,505) (2,247,089)
Medicare Outpatient (176,771) (363,057) (559,820) (791,225) (1,166,565) (1,559,234)
Medicare Readmission Adjustment (57,986) (64,822) (67,663) (70,488) (72,968) (75,468)
Value Based Purchasing 690 898 1,125 1,368 1,618 1,674
Medicare DSH - (394,367) (529,514) (675,139) (710,724) (727,441)
Medicaid 963,606 1,130,568 1,302,967 1,222,196 1,218,518
Medicaid DSH - (151,349) (178,022) (174,725) (513,686) (513,686)
Exchange Contractuals - 767,627 940,941 1,920,003 1,995,429 2,190,902
Blue Cross Contractuals - (1,967,523) (2,599,327) (5,233,549) (5,918,225) (7,137,973)
Commercial Contractuals - (410,339) (536,221) (1,087,305) (1,223,445) (1,472,817)
Other Government Contractuals - (174,887) (208,127) (441,585) (473,452) (555,964)
Other Insurance Contractuals - (273,243) (280,025) (669,636) (673,348) (774,064)
Self Pay Contractuals - (4,481,180) (5,853,069) (6,116,211) (6,061,679) (5,895,302)
Difference Due to Reform (462,940 ($1,705,104) ($2,539,013) ($5,853,936) ($8,026,435) ($10,522,647)
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SUMMARY• Potential Impact of PPACA is Profound and Far
Reaching• To Cope With Impact, Hospitals Will Need to Change
the Way They Operate• To Plan for the Needed Changes, a Hospital Must
Understand the Impact That PPACA Will Have on Their Operations
• A Hospital Will Need to Plan Strategies and Operational Changes to Mitigate Impact
Rollins Capital Strategies 44
Questions & Answers
Rollins Capital Strategies 45
Richard L. Rollins
Rollins Capital Strategies
Roswell, Georgia
(919)618-4698