How Hospitals Can Protect Their Revenue Streams as Medicaid Increase - Coursework Example

Hospitals and New Revenue Streams Hospitals have consistently worked with Medicaid and Medicare patients in an attempt to make sure that all patients had adequate healthcare. As time has gone own, funding cuts and difficulties in getting payments from Medicaid and Medicare are making some hospitals either stop taking these patients or finding new revenue streams to continue. For some patients, especially on Medicaid, hospitals are refusing certain services that many patients need, which also means that doctors will not see these patients for these services. As we move into 2009 and beyond, Medicaid may be a tough insurance for people to use because some hospitals are refusing to accept these services. SIGNIFICANT HISTORICAL MILESTONES IN MEDICAID AND MEDICARE PROGRAMS IN HOSPITALS In 1965 both Medicaid and Medicare were created as Title XVIII and Title XIX of the Social Security Act and the goal was to provide healthcare coverage to "almost all Americans age 65 or over (e.g., those receiving retirement benefits from Social Security or the Railroad Retirement Board) and providing health care services to low-income children deprived of parental support, their caretaker relatives, the elderly, the blind and individuals with disabilities." ("Key Milestones, 2005). At that time it was thought that Seniors were most likely to live in poverty and only about one half had their own health insurance coverage. In 1966 Medicare began to serve about 19 million people. Since then Medicaid and Medicare have gone through a variety of changes and they have lost funding or gained funding depending on who was in political office. In 1988 "The Medicare Catastrophic Coverage Act (MCCA)", included the most "significant changes since enactment of the Medicare Program" ("Key Milestones, 2005") was to improve hospital and skilled nursing facility (SNF) benefits, cover mammography and began an outpatient prescription drug plan; it also placed a cap on patient liability. The added services for pregnant women and infants and other people were allowed to be covered. In 1991 Medicaid DSH payments were subject to spending controls and "provider specific taxes and donations to States were capped." In 1996 the first ideas for welfare reform began with The Aid To Families with Dependent Children (AFDC) began as an entitlement program replacing the Temporary Assistance for Needy Family block grant and broke the tie to Medicaid. This severely changed the Medicaid Program by adding a mandatory low income group and regulating Medicaid recipients to no longer receive Medicaid automatically if they lost cash payments in welfare. ("Key Milestones, 2005"). In the same year, there were significant changes to Medicare that included: new Medicare managed care and private health insurance plans that beneficiaries could take advantage of which was much like regular insurance in that it was offered through an open enrollment program; education programs were expanded to help beneficiaries understand their choices, five new services were added and the Internet site www.medicare.gov began to provide updated information about Medicare in1998. ("Key Milestones, 2005"). There were other significant changes for Medicaid and Medicare recipients as time went on and there were some increases for providers. A significant change for providers happened in 2000 when The Benefits Improvement and Protection Act (BIPA) "increased Medicare payments to providers and managed health care organizations", reduced some co-payments for beneficiaries and improved Medicares coverage for some of their prevention services. BIPA also created "a new Medicaid PPS for federally qualified health centers and rural clinics". They also modified Medicaid DSH funds to hospitals and extended the sunset of medical assistance for families who were eligible for welfare through their transition. This was a one year extension ("Key Milestones, 2005"). By 2007, President Bush was continuing to cut Medicaid and Medicare because he wanted to curb spending. In this process, he decreased all payments of specific services provided in Medicare parts A and B, reduced terms of use for oxygen and electric wheelchairs and expanded bidding for some laboratory services (Healthcare Financial Management Association, 2006). President Bush also changed the Medicaid program in such a way that many people who were providing service could not afford to do it anymore and he reduced many programs for adults, limited payments on some pharmaceuticals and put a cap on government providers "at the cost of providing services to Medicaid beneficiaries." (Healthcare Financial Management Association, 2006). The ramifications of these changes that also carried through 2008 were that many hospitals could not afford to take Medicaid or Medicare on many levels. This became more of a business decision than one that cared about patients. This has also created more competition between private hospitals and specialty health service providers. HOSPITALS AND PROTECTION OF REVENUE STREAMS As the Baby Boomers continue to age and there is more need for public and private hospital and nursing care there are a variety of issues that come through that affect Medicaid and Medicare patients. The needs of the hospitals to keep growing and sustain themselves in lieu of the changes in the economy, the world and these two types of health insurance has made hospitals take a broader look at funding sources. Because of this, some services suffer or are deleted while others continue at bare minimums. Some hospital administrators become frustrated and cut service to Medicaid patients. Older patients my get passed through the doors of the clinics and hospitals because they are on Medicaid or Medicare and managed care means they may not get the total care that they need. Part of the challenge for hospitals is that they are vulnerable to the changes that Congress decides as time goes on. As an example, recently $100 billion in cuts were proposed by Congress but for now it will not happen. The reason is because of grassroots efforts to show them how vulnerable it left hospitals and patients who really need the service. But according to Fulton (2007) these cuts could still come as Congress continues to try and manage their budget. They are still looking at problems with these two programs and eventually may happen. This would create problems for the elderly, disabled and poor. (Fulton, 2006, p. 1). Some of the challenge to hospitals is that niche healthcare agencies are being built to challenge their programs. As an example, ambulatory service centers have grown and many outpatient surgeries have dropped that hospitals were providing (Fulton, p. 2). The way that some are coping with this and protecting revenues is to work with doctors on an outpatient basis. According to Matthew Fulton, senior vice president of business development at Centura Health System in Colorado: "By being good partners on the outpatient side, we get [doctors to work favorably with us] on the inpatient side"(As quoted in Fulton, p. 3). Centura Health System purchased 50% of Golden Ridge Surgery Centers to have access to their specialization which is orthopedic surgery. By creating niche partnerships, hospitals can have the best of both worlds -- they have someone doing a service that they provide without competing with them for the service. Another way that hospitals are protecting their revenue streams has to do with a program called P4P or "Pay for Service". This is a fairly new program according to Burke (2006) but it is one that many hospitals are trying because it engages specialty physicians. According to Burke: If P4P programs are to mature to a point where they achieve the magnitude of demonstrable that results in significant quality improvement … they will need to represent a higher proportion of a providers revenue stream and they will also need to move into specialty physician contracts (Burke, p. 1). The various PCP programs are the ones that are targeted for the P4P program but there are only about 20-30% to help physicians. According to Burke, adding specialty physicians to this program will have a significant impact on the quality of care (Burke, p. 2). Henry (2005) reports on the idea that many hospitals are learning to create revenue streams from retail strategies that can be customized to meet the organizations "patient mix and traffic volume" (Henry, p. 1). They are providing retail services and products to customers who come through their doors. This is an interesting concept because it is also geared towards the healthcare needs of the patients. For instance, they may sell deodorant for a breast cancer survivor so she will not be embarrassed going into a regular store. Where these retail programs are developing, they are taking the place of the smaller gift shops and turning into retail stores. The stores also provide items like specialty clothes for newborns, maternity clothes, skin lotion for cancer survivors and much more (Henry, p. 3). This has created a $100 million in combined sales for some hospitals (Henry, p. 2). It seems that many hospitals are relying on those patients who can pay to create a larger amount of revenue stream. A question comes to mind as to whether these efforts will eventually turn away the Medicaid and Medicare patients all together because of their inability to pay substantial costs that other patients can and do pay. This may turn into more of an ethical challenge or dilemma for hospitals but they have to do something to make sure they have what they need to keep going. When hospitals need to fulfill their need to strive they will search for many ways to create an opportunity to keep revenue. Another way they are doing this is through pay for service programs. This is a growing revenue stream and "in the first quarter of 2004 it generated 7.16 percent of total gross revenue" ("Partner", 2004). Patient access and patient finance departments are also coming together so that they can manage the pay for service revenues easier and more efficiently. This newsletter predicts that there will be a rise in patients who pay for service because employer sponsored healthcare plans are declining. They predict that this will increase the uninsured, underinsured and self-insured patients as well. Another idea that hospitals are beginning to explore as they look at the various retail options is to incorporate spa services inside the hospital. According to "Beautiful Forevers Cheryl Whitman" (2006) this trend is happening because people like the idea of being in a hospital setting in case anything happens. They also have practitioners who know what they are doing and this creates a better dynamic for this service. This is an interesting idea and it would seem that it is something some hospitals may pursue more since health spas are the rage in some areas. DCruz and Terri (2008) took the issue of hospitals and revenue streams and made some predictions regarding what would happen as Medicaid and Medicare continue to dwindle in some fashion. They predict that many payers will shift to a Medicare-Severity DRGs (MS-DRGs) for more severe illnesses. It seemed that what the were saying that this type of service would stop some hospitals from picking only those who only chose healthier patients (DCruz and Terri, p. 5). They predict this will happen to stop some of the risk that hospitals already have when they are dealing with Medicaid or Medicare services. CONCLUSION No matter how it happens it will be difficult for patients to continue to use hospital facilities if every hospital starts catering to only those who can afford care. After doing the research for this paper it seems very clear that our nation needs some sort of national healthcare system. On the patient side this may be a better way for people to receive care than through Medicaid or Medicare. It seems that in some respects Medicare is more protected than Medicaid, but that may not be for very long. It also seems that there are challenges with hospitals getting the payments they need and they are turning to these other revenue streams to off set their operational costs. A challenge seems to be that as they continue to use these alternative revenue streams they may forget that the elderly and the poor need their services. They may be able to walk away from them and go towards only those who have the ability to pay. On the one hand this seems feasible and some would say that it is their right to do. On the other hand this may become more of a moral dilemma as people are faced with not getting the care they need. Already, there are people who do not receive the care they need because Medicaid will not pay for certain services or they pay so little that some doctors refuse to take patients for these situations. As an example, a woman I know needed Bariatric Surgery and went to the seminars and all of the other things she had to go through in order to be ready for the surgery. When she got to the physicians office, they refused to see her because she was on Medicaid. There is more to the story but the point is there needs to be a way that as hospitals change to accept these more lucrative opportunities that Medicaid and Medicare patients continue to receive care. References Beautiful Forevers Cheryl Whitman Says Medspa Hospital Trend Gaining Momentum; New Revenue Stream Makes This Trend a Winner on Hospitals ROI Scorecard (24 May 2006). Business Wire. Retrieved August 28, 2008 from http://findarticles.com/p/articles/mi_m0EIN/is_2006_May_24/ai_n26875252. Burke, Kathryn (2006). Specialty physician involvement in P4P can enable Programs to thrive. Managed Healthcare Executive. 16(3) 42-46. Retrieved August 28, 2008 from Business Source Premier Database (AN 20034867). DCruz, Martin and Terri, L. (1 January 2008). Major trends affecting hospital payment. Healthcare Financial Management. Retrieved August 30, 2008 from http://www.allbusiness.com/health-care/health-care-overview/10590450-1.html. Fulton, Matthew (2007). Niche Partnerships. Trustee, 60(6) p. 6-7. Retrieved August 30, 2008 from Business Search Premier Database (AN 25474020). Healthcare Financial Management Association.( 15 February2006). Fact Sheet: Medicare and Medicaid Changes in the Presidents 2007 Budget Proposal. Retrieved August 25,2008 from http://www.hfma.org/library/reimbursement/medicare/400507.htm Henry, David (2005). Whats in store. Marketing Health Services. 25(3) p. 14-18. Retrieved August 28, 2008 from Business Source Premier Database (AN 18086008). Key milestones in Medicare and Medicaid history, selected years: 1965-2003. (22 December 2005). Healthcare Financing Review. Retrieved August 28, 2008 from http://www.allbusiness.com/government/employment-regulations/873736-1.html. Partner patient access, patient finance, and patient care. (2004). Health Care Registration: The Newsletter for Health Care Registration Professionals. 14(2) p. 10-11. Retrieved August 28, 2008 from Business Source Premier Database (AN 14939354). Read More