The rising costs of health care, coupled with a rapid increase in ranks of the uninsured have created an overall worrisome financial situation for Alaska hospitals for 2005. The problem has even prompted a few hospitals to start asking for some cash up front.
"While hospitals want to and are required to treat people who show up in their emergency rooms, in the end somebody has to pay for that," said Rod Betit, president of the Alaska State Hospital and Nursing Home Association.
It's not just emergency care that has hospital administrators concerned.
"The overall financial situation is worrisome," he said. "We continue to work with the (Alaska congressional) delegation to make sure the Medicare rates for Alaska don't fall below a level that becomes problematic." There are also initiatives under discussion to cover more of the uninsured, he said.
"Hospitals are seeing a bigger and bigger piece of their business not covered," he said.
To counteract the dearth of cash flow, the hospitals are working closely with patients to see if they qualify for any financial aid, from Medicare, Medicaid or the Denali Kid Care program. They are also asking for more cash up front from nonemergency patients.
Janet Clark, assistant commissioner of the state Department Health and Social Services, said the state spends about $1 billion annually on Medicaid services for about 130,000 residents.
That covers the current Medicaid in-patient rates, a flat day rate of $1,736.88 at Providence Alaska Medical Center and $2,161.28 at Alaska Regional Hospital, said Jack Nielson, executive director of the department's office of rate review.
Providence Alaska Medical Center in Anchorage is asking patients to pay their co-pay insurance up front, said Robert Dvorak, chief financial officer. At some point, patients will be asked to pay their deductibles up front, if they have insurance, he said. Other patients, if they qualify, will be signed up for Medicaid or charity, or will be set up with a payment plan, he said. Emergency room patients are still treated first, and then asked about payment, he said.
"We started this month and we are in the process of training our financial counselors to actually accomplish this," he said.
"We have noticed a significant increase in self-pay patients," he said. "We have to do something in terms of national legislation to resolve this."
Karina Jennings, director of communications and marketing at Providence, said Providence Health Care Systems writes off about $20 million annually in charity work or forgiveness of debt. That loss is made up from income received for hospital services, she said.
Alaska Regional Hospital, likewise, is asking for payment up front for nonemergency care, said Dan Houghton, chief financial officer. "Currently the program is such that a minimum deposit is requested at point of, or in advance of (nonemergency) service."
That minimum deposit varies, depending on the type of service and the hospital resources being consumed, he said.
Houghton also noted that the number of uninsured patients has grown significantly year after year. The country's economic system has been down and it has created an environment where businesses pass more costs on to employees while insurance companies are raising their rates, he said. "There are multiple issues."
Houghton said the administrators of Alaska Regional try to compensate by being as cost efficient as possible.
"The biggest response of the industry is trying to control our costs wherever possible, to mitigate part of that," he said. Alaska Regional's parent company, HCA, plans to implement a discount program for the uninsured in 2005, "but I can't tell yet what the discount will be," he said.
Houghton said HCA has taken a lead, working with the Federal Centers for Medicare and Medicaid Services to work out a plan to help the uninsured. "This program is trying to reduce the patient's overall burden by a fair amount and try to work with them to reduce that amount," he said. Participants in such plans may still be eligible for some charity, he said.
Valley Hospital, in Palmer, which is operated by Triad Hospitals Inc., wanted to put in place last year a discount program for self-pay patients who paid their bill in full at the time of service. The Federal Centers for Medicare and Medicaid Services, however, would not allow the program to continue because it favored the self-pay patients, hospital officials said.
Meanwhile, the hospital continues to ask for payment up front for nonemergency services. "There has been some resistance, but we keep plugging along," said Robin Thompson, director of the hospital's business office.
Fairbanks Memorial Hospital adopted a different plan years ago, said Rob Gould, chief financial officer. Self-pay patients who owe more than $5,000 are asked to take out a bank loan, for which the hospital co-signs, Gould said. "It's a wonderful thing," he said. "We co-sign every one of those loans. If the patient doesn't pay, we pay.
"It works very well. It's a fairly small default rate, where they've had something they didn't plan for and they truly want to pay their bill," he said. In 2003, the loan program had about three dozen participants. Loans can go for up to 60 months.
Long-term care lacks coverage
As hospitals struggle to keep a financial balance, the picture is even less rosy for nursing home patients, for whom Medicare coverage is limited, Betit said. "Medicare only makes nursing home care available to people who require hospitalization first, then are discharged directly to nursing homes. And then coverage is only for 90 days.
"After 90 days, they are on their own, or must apply for Medicaid," Betit said. "The public doesn't understand how poor the Medicare coverage is for long-term care."
Currently the state of Alaska picks up about 43 percent of Medicaid bills and the federal government takes care of the other 57 percent, thanks to a federal law that gave Alaska an enhanced federal match rate, he said. If that enhanced match rate is not renewed, the state's portion would go to 50 percent in July.
"To replace that federal money would cost the state around $60 million a year above the about $300 million for the state's share of all Medicaid bills, he said.
Most people don't have long-term care insurance, Betit said. "It continues to be a big education gap, when people do retirement planning.
"The insurance is out there. People who have enough income and assets to support themselves for a long time are the ones at risk for becoming impoverished. They would be eligible for Medicaid (only) if they used up all their money."
There are reasonably priced long-term care insurance products on the market, he said. The state Division of Insurance has a list of these policies from reputable companies, he said. The state has evaluated these policies and the National Association of State Insurance Commissioners has recommended them to the public, he said.
