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Notre Dame Journal of Law, Ethics & Public Policy

Volume 28 | Issue 1 Article 5

May 2014 On the Uneasy Relationship between and Charity Care Merle Lenihan

Laura D. Hermer

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Recommended Citation Merle Lenihan & Laura D. Hermer, On the Uneasy Relationship between Medicaid and Charity Care, 28 Notre Dame J.L. Ethics & Pub. Pol'y 165 (2014). Available at: http://scholarship.law.nd.edu/ndjlepp/vol28/iss1/5

This Article is brought to you for free and open access by the Notre Dame Journal of Law, Ethics & Public Policy at NDLScholarship. It has been accepted for inclusion in Notre Dame Journal of Law, Ethics & Public Policy by an authorized administrator of NDLScholarship. For more information, please contact [email protected]. 34929-nde_28-1 Sheet No. 88 Side A 05/07/2014 15:37:06 35 NINSURED U S ’ ** MERICA A . 227 (2007). 2 FF ERMER A RISIS OF EALTH D. H C HE : T AURA , 26 H 165 ENIED * & L , D NTRODUCTION I INOKUR ENIHAN W L Heart of the Uninsured ULIE ERLE M & J MEDICAID AND CHARITY CARE AND CHARITY MEDICAID ASHI K D ON THE UNEASY RELATIONSHIP BETWEEN RELATIONSHIP THE UNEASY ON 1 Keeshun Lurk was twenty years old and working part-time at Wash- Keeshun Lurk was twenty years old Ginny was five years old when she “met” her doctor on his first Ginny was five years old when she Ethel Hines lost her health insurance when she divorced.Ethel Hines lost her She was 2. Arthur Garson, * Center; Ph.D., Institute for the M.D., University of Tennessee Health Science ** Associate Professor, Hamline University School of Law. J.D., Northeastern Uni- 1. E (2003). Medical Humanities, University of Texas Medical Branch.Medical Humanities, University of Texas Medical I would like to thank the mem- Professor Hermer, for her encouragement bers of my dissertation committee, especially and for pressing me, when necessary, to and support as well as her attention to detail based on one chapter of my shore up my arguments. This Article is substantially dissertation. versity School of Law; L.L.M., Health Law, University of Houston Law Center. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 1 1-MAY-14 14:53 ington Center in the nation’s capital when he developed ington Hospital Center in the nation’s night as a pediatric cardiology fellow at a Virginia hospital.night as a pediatric cardiology fellow She had just heart defect when her heart gotten out of surgery to repair a congenital stopped and Dr. Garson revived her. Over the next several years Ginny Ginny developed a serious did “beautifully.” When she was sixteen, several medications, was con- heart rhythm problem that, after trying trolled by an expensive one. kept her from developing a The treatment well.fatal rhythm and she did remarkably After high school Ginny small town but no one would hire applied for every possible job in her and proudly told potential her, perhaps because she so willingly employers about her heart condition. Then, a few months after Ginny one night.turned nineteen, she died suddenly The cause was a fatal heart rhythm. her bed was an empty pill bot- Lying in a drawer beside tle. and, knowing her could Ginny had “aged out” of Medicaid taking it. not afford the medication, she stopped admitted to a hospital in Ohio where the doctors discovered she in Ohio where the doctors admitted to a hospital which was placed in her heart.needed a pacemaker, After struggling and her physi- of the bill as she could, the hospital to pay off as much remaining balance.cian “excused” the doctor’s fees for Ethel paid the Tennessee. out of pocket until she moved to monthly checkups Now she went to delivery carrier and still uninsured, working as a newspaper over four years with no checkups.a free clinic after doctors there The on her face.noticed a skin problem skin cancer but It turned out to be program, so she TennCare, Tennessee’s Medicaid she was eligible for her pacemaker and started getting checkups for was treated for cancer again. 34929-nde_28-1 Sheet No. 88 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 88 34929-nde_28-1 34929-nde_28-1 Sheet No. 88 Side B 05/07/2014 15:37:06 5 4 NON ’ [Vol. 28 OMM C AISER , K . g note 19 (discussing the 3 See, e. In many instances at 9 ., Sept. 2000, at 42. Medicaid payments also EP 8 R see also infra ETHICS & PUBLIC POLICY ONSUMER LAW, 7 , 65 C Second-Class A lengthy history accounts for this connection, and A lengthy history accounts for this 6 notes 132–133,136 and accompanying text. notes 95–111 and accompanying text. notes 48-50, 52-57 and accompanying text. notes 274–276 and accompanying text. notes 40–47 and accompanying text; NOTRE DAME JOURNAL OF See infra See infra See infra See infra See infra The connection between Medicaid and charity continues in other The connection between Medicaid The stories of these patients show some of the ways in which Medi- patients show some of the ways in The stories of these 9. Medicaid is the largest source of revenue for community health centers, provid- 8. 6. 7. 5. 4. 3. Trudy Lieberman, ing nearly 40% of their total revenue, and Medicaid payments to community health cen- ters are higher than at other sites because they are prospective cost-based. About 75% of health center patients are uninsured or enrolled in Medicaid. language in Paul Ryan’s proposed budget). Yet contrary to that intent, Medicaid may be seen as charity care to Yet contrary to that intent, Medicaid care providers when costs for treat- institutional and individual health or when payment otherwise fails ing Medicaid patients exceed payment, concerning remuneration. to meet health care providers’ expectations uninsured may visit a free clinic or People with a low income who are from or physicians and receive charity or discounted care either become eligible or find sometimes, because of their illnesses, they are eligible for Medicaid. Medicaid has been linked Historically, people, particularly people receiv- to certain categories of low-income ing cash welfare. 166 headaches.debilitating not he was worker, temporary he was a Because insurance. health offered depart- emergency hospital’s to the He went ear infection, and an with migraines he was diagnosed where ment neck. a lump on his was causing which presumably his symptoms When unable to work. he became completely worsened, He went to the Wash- a biopsy Keeshun needed confirmed that Clinic where they ington Free gone away. that had not of the lump of clinic used a network Their a biopsy. agreed to do providers and one volunteer was The lump caused by brain cancer.cancer treatment Keeshun started receiving not know how he his symptoms began, though he did about a year after would pay for it. out, he became his unemployment benefits ran When from that which covered the cost of his treatment eligible for Medicaid, point. debt, however, remained intact. His medical \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 2 1-MAY-14 14:53 guises. became one of the most Beginning in the 1980s, Medicaid that provide care not only to important sources of funding for hospitals also to uninsured people with no low-income Medicaid enrollees, but direct connection to Medicaid whatsoever. caid, hospital charity care, free clinics, physician volunteers, and delay- care, free clinics, physician volunteers, caid, hospital charity who are ill care interact in the lives of people ing or forgoing medical and have a low income. was arguably Medicaid, when it was enacted, often relied on qualifying members of the poor, who intended to bring care “main- clinics for medical care, into the health charity and public reimbursement. them with a source of third party stream” by providing despite attempts to delink Medicaid from welfare, if not charity, the despite attempts to delink Medicaid association continues to this day. support other safety net providers such as community health centers support other safety net providers people. that provide primary care to uninsured 34929-nde_28-1 Sheet No. 88 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 88 34929-nde_28-1 34929-nde_28-1 Sheet No. 89 Side A 05/07/2014 15:37:06 . : FF ACT 167 TAN A note F EFORM EDICAID Medicaid R OST M available at EALTH Decision on C g See infra ARE EALTH 31 H C H XPANSION OF RA OF . 2365–67 (2012); S , 2, 4 (2013), OSPITAL E E ED , John A. Graves, . H g TATE ROWTH S . J. M See, e. G NG E ENTERS IN AN EW ENTER C The Supreme Court’s Surprisin NCOMPENSATED C , U OSPITALS FROM EALTH N , 367 N ’ EALTH H H SS Provision of Community Benefits by Tax-Exempt U.S. Provision of Community Benefits by Tax-Exempt H . A OSP . 1522 (2013). care in The definition of uncompensated ENEFIT TO . H OMMUNITY M ED B , C , A 11 http://www.aha.org/content/13/1-2013-uncompensated-care- . notes 63–65 and accompanying text.here that It is relevant g HALLENGES TO . J. M C NG EY INANCIAL http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/ See, e. NINSURED E K F note 14. out that: Rosenbaum and Westmoreland point U Gary J. Young et al., EW HE The Affordable Care Act (ACA) promised to substantially promised Act (ACA) Care Affordable The available at See see also infra THE 10 ., T See infra & , 368 N available at ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON (2013), This Article explores these aspects of Medicaid. explores these This Article the It focuses on VERVIEW AND 10. the effects of states’ decisions to At least two recent analyses have assessed 11. Care Act’s central achievement [F]or the poor and near-poor, the Affordable low-income people who were was the extension of Medicaid to all nonelderly previously ineligible for coverage. In the case of adults, as already has been accomplished for children and pregnant women, the expansion essentially ren- ders irrelevant the demographic, financial, and personal factors that are the ves- tiges of cash welfare assistance. O EDICAID ORN ET AL N HEET 1665 (2012). A http://kaiserfamilyfoundation.files.wordpress.com/2013/03/8098-03.pdf care.” expand Medicaid on hospital “uncompensated Expansion Opt-Outs and Uncompensated Care the Medicaid DSH program is defined differently from the AHA definition. the Medicaid DSH program is defined differently 223 and accompanying text. Sara Rosenbaum & Timothy M. Westmoreland, the Medicaid Expansion: How Will the Federal Government and States Proceed? D (2013), S fs.pdf. expenses in 2010 were categorized as This fact sheet reports that 5.8% of hospital uncompensated care. charity and bad debt separately. The AHA does not report Bad charity expense.debt expense is generally much greater than For example, in the most 1.9% of expenses in 2009 were reported as recent analysis of data on nonprofit hospitals, charity care. M Hospitals 2014] in policy intertwined closely are and charity Medicaid level, the state decisions. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 3 1-MAY-14 14:53 rwjf405040; uneasy relationship between Medicaid and charity care. Medicaid and charity between uneasy relationship relation- This reimburse- acute in the context of Medicaid ship becomes particularly ment. of the Medicaid we trace some of the history In this Article, payments reimbursement and supplemental program, using Medicaid between Medicaid which to examine the relationship as lenses through and charity care. will need to be The tension that we will uncover arguable aim of is to come closer to achieving its resolved if Medicaid care system as on the same footing in our health placing the poor privately-insured Americans.enjoyed by wealthier, Part I, we trace In of this origin as in charity care and the impact the origins of Medicaid in the .Medicaid developed we examine the In Part II, Share Hospital of Medicaid Disproportionate creation and evolution with a par- Upper Payment Level (UPL) programs, (DSH) funding and of the two supplemental payment ticular focus on how the construction abuse by both states and hos- programs encourages, or at least permits, “uncompensated care” is not equivalent to charity care and both terms have a variety of “uncompensated care” is not equivalent to charity meanings. is comprised of charity care for which no In general, uncompensated care to pay, and bad debt, for which a pay- payment is expected because of financial inability ment is expected. reduce the categorical nature of the program by expanding access to all access by expanding the program nature of the categorical reduce but the poverty level, 133% of the federal earning up to individuals option not to implement allows states the Court ruling 2012 Supreme expansion. Medicaid 34929-nde_28-1 Sheet No. 89 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 89 34929-nde_28-1 34929-nde_28-1 Sheet No. 89 Side B 05/07/2014 15:37:06 , See, 13 ROVI- RIMER EOPLE P P ECISION [Vol. 28 http:// RIMER D : A P Under the NCOME : A P OVERAGE OURT -I 13 C C EDICAID OW HARITY available at L , M C EDICAID UPREME Policy Makers Should Prepare NSURANCE S As the ACA is imple- I 16 NINSURED INKS TO U ECENT ROGRAM FOR L P R THE , 1, 15 (2010), ., RL 33202, M ETHICS & PUBLIC POLICY & ERV RIMER OVERAGE S STIMATES FOR THE C LAW, , E EDICAID : A P EDICAID AND National Federation of Independent Business M PDATED FOR THE EALTH ESEARCH FFICE M U H S O CT ’ . R NON ’ EDICARE , Benjamin D. Sommers et al., A . g ONG ARE OMM ., M ATION UDGET Nevertheless, the Congressional Budget Office Nevertheless, the Congressional C , C C B N See, e. RIGINS OF 14 . 2186 (2011). ERZ OUND FF O AISER http://www.aging.senate.gov/crs/medicaid1.pdf. F http://kaiserfamilyfoundation.files.wordpress.com/2010/06/7334-05. A HE , K . J. H g FFORDABLE AMILY A EALTH effectively makes the expansion optional for states by remov- effectively makes the expansion optional Medicaid provides benefits to more people than any other benefits to more people than any Medicaid provides NOTRE DAME JOURNAL OF F ONGRESSIONAL I. T LICIA SIONS OF THE 15 See, e. 12 available at available at AISER , 30 H The importance of Medicaid cannot be overstated as a critical The importance of Medicaid cannot Medicaid is a means-tested, joint federal-state entitlement program joint federal-state entitlement Medicaid is a means-tested, NFORMATION ON THE 13. coverage to 47 million people. In 2010, provided health insurance 14. 2566 (2012). Nat’l Fed’n of Ind. Bus. v. Sebelius, 132 S.Ct. 15. C 16. 12. E I , K . EY g for Major Uncertainties in Medicaid Enrollment, Costs, and Needs for Physicians under Health Reform (2010), (2012), http://www.cbo.gov/publication/43472. Estimates of the number of Medicaid enrollees vary widely, however.to the methods used to make the estimates This is due will be put in place to either encourage or and to the uncertainty of the policies that discourage enrollment. Although Medicaid covers more people than Medicare, it costs less. In 2010, spending on Although Medicaid covers more people than of the federal budget whereas spending on the Medicare program accounted for 12% (CHIP) combined accounted for 8%. Medicaid and the Children’s Health Insurance e. kaiserfamilyfoundation.files.wordpress.com/2013/01/7615-03.pdf. K (2013), 168 of conflation and association the continued and encourages pitals care. charity with Medicaid state DSH the we examine Part III, In into effect, went recently which requirements, auditing and reporting ACA. enacted in the the to DSH as well as that, if We conclude work retained, additional are to be DSH and UPL payments Medicaid of Medicaid supplemen- the ultimate fate to ensure that must be done it is used and that the states, is transparent, once it gets to tal funding, and logical, efficient, in a more access for the underserved to expand productive manner. provide an Changes to DSH funding in the ACA some of this work. opportunity to do \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 4 1-MAY-14 14:53 pdf. source of health insurance coverage for children, disabled people, source of health insurance coverage groups. residents of nursing homes, and other for certain low-income people that finances the delivery of primary and people that finances the delivery for certain low-income as well as long-term care.acute medical services 2010, Medicaid In than 68 million long-term care services to more financed health and people. program, including Medicare. public or private insurance estimated after the Supreme Court’s ruling that 11 million additional estimated after the Supreme Court’s have coverage through Medicaid previously-uninsured individuals will by 2022. ACA, Medicaid will expand substantially. While originally mandatory, expand substantially. While originally ACA, Medicaid will the Supreme Court’s ruling in v. Sebelius Services’ (CMS) authority to with- ing Centers for Medicare & Medicaid a measure to incentivize states to hold existing Medicaid funding as expand Medicaid. 34929-nde_28-1 Sheet No. 89 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 89 34929-nde_28-1 34929-nde_28-1 Sheet No. 90 Side A 05/07/2014 15:37:06 23 169 2, 4 Point- Propo- ISTORY OF 21 H ONGRESS As he sees C (Apr. 17 2012), 18 TH OCIAL ILL 113 H : A S HE , T , Aug. 27, 2012, at 22. OORHOUSE P GENDA FOR THE A 19 EWSWEEK ARE , N C . 16 (May–June, 2008) (describing how, espe- EP Yet its roots in public assistance that assistance in public its roots Yet 24 R EALTH 17 HADOW OF THE Personal Responsibility: A Plausible Social Goal, but Not H S S ’ ENTER C N THE UBLIC Taxes for poor relief were often collected sepa- Taxes for poor relief , I The alleged effects of outdoor relief included The alleged effects of outdoor relief P 20 Why Obama Must Go HE 22 ASTINGS ATZ ., T 14–15 (1996). 38 H http://www.kff.org/kaiserpolls/upload/8405-F.pdf. B. K , Laura D. Hermer, . OUND g F MERICA at 41–42. at 55–59. at 17. a seemingly contradictory From the earliest times, there has been ICHAEL . at 34. A See, e. Id. Id. Id. Id AMILY available at ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON F The origins of Medicaid can be traced to the “outdoor relief” of can be traced to the “outdoor The origins of Medicaid 24. 23. 20. M 19. compared his 2012 proposal to As just one example, Congressman Paul Ryan 22. 21. 17. 18. Niall Ferguson, to ‘90s Welfare Reforms, Paul Ryan Defends His Medicaid Plan to ‘90s Welfare Reforms, Paul Ryan Defends His ELFARE IN g AISER for Medicaid Reform, (2013), http://thehill.com/blogs/healthwatch/medicaid/221943-lawmakers-spar-over-welfare- reforms-lessons-for-medicaid-overhaul. a recent Kaiser/Harvard survey found However, Care Act’s expansion of Medicaid, that a majority of Americans support the Affordable in addressing national deficit reduction. and nearly half support no cuts for Medicaid K in cut Medicaid payments by 75% by 2050 and block grant the program to the block-grant- cut Medicaid payments by 75% by 2050 and cash welfare in 1996.ing of and removal of entitlement status from Julian Pequet, sense of charity.can taxes collected by local or other govern- For instance, to what extent public education, police, and fire services ments be considered charity? Taxes to support that support services only or primarily for are virtually never considered charity. Taxes always associated with charity by some. poor people, on the other hand, are almost cially recently, paternalistic requirements in state Medicaid programs such as higher copayments and enhanced benefits for maintaining wellness metrics are often framed as fostering greater personal responsibility but that these are rooted in moralistic attitudes toward the poor). Similar sentiments persist today. W 2014] in role important even more to play an is poised the program mented, care coverage. health essential \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 5 1-MAY-14 14:53 the American colonies, modeled after practices established in England. modeled after practices established the American colonies, individuals referred to charity provided to indigent “Outdoor relief” live and work in the requirement for recipients to and families without an almshouse. both as a public the colonial period, it was seen During this “charity” a profoundly local practice to provide responsibility and or relief to the poor. rately, emphasizing the expense and enhancing resentment. rately, emphasizing through the erosion of indepen- “[t]he demoralization of the poor idleness and the loss of the will to dence and self-respect; the spread of in all its forms; and the work; the promotion of immorality growth of poorhouses and jails.” increase in public costs through the began in the early twentieth century have meant that it continues to be to that it continues meant have century early twentieth in the began Niall Fer- The journalist notion of “welfare.” with a pejorative associated a individuals received “[n]early 110 million claimed that guson recently food stamps.” Medicaid or in 2011, mostly welfare benefit nents of outdoor relief often believed a small sum of money could tide relief often believed a small sum of nents of outdoor proponents of and keep them together, whereas over a distressed family that keep- institutionalized care were not convinced the almshouse or could be pro- together was wise or that such a system ing poor families tected from abuse. it, the people receiving these benefits are a drain on the country. benefits are a drain receiving these it, the people He is sentiment. in expressing this not alone 34929-nde_28-1 Sheet No. 90 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 90 34929-nde_28-1 34929-nde_28-1 Sheet No. 90 Side B 05/07/2014 15:37:06 - OLICY OCIAL EALTH ELFARE EDICAID S P [Vol. 28 W H ISTORY OF , M 27 H ADC was ELFARE UBLIC OORE ISTORY OF P 29 W MERICAN Michael Katz UR A 30 D. M O : A H OCIAL Thirty-nine states Thirty-nine : S 25 TATE UDITH OTHERS AND THE ACING S F M OMEN After the economic dev- After the & J EDEFINING THE W 26 ELFARE INGLE : R MITH HREATS W : S T ETHICS & PUBLIC POLICY IVES OF G. S HE 74 (2003). 31 L AW TO ?: T AVID NTITLED L ITIZENSHIP LAW, E C 197 (1996). ESPONSE OOR OT P R N RICE OF ROM RESENT ASED P EGULATING THE -B P , F ISENTITLEMENT HE , R ITIED BUT , T , D IGHTS , P ATZ OST R RATTNER 1965–2007 13, 245–46 (2008). note 20, at 133. 273–75 (1999). S. J B. K IMES TO THE ORDON I. T BRAMOVITZ supra T G OLICY , A MERICA P The Social Security Act was an omnibus measure that Act was an omnibus measure The Social Security ALTER ICHAEL IMI NOTRE DAME JOURNAL OF A IMOTHY ATZ INDA FROM 28 , 1890–1935, at 253–60 (1994). OLONIAL ROGRAMS AND A 1 (2001). Despite the clear improvements that many Americans could claim Despite the clear improvements that Acknowledgment that the federal government bears some respon- that the federal government bears Acknowledgment By the early twentieth century, worry that providing relief to desti- relief providing worry that century, early twentieth By the “welfare” had become a code word for public assistance given “welfare” had become a code word young women of color, mainly to unmarried mothers, mostly Children [the successor to under Aid to Families with Dependent ADC].the stigma of welfare. No other public benefits carried all attacked it.The political left, right, and center In the early to “end welfare as 1990’s, when President Bill Clinton promised meant AFDC—thewe know it,” everyone knew that he most dis- liked public program in America. C P 29. ADC was the forerunner to Aid to Families with Dependent Children (AFDC) 27. W 28. T 30. L 26. M 31. M 25. K ELFARE IN ELFARE ARE OLITICS AND TATE C and, later, Temporary Aid to Needy Families (TANF). In 1962, ADC was renamed AFDC. In 1996, AFDC was replaced with TANF. D W P W S 170 \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 6 1-MAY-14 14:53 regarding financial security and other benefits, in some respects, the regarding financial security and other between social insurance and Social Security Act set up a clear division public assistance. for example, in the role that This became apparent, sibility for the economic well-being of its citizens occurred when Presi- well-being of its citizens occurred sibility for the economic in 1935. signed the Social Security Act dent Franklin Roosevelt It was in the United in the creation of entitlements the “seminal event States.” Old Age, Survi- the Old Age Insurance program (now included not only Security), but Insurance, otherwise known as Social vors, and Disability unemployment program, Aid to the Blind, also the Old Age Assistance to Dependent Children (“ADC”). insurance, and Aid tute people would promote idleness and the loss of morality was over- was of morality the loss and idleness promote people would tute children. with widows especially groups, deserving for certain come For halting but consequential were a “small, “mothers’ pensions” example, toward entitlement.” from charity and step away astation caused by the Great Depression, the number of Americans sur- number of Americans Depression, the by the Great astation caused in some states.relief reached 40% some form of viving on Social in all of the coun- form, as had already been enacted insurance of some instability Europe, seemed inevitable as economic tries of continental control. of forces beyond the individual’s was seen as a result had enacted mothers’ pension laws by 1919. mothers’ pension had enacted observed that by the 1960s, modeled directly after the mothers’ pensions laws. ADC and other modeled directly after the mothers’ as “welfare.” means-tested programs became known 34929-nde_28-1 Sheet No. 90 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 90 34929-nde_28-1 34929-nde_28-1 Sheet No. 91 Side A 05/07/2014 15:37:06 ASE 171 : A C MERICA A ADC clients were ADC clients EDICINE IN 32 M . at 298–99. Administratively, A particularly humiliat- Id 37 ELFARE , W By 1960, spending on medical By 1960, spending 35 TEVENS S In essence, and in contrast to social and in contrast In essence, 33 note 34, at 35. OSEMARY supra , & R note 30, at 293–99. TEVENS TEVENS note 28, at 80. supra 11 (2d ed. 2003). 36 , & S B. S 34 Hospitals were distressed at the delay between the provi- Hospitals were distressed at the delay supra that such restrictions violated the Social Security Act. that such restrictions violated the Social Security King v. Smith, 392 , 38 at 80–81. EDICAID ORDON OBERT TEVENS OST Id. M ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON v. Smith g The Kerr-Mills Act Creates Medical Vendor Payments for ADC Recipients Creates Medical Vendor Payments for ADC The Kerr-Mills Act The first suggestion of an entitlement to health care among ADC of an entitlement to health care The first suggestion The Kerr-Mills provisions were implemented slowly and many The Kerr-Mills provisions were implemented 38. S 33. G 34. R 35. Social Security Amendments of 1950, Pub. L. No. 81–734, 64 Stat. 551. 36. J 37. 32. clients were subjected to frequent Particularly during the 1940s and 1950s, ADC Kin TUDY OF A. U.S. 309 (1958). this process was called “deeming” by the caseworker. In 1958, the Supreme Court ruled in S monitoring by caseworkers who would search for hidden resources and deduct any earn- monitoring by caseworkers who would search ings that were found from the ADC stipends. Far more intrusive and moralistic was the practice of monitoring for a “suitable home.” The presence of a man in the , some- the birth of an illegitimate child, made the times discovered through surprise raids, or for benefits. home unsuitable and therefore not eligible recipients came in the form of amendments to the Social Security Act the form of amendments to the Social recipients came in in 1950. funds to provided for federal matching These amendments health services for of paying medical vendors for states for the purpose public assistance. people receiving 2014] procedures. in program played discretion for criteria Security Social discre- to bureaucrats’ little leaving detailed, elaborately were eligibility tion. often however, of ADC benefits, in the provision Discretion judging of the trustworthi- monitoring and intrusive, personal involved receiving benefits. character of those ness and \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 7 1-MAY-14 14:53 states did not participate, or participated only minimally.states did not participate, or participated It was diffi- people were covered by Kerr-Mills cult to know how many additional the cost of care under less since states sometimes merely transferred generous vendor payments to the program. sion of care and receipt of payment for Kerr-Mills patients.sion of care and receipt of payment The result, “Kerr-Mills patients began to be according to Jonathan Engel, was that insurance, there was “administrative discretion at the lowest levels of “administrative discretion at the insurance, there was government.” care through public assistance programs climbed to more than half a assistance programs climbed to care through public forty states were participating—albeitbillion dollars and to vastly differ- ing degrees—in Kerr- a federally-approved vendor payment plan. The to provide what was sup- Mills Act of 1960 used a similar framework benefits to people receiving Old posed to be comprehensive medical Age Assistance. ing experience for elderly Kerr-Mills recipients was the requirement to ing experience for elderly Kerr-Mills each of whom was subject to a provide their children’s addresses, means-test. required to be “needy,” which resulted in constant surveillance by constant surveillance which resulted in to be “needy,” required need but there was a not only whether who determined caseworkers amount of the need. also the 34929-nde_28-1 Sheet No. 91 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 91 34929-nde_28-1 34929-nde_28-1 Sheet No. 91 Side B 05/07/2014 15:37:06 NIN- CON- U HARITY E [Vol. 28 C ONATHAN THE Historical Medicaid and & g OLITICAL 44 The federal MERICAN P In structure, 43 A 40 EDICAID http://www.cms.gov/ M at 75. See also J Id 39 OLITICS AND NON ’ P EDICAID AND available at Medicaid: Considerin OMM g : M C MERICAN ETHICS & PUBLIC POLICY islatin g , A AISER EDICINE Le K M . 45 (2005), S LAW, ’ EV EDICARE R See also States’ participation has always been vol- States’ participation M EOPLE note 34, at xx. P 41 The Enactment of Title XIX The Enactment IFE OF supra INANCING OOR Medicaid was not a program based on medical Medicaid was not a program based , L F , P 45 B. 42 ARE TEVENS C NGEL note 28, at 98. Jost describes the defining characteristics of social note 28, at 98. Jost describes the defining OLITICAL E P & S EALTH supra HE , , T at 77. note 16, at 31. 1965, at 37 (2006). NOTRE DAME JOURNAL OF TEVENS SURED OMY ONATHAN OST Id. , 27 H supra ins g , The Department of Health, Education, and Welfare (HEW) had The Department of Health, Education, When Congress took up the issue of health care for the elderly issue of health took up the When Congress 45. 43. HEW was the forerunner of the Department of Health and Human Services. 44. S 42. Judith D. Moore & David G. Smith, 41. L. No. 89–97, Social Security Amendments of 1965, Pub. 79 Stat. 286, 351. The 39. J 40. J 28–31 (2003). BERLANDER ARE SINCE Its Ori Research-Statistics-Data-and-Systems/Research/HealthCareFinancingReview/downloads/ 05-06Winpg45.pdf. insurance entitlements as: eligibility requirements defined by federal law, entitlement is insurance entitlements as: eligibility requirements is available. linked to contributions, and administrative review federal government funded about 57% of Medicaid spending overall in recent years with federal government funded about 57% of Medicaid a range between 50-73% per state. C O 172 patients paying than private rather patients charity as glorified seen policies.” insurance government-subsidized with \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 8 1-MAY-14 14:53 the task of implementing both Medicare and Medicaid, even though the task of implementing both Medicare program. Medicaid was ultimately a state-administered need at its inception; it was a program based on categories linked to need at its inception; it was a program public assistance. the dichotomy and confusion by Congress furthered Medicare and “recipients” under naming patients “beneficiaries” under again in the mid-1960s, it ultimately enacted the social insurance pro- the social insurance ultimately enacted the mid-1960s, it again in program. a means-tested rather than gram of Medicare, Title Medicaid, compan- as a means-tested Act, was enacted Social Security XIX of the for the “deserving” poor. ion program to Medicare untary, but states choosing to participate must meet federal baseline choosing to participate must meet untary, but states requirements.enrolled in the were required to include people States children and programs, such as AFDC-eligible federal public assistance the elderly as in and the disabled, rather than merely adults, the blind, Kerr-Mills. assistance, program’s tight connection to public Given the of the states’ was most often a responsibility administering Medicaid welfare department. precedence conflicted with aspirations of proponents: “Many in 1965 precedence conflicted with aspirations the basis for widespread health assumed that Medicaid would provide pointed clearly to the nar- care for the poor, yet its historical evolution rower welfare mold.” response was hampered by the lack of clarity on the goals of Medicaid: response was hampered by the lack a “welfare” program? Was Medicaid primarily a “health” or Medicaid descended directly from Kerr-Mills.Medicaid descended federal Like Kerr-Mills, met both cate- was open-ended for enrollees who funding for Medicaid requirements.gorical and financial of their match- States have the rate the relative per yearly as in Kerr-Mills, based on ing funds determined the state. capita income of 34929-nde_28-1 Sheet No. 91 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 91 34929-nde_28-1 34929-nde_28-1 Sheet No. 92 Side A 05/07/2014 15:37:06 47 173 , 28 OHN AMILY 8 F & J makes 38 (1982) . 765 (1967). AISER ED OVBJERG , K HOICES C . J. M R. B NG TATE E S EW ANDALL R The provision of hospital , 277 N OLICY AND 50 land Journal of Medicine see also g P EDERAL New En : F Trends in Medicaid Physician Fees, 2003–200 RA e under Medicaid g E note 34, at 356–57. note 34, at 66; supra supra EAGAN , , R Provider Participation in Medicaid Provider Participation 49 note 39, at 49. TEVENS TEVENS http://kff.org/medicaid/state-indicator/medicaid-to-medicare-fee- C. Resistance to Chan & S & S supra , enerally State Health Facts, Medicaid-to-Medicare Fee Index enerally State Health Facts, Medicaid-to-Medicare From the beginning, as the social historian Rosemary Ste- Rosemary historian as the social the beginning, From g EDICAID IN THE 46 A 1967 editorial in the A 1967 editorial in . (2009). NGEL TEVENS TEVENS FF See , M 48 A ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON available at . Hospital reimbursement was different. While, according to Rose- One of the pervasive problems in the Medicaid program has been in the Medicaid pervasive problems One of the The welfare directors seeking cut-rate payments to physicians The welfare directors subsidize virtually demanding that physicians under Medicaid are the Government – that has assumed the responsi- a Government the pop- medical services to a large segment of bility of paying for ulation. ethical principle that physicians should The traditional their abil- of medical care without regard to treat patients in need in concept and practice.ity to pay is noble however, the Once, or state program that patient becomes the beneficiary of a federal medical care, and that guarantees that he will receive high-quality be classed as a medical it will be paid for, he cannot justifiably charity case. the federal Government as a charity The concept of case is ridiculous. 50. S 48. 47. S 46. E 49. Editorial, EALTH OLAHAN OUND (arguing that another method, state “rate-setting,” or prospective payment, was occasion- ally used as an alternative to the reasonable cost method). H index/. Stephen Zuckerman et al., F H 2014] Medicaid. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 9 1-MAY-14 14:53 mary Stevens, states “could include the continuation of the long welfare mary Stevens, states “could include the services] at less than cost, in other tradition of reimbursing [physician out of charity,” Medicaid hospital words, expecting providers to donate cost,” as in the Medicare payments were originally based on “reasonable program—in other words, “paying the full costs at which each hospital delivers services to Medicaid recipients.” its comparatively low payment rates, particularly for physicians. rates, particularly low payment its comparatively In most than Medicare reimbursement is much lower states, Medicaid physician of the program’s and has been so for much or private health insurance, history. vens wrote in 1974, there was lack of clarity: “Recipients have never clarity: “Recipients lack of was 1974, there wrote in vens clear whether been have not providers ‘rights;’ their clear about been cases.” or charity patients as ‘real’ patients treat Medicaid they are to this point: care to poor patients on the basis of reasonable cost was not entirely care to poor patients on the basis hailed as an achievement. educators sometimes considered Medical as private patients to be a conun- the treatment of Medicaid patients drum.American Hospital Association wor- A former president of the of the disappearance of the ried in 1966 about “the clear probability ‘ward service’ patient—the ‘charity patient’—the ‘second class’ patient—upon whom has rested nearly the whole reliance for graduate 34929-nde_28-1 Sheet No. 92 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 92 34929-nde_28-1 34929-nde_28-1 Sheet No. 92 Side B 05/07/2014 15:37:06 . e g 56 OSP SSUES I . H [Vol. 28 M , A INANCING F 57 AYMENTS AND P 60–61 (2010). When the Boren In older research, the atti- Do Reimbursement Delays Discoura 58 Among payments for specific Among payments . w17, w18 (2008). FF ETHICS & PUBLIC POLICY EDICAID 55 A M UPPLEMENTAL LAW, S EALTH See Trendwatch Chartbook 2011 Table 4.4 note 34, at 99. OLITICS OF , 28 H EDICAID P HE supra , , T note 48, at w510, w515. , RR. M Medicaid physician fees, on the other hand, con- Medicaid physician note 39, at 169. LSON 54 supra TEVENS http://www.healthlawyers.org/Events/Programs/Materials/Docu- UBAND note 28, at 167. repealed in 1997 after The Boren Amendment was O L & S supra ATZ , supra K 51 , The trend in hospital payments under Medicaid and Medi- payments under Medicaid and The trend in hospital at w515. at w513–w14. HARLES NOTRE DAME JOURNAL OF NGEL available at The result was that while forty states paid for Medicaid hospi- states paid for was that while forty The result TEVENS OST 53 AURA Id Id 52 Low physicians’ fees are usually cited as the most important reason Low physicians’ fees are usually cited Hospital payment requirements for Medicaid patients changed in patients changed for Medicaid payment requirements Hospital , http://www.aha.org/research/reports/tw/chartbook/2012/table4-4.pdf. 57. 58. Peter J. Cunningham & Ann S. O’Malley, 52. J 56. 54. In 2010, the payment to cost ratio for Medicare was 92.4%, for Medicaid 92.8%, 55. Zuckerman, 51. S 53. E N ’ SS A Medicaid Participation by Physicians? Amendment was repealed, the Medicaid DSH requirement, discussed subsequently, was Amendment was repealed, the Medicaid DSH retained. C and for commercial insurers 133.5%. many “Boren lawsuits” had resulted in states being forced to increase their payment rates many “Boren lawsuits” had resulted in states were found not to be “reasonable and ade- to hospitals and nursing homes when they quate.” L 2, (2011), These averages smooth over substantial disparities among states. over substantial disparities among These averages smooth Medi- Wyoming reim- states such that, for example, caid fees vary among 40% more than for Medicaid services an average of burses physicians physicians, Medicare, whereas New York reimburses they receive under Medicare rates. on average, more than 40% less than 174 medical of undergraduate part a major and education medical education’” \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 10 1-MAY-14 14:53 tal services on the basis of Medicare rates in 1981, only four states did so only four states rates in 1981, on the basis of Medicare tal services by 1991. Medicaid program.for low physician participation in the About half of Medicaid patients whereas more physicians nationwide accept all new insured or Medicare patients. than 70% accept all new commercially in Medicaid are delays in Other reasons for low physician participation payment and high administrative burdens. 1981 under an expansion of the Boren Amendment, which allowed which of the Boren Amendment, an expansion 1981 under the costs to meet and adequate pay an amount “reasonable states to institu- operated and economically be incurred by efficiently that must tions.” American Hospi- converged as of 2010, with the care have nevertheless covered just that both programs’ payments tal Association reporting over 92% of costs. ments/MM09/luband.pdf. tinue to lag significantly behind Medicare fees.tinue to lag significantly Medicaid phy- In 2008, of Medicare fees. sician fees were 72% services, Medicaid fees vary such that, on average, Medicaid pays 66% of fees vary such that, on average, Medicaid services, Medicaid obstetrical fees. primary care services but 93% of Medicare fees for tudes and perceptions of providers have been shown to be a factor in tudes and perceptions of providers in the 1983 President’s Commis- Medicaid participation. For example, authors included research demon- sion Report on access to care, the factors to low participation strating that additional contributing for Medicaid patients and political included physicians’ personal dislike 34929-nde_28-1 Sheet No. 92 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 92 34929-nde_28-1 34929-nde_28-1 Sheet No. 93 Side A 05/07/2014 15:37:06 ., g , 6 175 PPEN- THICAL A let- See, e. E 3: A 59 HE : T OLUME ARE round and Issues Managed care g : V C note 16, at 16–17. 61 . J. 1064–65 (1999). 60 ED EALTH ERVICES ness of Private Primary Care supra The rise in the num- g , S H 239, 243 (2002). . 1560 (2013). 64 FF , 92 S. M EALTH A Physician Participation and Nonpartici- H her Reimbursements to Expand Medicaid NINSURED CCESS TO g 105–130 (President’s Commission for U EDIATRICS A EALTH On the other hand, in one 1997 Access to Private Physicians for Public Patients: THE 63 TUDIES , 110 P & , 32 H S ECURING S . 815 (2001). VAILABILITY OF in ED , A EDICAID M ton State g M Physician Participation in Medicaid: Back In a 2001 survey, physicians tended to have In a 2001 survey, physicians tended ONCEPTUAL Factors That Influence the Willin 62 C Specialists’ and Primary Care Physicians’ Participation in Medicaid NON ’ NTERNAL AND ed Care: The Tenncare Experience . I g , OMM EN & L. 703, 711 (1982). Y C s from Washin ’ g EGAL IFFERENCES IN THE Physicians May Need More Than Hi OL , L D AISER . P , 16 J. G K OL DICES P See MPIRICAL ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON ed Care In a 2000 survey of pediatricians, lower payments and a greater of pediatricians, lower payments and In a 2000 survey g The effort and time required for the care of a Medicaid patient is for the care of a and time required The effort because of: (a) regular practice than that for one’s often greater the making and patients to ignore for many of the The tendency appointments.keeping of an don’t show up, placing They either or they arrive for retrieval, burden on the physician additional instead of the one for whom the appointment with four children (c) The frequent lack of telephone facilities; was made; (b) The telephoning prescriptions; (d) The additional restriction against of the paperwork; (e) The usual delay and often cumbersome of payment to the physician; (f) the difficulty agency in making through the usual channels. securing consultation , E 63. Lisa Backus et al., 62. 60. Stephen M. Davidson, 64. Frank A. Sloan & Christopher J. Conover, 61. Steve Berman et al., 59. Janet B. Mitchell & Jerry Cromwell, EALTH MPLICATIONS OF Mana J. H Sharon K. Long, Participation: Findin pation in Medicaid Mana the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research ed. the Study of Ethical Problems in Medicine and do not tend to ask physicians about atti- 1983). While this survey is older, newer surveys imply biases and value judgments. tudes toward Medicaid enrollees that may Pediatricians to Accept More Medicaid Patients Participation in Medicaid and Medicare I 2014] in medicine.” of “government the involvement against attitudes \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 11 1-MAY-14 14:53 paperwork burden for physicians seeing patients enrolled in Medicaid- for physicians seeing patients enrolled paperwork burden rates, sug- associated with reduced participation managed care were of many of the same problems. gesting a continuation negative attitudes toward Medicaid patients and Medicaid-managed negative attitudes toward Medicaid of new Medicaid care but these attitudes did not predict patients. in the survey believed that Medi- About half of the physicians them, and almost three-fourths caid patients were more likely to sue likely to be noncompliant and believed that Medicaid patients were require extra time. physicians believed that Medicaid About 80% of psychosocial problems.patients have complex clinical and Greater that Medicaid patients “unsettle than one third of physicians believed other patients in the waiting room.” survey almost 60% of physicians stated that participation in their state’s survey almost 60% of physicians stated to do.” Medicaid program was the “right thing ber of Medicaid patients enrolled in managed care is associated with ber of Medicaid patients enrolled arrangements have increased over the past few decades such that three- increased over the past few decades arrangements have services through enrollees received all or some quarters of Medicaid managed care in 2010. ter from a Baltimore physician in 1982 described his experience with his experience described in 1982 physician a Baltimore ter from way: nuanced in a patients Medicaid 34929-nde_28-1 Sheet No. 93 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 93 34929-nde_28-1 34929-nde_28-1 Sheet No. 93 Side B 05/07/2014 15:37:06 : NE EALTH O THICAL [Vol. 28 E RCHIVES OF , 7 H HE EDICINE AND 68 OLUME e in Search for g : T ly Concentrated M V g , 129 A ARE Both Medicaid C ERVICES 69 S ROBLEMS IN EALTH P H EALTH H THICAL E CCESS TO Medicaid Hospital Covera A g ETHICS & PUBLIC POLICY Medicaid Patients Increasin The Reform of Medical Education In 1983, the President’s Commis- In 1983, the President’s TUDY OF Little has changed since. Little has changed 66 S LAW, ECURING 67 VAILABILITY OF , S A 65 States Are Limitin ESEARCH (Oct. 31, 2011), http://www.kaiserhealthnews.org/stories/ R Development of the City-County (Public) Hospital EWS note 66. OMMISSION FOR THE N note 39, at 126. The mass closings of public hospitals that were pre- The mass closings of public hospitals C 70 S ’ supra IFFERENCES IN THE EHAVIORAL supra EALTH , Phil Galewitz, D (Aug. 2006), http://www.hschange.com/CONTENT/866/. . B , Changes in the distribution of care, however, did. Changes in the distribution of care, From g H Robert H. Ebert & Eli Ginzberg, 71 NOTRE DAME JOURNAL OF NGEL RESIDENT AISER See See, e. 760, 763–64 (1994). 157 (1983). , K Physicians s Yet Medicaid is sometimes credited with dealing a blow to a tradi- Yet Medicaid is sometimes credited Together, the low fees, delays in payment, and administrative bur- administrative in payment, and the low fees, delays Together, g g 67. P 70. massive infusion of money into the health care system.massive infusion of money into the health care Whatever the initial con- cerns of the medical profession, these programs proved a bonanza for physicians and for most hospitals. Suddenly, there was public money to pay for the millions who had previously been medically indigent. Elderly persons, once forced to seek care in public hospitals or in the charity wards and outpatient departments of voluntary hospitals, now could pay for their care. 71. William Blaisdell, 65. Peter Cunningham & Jessica May, 68. Galewitz, 69. E 66. . 10 (1988). Medicare and Medicaid provided a: . 10 (1988). Medicare and Medicaid provided FF EPORT IOMEDICAL AND URGERY MPLICATIONS OF R Savin 2011/october/24/states-are-limiting-medicaid-hospital-coverage-in-search-for-savings. aspx. A S B I 176 phy- of numbers smaller patients among of Medicaid the concentration settings. and practice sicians Amon \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 12 1-MAY-14 14:53 tional source of charity care—the public hospitals—in what has been of the program. called one of the “great paradoxes” dens may act in synergistic ways with the already pervasive negative atti- pervasive negative ways with the already act in synergistic dens may Medicaid patients. physicians about tude among patients As Medicaid of practi- number among a shrinking concentrated become increasingly to per- may continue how these factors question arises about tioners, a and and charity, ties between Medicaid strong historical petuate the of care, but only improve both access and quality inhibit efforts to not receive the same for Medicaid recipients to also to make it possible types of health providers, that people with other care, from the same insurance receive. people who Although obvious, it bears noting that be uninsured through Medicaid would likely do have health insurance available.if Medicaid were not that Medicaid This is one of the reasons in a myriad of ways.and charity care interact states often For example, enrolled in of days of hospital payment for patients limit the number measure. Medicaid as a cost-saving dicted by some did not occur after the enactment of Medicaid and dicted by some did not occur after Medicare. 1966 to 1980 the number of beds in urban public hospitals declined by 1966 to 1980 the number of beds in sion wrote that “[i]f a patient is admitted and then needs to stay past a patient is admitted and then sion wrote that “[i]f moved to a pub- must be covered as a charity case, the limit, the person lic hospital—or forced to leave.” and Medicare allowed patients who would have been charity patients to and Medicare allowed patients who to a greater extent than prior to obtain services from private hospitals their enactment. 34929-nde_28-1 Sheet No. 93 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 93 34929-nde_28-1 34929-nde_28-1 Sheet No. 94 Side A 05/07/2014 15:37:06 , , 9 , A 177 avail- YSTEMS S available at NINSURED Addition- U NAPH (2012), 2 (1996), EALTH 72 , It is difficult H THE 74 note 10 and accom- URVEY & URVIVAL S S CHIP (2013), See supra EDICAID ., http://www.gao.gov/about/ OSPITALS AND M FF H O ET NON ’ N EDICAID AND HARACTERISTICS In the first report, focusing on C RESCRIPTION FOR 79 M OMM AFETY C S S ’ —A P —A OSPITAL CCOUNTABILITY AISER A T LIGIBLE FOR ’ MERICA The General Accounting Office studied this The General Accounting Office studied OSPITALS E OV ., A H 78 NAPH H The Impact of National Health Insurance on the Public Hospital The Impact of National Health Insurance on the Feeling “welcome” at an institution is another Feeling “welcome” UBLIC . 55, 62 (1984). 75 NINSURED NNUAL note 73, at 3. , P EV A U AMAN ET AL R , GAO: U.S. G Enrollment in Medicaid Affects uncompensated care Enrollment in Medicaid Affects uncompensated IEGEL 73 In other words, Medicaid has worked in both directions In other words, Medicaid supra GMT , S S. Z 76 M at 763. D. BAID RUCE http://www.naph.org/Main-Menu-Category/Publications/Safety-Net-Financ- IEGEL ARE Id. Id. OOK AT THE Our Name C 77 ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON ESULTS OF THE http://www.commonwealthfund.org/Publications/Fund-Reports/1996/Oct/Pub- L It is difficult to determine how many people are potentially eligible It is difficult to determine how many Yet this is by no means the complete picture because public hospi- complete picture by no means the Yet this is 74. 75. Gary Henderson, 78. here because this is how the term The term “uncompensated” services is used 79. The General Accounting Office became the Government Accountability Office 73. B 77. O 76. S 72. EALTH LOSER C 2010: R panying text.of adults and children eligible for Medicaid For estimates of the number 113 and accompanying text.and CHIP prior to 2014, see notes 112 and In a recent estimate of 29% would be eligible for Medi- the total 47.6 million uninsured population, coverage gap created by states that do not caid or CHIP and 10% would fall into the implement the Medicaid expansion. K able at lic-Hospitals—A-Prescription-for-Survival.aspx. H available at ing/2010-NAPH-Characteristics-Report.aspx?FT=.pdf. literature cited. for charity and bad debt is referred to in the namechange.html (last visited Mar. 8, 2014). http://kaiserfamilyfoundation.files.wordpress.com/2013/12/8533-a-closer-look-at-the- uninsured-eligible-for-medicaid-and-chip.pdf. in 2004. 2014] by 60%. increased beds hospital while private to 40% close \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 13 1-MAY-14 14:53 for Medicaid yet are not enrolled, and whose care then results in for Medicaid yet are not enrolled, uncompensated services. tals, in particular, have come to rely on Medicaid funds. to rely on Medicaid have come tals, in particular, to dismantle some traditional sources of charity care and to simultane- traditional sources of charity care to dismantle some same sources.ously shore up those Association of In 2010, the National of total net reve- that Medicaid provided 35% Public Hospitals reported hospitals.nue for member payments In addition to regular Medicaid below are con- Medicaid payments discussed for services, supplemental financial well- to maintaining member hospitals’ sidered essential being. such factor. issue in two reports in the early 1990s. the District of Columbia, hospital officials estimated that they enrolled the District of Columbia, hospital officials ally, the number of public hospitals declined from 1,700 in 1978 to in 1978 1,700 from declined hospitals of public the number ally, in 1995. 1,360 and influences of provider not so subtle both the subtle and to assess of hospi- patient’s choice their effect on the behaviors and institutional tal. the patients interviewed three-fourths of in the 1970s For example, even when Hospital preferred that hospital at Philadelphia General hospitals.they could go to other this was due to It is unknown whether some other com- racial segregation in the city or the history of hospital bination of factors. 34929-nde_28-1 Sheet No. 94 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 94 34929-nde_28-1 34929-nde_28-1 Sheet No. 94 Side B 05/07/2014 15:37:06 85 http:/ EDICAID [Vol. 28 While OTENTIAL M available at 88 : P Two pro- Most of the Most 87 available at 80 EFORM R ARRIERS TO 5 (1994), ARE : B C 5 (1992), EOPLE P ARE EALTH Although hospitals in the OLUMBIA C State welfare agencies face State welfare agencies C 86 83 NCOME -I ETHICS & PUBLIC POLICY OW It is not known how many of the It is not known how L ISTRICT OF 82 LAW, NCOMPENSATED , GAO-94-176, H , D U FFICE FFICE O O In a follow-up study in three states, about half study in three In a follow-up LIGIBILITY FOR OSPITAL E H 81 84 CCOUNTING A CCOUNTABILITY ETERMINING A D ONTRIBUTE TO T ’ at 13. at 10. at 6. C at 10. at 9. NOTRE DAME JOURNAL OF OV ENERAL Id. Id. Id. Id. Id. Id. Id. The second report examined the issue more broadly, and The second report examined the 88. 86. 87. 85. 82. G 84. 81. 83. 80. G IFFICULTIES IN NROLLMENT /www.gao.gov/assets/220/217378.pdf. http://www.gao.gov/assets/230/220023.pdf. D Medicaid covers hospitalization for ninety days prior to enrollment if Medicaid covers hospitalization for time. the applicant was eligible during that E 178 admission. during for Medicaid eligible patients third of one Other those enter- not just residents, District 17% of shown that had research but not enrolled. for Medicaid were eligible ing hospitals, \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 14 1-MAY-14 14:53 addressed the role of vendors in enrolling potential Medicaid benefi- addressed the role of vendors in enrolling ciaries. enrolled in Medicaid without Significantly, no one can be applying for it. incentive to ensure that peo- Hospitals have a powerful in Medicaid when they are eligible ple who have received care enroll without enrollment. because the costs are often uncompensated of the denials for Medicaid coverage occurred for procedural reasons, for procedural coverage occurred for Medicaid of the denials or not not providing the necessary documentation such as the applicant interview. appearing at a required denied applicants would have obtained Medicaid had they supplied the would have obtained Medicaid had denied applicants or interview.missing documentation were asked, the When patients application was for not providing the completed most common reasons what was of time given, not understanding the limited amount unable to attain the necessary documents.required, and being Hospi- too embarrassed that some people were too sick or tal officials believed for the interview. to go the welfare agency follow-up study believed that the state Medicaid caseworkers should follow-up study believed that the the caseworkers were generally provide more help in enrolling patients, on patient advocacy since too overworked and also faced prohibitions determinations. they were also charged with final eligibility penalties for enrolling people who are not eligible but do not face a people who are not eligible penalties for enrolling the applica- to enroll a person who is eligible because penalty for failing tion is incomplete. prietary vendors at one hospital in 1992 obtained an additional $10 mil- prietary vendors at one hospital in 1992 were paid $2 million. lion in Medicaid reimbursement and District’s hospitals had hired proprietary vendors to enroll patients eli- to enroll patients proprietary vendors hospitals had hired District’s Medicaid.gible for at a a contingency basis were paid on The vendors from by the hospital gained to 17% of the reimbursement cost of up program. the Medicaid hospitals employed staff to assist Medicaid applicants, the vendor firms hospitals employed staff to assist Medicaid 34929-nde_28-1 Sheet No. 94 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 94 34929-nde_28-1 34929-nde_28-1 Sheet No. 95 Side A 05/07/2014 15:37:06 179 When 92 90 91 . 635, 637 (2002). Access to care in the ED 93 M OF . J. NG The General Accounting Office Accounting General The E 89 EW on Health Insurance Experiment: Evidence from the g at 15. Id. , 346 N The Ore Medicaid . 1057, 1096 (2012). CON at 24–25. Id. Id. , 127 Q. J. E ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON Needless to say, while the benefit to hospitals and to patients in Needless to say, while the benefit people who are eligible for While it is important to recognize that The child of a single uninsured working mother incurred a working mother of a single uninsured The child bill.$20,000 hospital at home. had young twins The mother also vendor firm after to an enrollment referred this case The hospital Medicaid case. that it was a potential determining contact- After a Medicaid appli- and submitted the firm initiated ing the mother, cation. items a list of the verification gave the applicant The firm provide.she would have to did not pro- However, the applicant denied. items and Medicaid coverage was vide the requested applicant the denial, the firm contacted the Upon learning of by period of 2 months to get her to cooperate twice weekly for a power of verification document or signing a either providing the allow the firm to obtain the documents.attorney that would How- on her the applicant had pressing demands ever, during this time, life.her sick child and to working, she was caring for In addition young twins. to the When the applicant stopped responding firm assigned another caseworker.firm’s many calls, the Eventu- items and submitted the verification ally, the applicant responded of attorney to the firm.and a signed power verification items The a Social Security card, and included copies of a birth certificate, pay stubs. at the firm, the applicant had According to an official for some time but did not been carrying these items in her purse to the firm.attach any priority to providing them The signed appeal the denial success- power of attorney allowed the firm to the children. fully and obtain Medicaid coverage for 91. That being said, the General Accounting Office found not only that such firms 92. Amy Finkelstein et al., 93. Sara Rosenbaum, 89. 90. were used by the majority of the small sample of hospitals they surveyed in the report, but also noted that HCFA considered them useful in helping to ensure that patients who qualify for Medicaid were enrolled. First Year 2014] assistance. intensive more provided \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 15 1-MAY-14 14:53 reducing uncompensated care and medical debt, respectively, is real, reducing uncompensated care and vendors to enroll patients in Medi- the net effect of paying proprietary care to a private for-profit caid is a loss of public funds for medical medical services. business that does not provide any up as uncompensated, that is, as Medicaid may receive care that ends the case that uninsured people are bad debt or charity care, it is also with Medicaid coverage. significantly worse off than people cited the following as one example: as the following cited Medicaid program comes close to the same level of access to care for Medicaid program comes close to people lose Medicaid coverage, they are three times more likely to lack people lose Medicaid coverage, they likely to have no physician visits as a regular source of care and twice as insurance. compared to someone with health 34929-nde_28-1 Sheet No. 95 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 95 34929-nde_28-1 34929-nde_28-1 Sheet No. 95 Side B 05/07/2014 15:37:06 L ’ 100 AT ma g 97 This [Vol. 28 99 , 732 N 94 http://www.nhpf.org/library/issue- ETHICS & PUBLIC POLICY Access to Care under Medicaid: Evidence for the g Many states accordingly used a single Many states accordingly LAW, available at . 1073, 1073 (2005). 96 FF A Assessin note 42 and accompanying text. note 29, at 243–44. In the initial years of the program, EALTH supra 1, 4 (1999), At the same time, Medicaid eligibility was At the same time, Medicaid eligibility note 30 and accompanying text. supra Welfare Reform and Its Impact on Medicaid: An Update 98 , Both mothers’ pensions and ADC were linked in a Both mothers’ pensions RIEF , 24 H 95 supra B note 28, at 168–70. , OORE 42 U.S.C.A § 1396a(a)(10) (West 2013). SSUE supra ., & M g , ORDON Welfare as We Know It Does Not Make Medicaid Free of Sti Not Make Medicaid We Know It Does Welfare as F. I G Y g ’ Moore & Smith, OST NOTRE DAME JOURNAL OF MITH OL See, e. See See P Endin In 1996, under pressure to reform welfare and live up to his prom- to reform welfare and live up In 1996, under pressure Despite many similarities in access between people with Medicaid access between similarities in Despite many The decision to separate welfare and Medicaid eligibility was well The decision to separate welfare and families’ Medicaid cover- intentioned; the goal was to protect poor age from possible cutbacks in welfare. Further, this might allow from welfare and some day Medicaid to begin to operate apart 97. Judith D. Moore, 100. J 99. 96. 95. 98. S 94. Teresa A. Coughlin et al., EALTH E. recipients in many states had an option of either working or receiving education or train- ing; however, many states that started with that option eventually dropped it. briefs/IB732_WelfRef&Mcaid_2-26-99.pdf. Nation and States H Proponents of severing the link between AFDC and Medicaid argued Proponents of severing the link between expand their eligibility criteria, but that not only would it allow states to with public assistance for it would also decrease the stigma associated those enrolled in Medicaid. of this view follows: A summary 180 and by state varies this though insured people, privately low-income, recipients. of categories different between \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 16 1-MAY-14 14:53 ise to “end welfare as we know it,” President Clinton signed the Per- as we know it,” President Clinton ise to “end welfare Act and Work Opportunity Reconciliation sonal Responsibility (PRWORA). which had been an entitle- PRWORA repealed AFDC, Temporary Aid to Needy Families ment program, and replaced it with work requirements and strict time (TANF), a block grant program with limits on eligibility. coverage versus private coverage, Medicaid tends to remain stigmatized Medicaid tends versus private coverage, coverage to welfare. historical connection through its XIX Amendments to Title from eligibility for to delink eligibility for Medicaid in the 1980s started fami- cash welfare program for impoverished AFDC, the federal/state children.lies with dependent the 1935 Social As already described, implemented ADC based on the widely Security Act established mother’s pensions. pejorative sense to the notion of charity.pejorative sense to was enacted, When Medicaid categories that or “welfare,” became one of the eligibility for AFDC, eligibility. determined Medicaid expressly delinked from cash welfare. States maintained the option to children at their 1996 AFDC leave eligibility for parents with dependent at their discretion. level, but could expand income eligibility application to determine eligibility for both AFDC and Medicaid. eligibility for both AFDC and application to determine change caused confusion about the new law on all sides as well as change caused confusion about the tactics to deter enrollees. reports of states engaging in aggressive 34929-nde_28-1 Sheet No. 95 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 95 34929-nde_28-1 34929-nde_28-1 Sheet No. 96 Side A 05/07/2014 15:37:06 e of 107 181 106 g ration Reforms: Unintended g The entitlement status of The entitlement 103 Welfare and Immi . 486 (2006). ES . R . 137, 148 (1998). FF As Michael Katz noted, the word “‘entitle- ERVS A note 29, at 246. S 105 How Did Welfare Reform Affect the Health Insurance Covera How Did Welfare Reform Affect the Health Insurance supra EALTH , EALTH note 20, at 328. note 20, at 328. , 17 H OORE note 28, at 169. 41 H The implementation of TANF occurred during the The implementation supra supra & M supra 104 , , , 101 108 at 319. ATZ ATZ MITH OST Id. Id. 102 ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON In actual fact, however, a variety of direct and indirect factors led indirect factors of direct and fact, however, a variety In actual eligibility allowed states to expand Medicaid Although PRWORA [T]he welfare system has paid for non-work and non-marriage and [T]he welfare system has paid for non-work has achieved massive increases in both. By undermining the work welfare system insidiously ethic and rewarding illegitimacy, the generates its own clientele . . . . Welfare bribes individuals into run are self-defeating to the courses of behavior which in the long increasingly a threat to individual, harmful to children, and society. as stemming from Poverty in the United States is characterized viewed as “lazy and personal inadequacies, with welfare recipients evolve into a freestanding health insurance system for low-income system for insurance health into a freestanding evolve persons. 104. K 103. S 108. 102. John Cawley et al., 105. J 106. K 107. 101. Marilyn R. Ellwood & Leighton Ku, Women and Children?, Side Effects for Medicaid According to this view: somewhat with its loss of entitle- Perhaps the threat of welfare faded not have.ment status but the sentiments may According to Laura Katz power: Olson, views of poverty have had sticking Often using racially coded language, the problem as many conservatives Often using racially coded language, but the collapse of family saw it, was “[n]ot jobs, wages, or globalization, its major source was welfare.” threatened America’s future, and 2014] \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 17 1-MAY-14 14:53 to a reduction in health insurance even among the people who among the people insurance even in health to a reduction TANF. assistance through eligible for cash remained TANF After were 8% and children for TANF were women eligible implementation, under than they were insurance coverage to have health 3% less likely AFDC. of the link both a practical and symbolic severing and was seen as attributable to a Medicaid, its passage was largely between welfare and of “dependency.” national abhorrence same period of time that President Clinton vetoed proposals to turn that President Clinton vetoed same period of time that would have ended its fiscal Medicaid into a block grant program entitlement status as well. ment’ had developed a connotation nearly as negative as ‘welfare.’”ment’ had developed a connotation AFDC ended with the enactment of PRWORA.AFDC ended with was more a mat- Its fate to improve the than a well-thought-out plan ter of political mobilization people with a low income.opportunities for the loss of enti- Politically, instead, a that cash assistance “would become, tlement status meant form of public charity.to the children of Asked what would happen recommended cash assistance, Speaker Gingrich women denied orphanages.” 34929-nde_28-1 Sheet No. 96 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 96 34929-nde_28-1 34929-nde_28-1 Sheet No. 96 Side B 05/07/2014 15:37:06 , 8 THE In UND . F 110 & TATES [Vol. 28 When S OSP In 2004, 113 H THER EDICAID 112 M O NITED U NON note 16, at 10. ’ AT THE OMM supra . C , ESSONS FROM NST I : L AISER NINSURED ROCESS ETHICS & PUBLIC POLICY EDICAID U America’s Uninsured: The Statistics and Back P ., M THE LAW, & LIGIBILITY E note 29, at 247. of For information on the creation note 52, at 230–31. EDICAID The ACA establishes processes that streamline The ACA establishes processes that DWARDS ET AL M note 40, at 125–26. supra E 618, 624 (2008). , supra 114 EDICAID 109 , supra NON ’ note 52, at 67. M , S THICS OORE ’ OULTER LSON OMM C supra http://www.medicaidinstitute.org/assets/516. ORK C , O , . & E . note 16, at 12. & M g Y ED EW BERLANDER LSON AISER ARBARA supra MITH NOTRE DAME JOURNAL OF N See, e. , 111 available at 115 Estimates prior to the implementation of the ACA showed that Estimates prior to the implementation But again, there were many people who hoped that severing Medi- many people who hoped that severing But again, there were shiftless,” “welfare queens,” “deceitful,” “immoral,” and “conniv- “immoral,” “deceitful,” queens,” “welfare shiftless,” ing.” adults receiving young that it is assumed most part, For the the system. abusing and cheating, are gaming, assistance income “educate,” thus been to “motivate,” main role has Government’s their families who individuals and and even “punish” “control,” basic needs. Blam- to meet their sufficient funds have not attained low-income, single and Hispanic especially black ing victims, Democrats and norm among has become the national mothers, Republicans alike. 36 J.L. M 115. 42 U.S.C. § 18083(a) (2012). See also K 113. Diane Rowland & Adele Shartzer, 111. 114. B 112. K 110. S 109. O NINSURED EFORMING (2008), R Story, HCFA, see O U 182 \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 18 1-MAY-14 14:53 over 70% of uninsured children were eligible for Medicaid or the Chil- over 70% of uninsured children were yet not enrolled. dren’s Health Insurance Program (CHIP), caid eligibility from AFDC would result in greater access and less AFDC would result in greater caid eligibility from stigma. Adminis- from the Health Care Financing A 1999 publication 1977 to oversee organization that was created in tration (HCFA), the “an opportunity Medicaid, described the changes as both Medicare and health insur- and market Medicaid as a freestanding for states to recast the possibility of low-income families, improving ance program for of the program and enhancing the potential destigmatizing Medicaid system.” that come into contact with the TANF to reach families eligibility determinations, enrollment and renewals of coverage, provid- eligibility determinations, enrollment health insurance Marketplaces. ing a “no-wrong-door” system through through Marketplaces are Individuals and families seeking coverage federal subsidies to help them screened not only for eligibility for for eligibility for Medicaid and purchase private coverage, but also CHIP. about 14% of uninsured adults were eligible for Medicaid. about 14% of uninsured adults were New York’s United Hospital Fund studied the Medicaid eligibility pro- New York’s United Hospital Fund studied administered by local social service cess in 2008, the program was still for cash assistance and food stamp agencies that were also responsible programs. new health insurance processes Yet other states had adopted that might discourage people from to eliminate any stigma of “welfare” applying for coverage. the intervening years, with as much as Medicaid has been able to with as much as Medicaid the intervening years, connected to not shed its status as somehow accomplish, it has charity. 34929-nde_28-1 Sheet No. 96 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 96 34929-nde_28-1 34929-nde_28-1 Sheet No. 97 Side A 05/07/2014 15:37:06 117 183 118 http:// 120 Medicaid More than RESSURES IN AN P 119 The Effects of Medi- 116 . 683, 684 (2011). available at ED EALTH . J. M H NG 8 (2009), E ISING . (Apr. 4, 2011), http://kff.org/ EW .R OUND OUND F , 365 N F OMMUNITIES C AMILY AMILY F OUR F F AISER ram from the Patient’s Point of View Point the Patient’s ram from g on Experiment AISER g Katherine Baicker & Amy Finkelstein, ., K OOK AT L ° note 92, at 1096. see also supra from the Ore g ERRY ET AL : A 360 P The Medicaid Pro The Medicaid (June 29, 2005), http://www.webwire.com/ViewPressRel.asp?aId=3137#. at 1082–99; Correspondingly, a large majority of Americans whom Kaiser polled about Correspondingly, a large majority of Americans ICHAEL ECESSION IRE e—Learnin Id. Id. Releases National Survey of the Public’s Views About Medi- Kaiser Family Foundation Releases National Survey g F. R W ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON EB At the same time, people insured through Medicaid do often per- At the same time, people insured through In 2005, the Kaiser Family Foundation surveyed the American pub- American the surveyed Foundation Family the Kaiser In 2005, 120. 118. M 119. Finklestein, 117. 116. , W CONOMIC caid Covera health-reform/perspective/pulling-it-together-a-public-opinion-surprise/. the issue reported that they either would not support any cuts whatsoever to Medicaid to the issue reported that they either would not only “minor” reductions (39%).reduce the federal deficit (47%) or would support Drew Altman, A Public Opinion Surprise, K www.kff.org/uninsured/upload/7949.pdf. caid UxuH-_33DR0. E More recently, after the economic recession began, researchers from the economic recession began, More recently, after in four commu- Foundation conducted focus groups the Kaiser Family related to their health care.nities about concerns people who Many Medicaid was not jobs could not understand why had recently lost their needed it.available when they job and health One woman who lost her Medicaid]. said: “It would be wonderful [to have insurance coverage It if you had a problem, you’d be able would be such a relief to know that go into the hole even further.” to have that taken care of and not a study on people in Oregon who Researchers also recently conducted 2008 to be eligible for Medicaid. had been selected by lottery in difficult to determine based on Although the effects on health were time frame, self-reported health did objective data because of the short improve.is . . . an overwhelming sense from They report that “[t]here feel better about their health the survey outcomes that individuals health care system.” and . . . their interactions with the 2014] \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 19 1-MAY-14 14:53 ceive that their care is less than it should be.ceive that their care is less than it should When the American Acad- their endorsement of extending emy of Family Physicians published in 1991, a mother of an adult son Medicaid coverage to more people wrote a letter describing how “he with Down’s syndrome on Medicaid care physicians and was denied was refused care by several primary because they did not want admission by two highly respected hospitals lic on their views of the Medicaid program. views of the Medicaid lic on their half of While more than about of the program, know about details surveyed did not the people or had in Medicaid who was enrolled number knew someone the same at some point. by Medicaid been covered news According to the fre- about Medicaid, given years of debate surprisingly release: “Perhaps and Man’ of state budgets, as the ‘Pac to the program quent references are remarka- public attitudes toward Medicaid periodic calls for reform, to cuts is reasonably strong.” bly positive, and opposition coverage improved financial well-being, and even happiness. coverage improved financial well-being, three-quarters of the people surveyed said they would be willing to the people surveyed said they would three-quarters of if they were eligible.enroll in Medicaid viewed almost as Medicaid was surveyed. and Social Security among those favorably as Medicare 34929-nde_28-1 Sheet No. 97 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 97 34929-nde_28-1 34929-nde_28-1 Sheet No. 97 Side B 05/07/2014 15:37:06 5 , 30 es In g es RISIS g [Vol. 28 C NHEALTHY ARE , U C OICES V EALTH 2560–61 (1991). N H ’ S note 16, at 11. Sommers ’ SS . The book provides EALTHY . A supra , H ED , MERICA The complexity and insta- 105 (2007). A . M M 124 Issues In Health Reform: How Chan OOR USMANO P NINSURED ETHICS & PUBLIC POLICY U K. G AMILIES IN , 266 J. A THE F LAW, 123 & OOR ICHAEL ., P OLICY FOR THE & M P EDICAID 122 M Letter to the Editor EALTH ROGAN NON ’ NGEL ET AL H When Medicaid managed care was being initiated care was being managed When Medicaid M. G OMM J. A C 121 OLLEEN ONALD AISER . 228, 232 (2011). State-administered “basic” health plans are intended to act NOTRE DAME JOURNAL OF DVOCACY AND FF Poor Families in America’s Health Care Crisis Poor Families in America’s A : A Throughout the book, what has been called “churning” or the Throughout the book, what has been Ronald Angel, Laura Lein, and Jane Henrici provide a nuanced Lein, and Jane Henrici provide Ronald Angel, Laura [T]he lives of the people we worked with were often confusing [T]he lives of the people we worked and chaotic. accounts, the story plots are not Unlike fictional gaps in the narratives. complete and there are often large we interviewed were Although for the most part the mothers and were forthcoming with remarkably candid about their lives sure when members of the information, we could not always be they had health insurance family were employed and when and confusing to be because their lives were simply too complex and activity matrix that easily entered into the sort of time novel might portray). researchers often use (or that a well crafted of events and the identi- Even in directed interviews, the sequence unclear to us and proba- fication of who did what when was often bly to the mothers themselves. I had a child who was on Medicaid and who needed to see a spe- and who needed who was on Medicaid I had a child . . .a nine o’clock appointment So I went out for cialist . . . I was women room with a hundred people, all put in this big waiting and children. knocked on a And by about 10:30 I went over and And the woman, “I have a 9:00 appointment.” window and said to does everyone else. . . .”the woman said, “So It was a very dehu- manizing experience. 124. K 122. C 123. R 121. Jane A. Zanca, ibility May Move Millions Back And Forth Between Medicaid And Insurance Exchan g EALTH ILENCE (2006). and Rosenbaum project that, after the health exchanges begin operating in 2014, half of adults with income below 200% of the poverty level will experience changes in their eligi- bility status for Medicaid or health insurance exchanges, as a result of income fluctua- tions. Benjamin D. Sommers & Sara Rosenbaum, Eli H S 184 patient.’” Medicaid ‘another was severely a fever, he had Although in a “[a]drift while wrote: the mother was vomiting, and dehydrated, to catch was a towel shown we were only mercy the white coats, sea of the vomitus.” \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 20 1-MAY-14 14:53 cycling on and off Medicaid is a constant. account of the situation faced by poor Americans in obtaining health faced by poor Americans in account of the situation care in families in three study of mostly minority details from an ethnographic from other supporting data and commentaries cities along with research. significant, describe a rarely studied, though The authors affects the health care that peo- aspect of the lives of these families that enrolled in Medicaid.ple receive and whether they are This is an account from the authors: widely in Connecticut, an advocate related the following story about her following story about related the Connecticut, an advocate widely in child: 34929-nde_28-1 Sheet No. 97 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 97 34929-nde_28-1 34929-nde_28-1 Sheet No. 98 Side A 05/07/2014 15:37:06 . HE ES EDI- 185 HAT ECES- . R , T M R : W Medi- ERV S 126 TIGMA S NINSURED NROLL IN U EALTH E While the “no . 1314 (2012). EYOND THE 129 FF , 44 H , B A & HANGED SINCE THE C AMILIES TO rams Would Lead to 4 Percent g ENTER F EALTH HEY . C EDICAID T M ED AVE NCOME , 31 H -I es H g NON . U. M ’ OW OW The Impact of CHIP on Children’s Insurance L ASH : H OMM C . W EEDS EO N AISER ., G ECISIONS OF ARE ., K D C Creation of State Basic Health Pro 127 the National Survey of America’s Families http://kaiserfamilyfoundation.files.wordpress.com/2013/01/ g EALTH note 123, at 3. TUBER ET AL H FFECT THE between Medicaid and Exchan g P. S ARRIER ET AL A supra HEIR , C T available at NGEL MILY ENNIFER Certainly the family members interviewed in the Angel, Lein, Certainly the family members interviewed CTUALLY SION When Cecilia was not eligible for Medicaid, she used a local for Medicaid, was not eligible When Cecilia A 128 ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON e: An Analysis Usin , Ann Hwang et al., g 125 . Particularly given the expansion of Medicaid in many states and its the expansion of Medicaid in many Particularly given g 129. J 125. cash assistance, not Medicaid. This disenrollment should only have affected 126. A 127. E 128. Lisa Dubay & Genevieve Kenney, ? (2011), NINSURED AND ARRIERS 2040 (2009). Fewer People Churnin U B as a bridge for this population, so they experience stability in coverage even as the source as a bridge for this population, so they experience to federal subsidies and private financing. of coverage funding changes from Medicaid See e. 8246.pdf Covera 2014] all reached and daunting were circumstances families’ of the bility basic necessi- other housing, employment, including of living aspects care.and health ties, in of churning occurred family’s example One “Cecilia.” of a single mother, the family as lost Medicaid coverage She with she missed a meeting benefits when stamps and TANF well as food pregnancy. during her second a caseworker was dis- Later, Medicaid up to were not his immunizations for one child because continued date. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 21 1-MAY-14 14:53 role in health care reform, the question of the degree to which people reform, the question of the degree role in health care program with stigma is important.may associate the Although in the wanted to enroll interviews many participants recent Kaiser Foundation has been a part not eligible, some effect of stigma in Medicaid but were expansions of Medicaid and of research on enrollment during previous CHIP. and Henrici study often felt humiliated. In 2000, researchers inter- care at community health cen- viewed 1,400 people who received health stigma associated with the use of ters in order to study dimensions of and Medicaid.public benefits such as cash assistance The researchers and other factors affected actual also identified ways in which stigma enrollment. for Medicaid would involve unfair The belief that applying would not receive the same treat- questions and that Medicaid enrollees health insurance were associ- ment by physicians as people with private ated with lower decisions to enroll. The researchers did not find “welfare stigma,” which is the belief evidence of what some have called herself or that others will look that the enrollee will feel bad about for not enrolling.down upon her, as separate causes Changes in the for Medicaid at places other than a enrollment process such as applying much less stigma. welfare office were associated with public program but she owed hundreds of dollars to the program. she owed hundreds of dollars public program but uninsured program was intended for low-income Even though the local free. was discounted, it was certainly not people and the price cal debt was mentioned by many of the people interviewed for the by many of the people interviewed cal debt was mentioned book. people. unusual even for extremely impoverished This is not prices when they people receive discounted Less than half of uninsured pay for medical care. 34929-nde_28-1 Sheet No. 98 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 98 34929-nde_28-1 34929-nde_28-1 Sheet No. 98 Side B 05/07/2014 15:37:06 g 7 51 133 CT A See also [Vol. 28 http:// EFORM ARE C R ESSONS FROM ram: Complex ROGRAM g L P EY EALTH available at States Undercuttin , K g H FFORDABLE A TATE OSPITAL S H NINSURED U Florida Amon NDER THE HARE THE U IMITS OF S 134 L & ETHICS & PUBLIC POLICY F. 5 (Sep. 4, 2001) Y ’ OL REATED EDICAID LAW, P NROLLMENT M C E S I EALTH NON (Sept. 17, 2013), http://www.nytimes.com/2013/09/ ’ EDICAID AND THE H L ’ Medicaid’s Disproportionate Share Hospital Pro ISPROPORTIONATE , M IMES OMM AT http://sphhs.gwu.edu/departments/healthpolicy/CHPR/ C N D UTREACH AND PARER O States have tended to increase outreach efforts and outreach efforts tended to increase States have note 29, at 168. AISER , N.Y. T FOR 130 S. S 131 , K EDICAID ., Lizette Alvarez and Robert Pear, supra http://kaiserfamilyfoundation.files.wordpress.com/2013/06/8445-key- . available at g g , M CHIP ICHAEL NOTRE DAME JOURNAL OF OORE HE See, e. See, e. The law explicitly allowed these funds to help pay for care of The law explicitly allowed these funds available at 132 & M Congress amended the Medicaid DSH provisions in 1987 out of Congress amended the Medicaid DSH Another way that charity care and Medicaid became linked in com- care and Medicaid became linked Another way that charity 134. Robert Mechanic, 131. 132. Omnibus Reconciliation Act of 1981, Pub. L. 97-35, 95 Stat. 808 (1981); 133. M 130. ?, (2000), II. T EDICAID AND MITH Health Care Enrollment (2014) (1996). Structure, Critical Payments, lessons-from-medicaid-and-chip.pdf. www.nhpf.org/library/background-papers/BP_MedicaidDSH_09-14-04.pdf. 18/us/florida-among-states-undercutting-health-care-enrollment.html?pagewanted=all. S Only seventeen states had a designated Medicaid Disproportionate Only seventeen states had a designated 1985. Share Hospital (DSH) program by CAID downloads/beyond_stigma_no3.pdf. M 186 will likely Marketplaces insurance health process through door” wrong organiza- as changing such measures, additional stigma, to reduce help attitude, a welcoming to promote offices at enrollment culture tional are also needed. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 22 1-MAY-14 14:53 concern that states were not implementing these additional payments. concern that states were not implementing a plan describing their DSH policy. States were now required to submit defining a hospital as a DSH hos- The law also set minimum criteria for DSH adjustments.pital and minimum criteria for calculating States a hospital as a DSH hospital were, and still are, required to designate inpatient utilization rate greater based either on having a Medicaid the mean for that state or based on than one standard deviation above plex ways that continue to be debated is through the use of Medicaid to be debated is through the plex ways that continue supplemental payments. Boren Amend- When Congress extended the largely resulted in to hospitals in 1981, which ment payment standards required states to hospital payments, it also states lowering Medicaid number of hospitals that serve a “disproportionate “take into account” when determining reimburse- low-income people with special needs” ment. number of whom were receiving uninsured patients, an indeterminate charity care. interested in their new ability Since states were primarily largely ignored this provision. to lower payments to hospitals, they simplify enrollment in Medicaid when budgets are strong and to are strong when budgets enrollment in Medicaid simplify and to enrollment or create other barriers such procedures dampen by some recent attempts downturns. The during economic retention health assistance with the people who need barriers for states to create driven by politi- seems, however, to be primarily insurance Marketplace cal opposition. 34929-nde_28-1 Sheet No. 98 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 98 34929-nde_28-1 34929-nde_28-1 Sheet No. 99 Side A 05/07/2014 15:37:06 187 138 ISTRI- ISPRO- D Rand D http:// ton Post Since, g available at 143 OINT 141 J ISPROPORTION- EDICAID D ISPROPORTIONATE available at Washin ., M D 6 (1997), EDICAID note 16, at 31. The Medicaid low- Medicaid The OUND The M F EDICAID SSUES NALYSIS OF THE 135 supra HE I 33 (1994) 142 , .A 10 (2002). AMILY ., T , What actually happened This limit did not have to This limit did not F ORP NST 140 139 . I ROGRAMS AISER NINSURED RB P AYMENTS ., 97–483, M U , K P , U ERV ., RAND C THE ACKGROUND AND S ISKA : B L & INANCING Beyond this minimum, states originally this minimum, states Beyond OSPITAL OUGHLIN F H AVID 136 ESEARCH YNN ET AL A. C EDICAID ROGRAM W PECIAL HARE . R & D M P S S The FMAP applies to Medicaid DSH payments, The FMAP applies ERESA ONG 137 THER ARBARA NON Small Provision Turns into a Golden Goose; States Use Subsidy to Bal- , Jan. 31, 1994, at A1. ’ & T , C note 136 at vii. AYMENT U OUGHLIN O OST K P OMM . P EARNE C supra A. C (2005). H ASH 42 U.S.C.A. § 1396r-4(b)(1) (West 2013). at 24. HARE AND OSPITAL ISPROPORTIONATE ERESA AISER EIGHTON , W EAN S Id. See BUTION OF PORTIONATE H D ATE ets g AYMENTS ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON P The federal match, or Federal Medical Assistance Percentage Medical Assistance match, or Federal The federal The intended purpose of the law was clearly to provide states with of the law was clearly to provide The intended purpose HARE 138. J 143. Dan Morgan, 137. K 140. Wynn, 141. L 142. 136. 42 U.S.C.A. § 1396r-4(b)(3)(B) (West 2013). The law specifies that the Medi- 139. T 135. S HARE ance Bud http://www.urban.org/UploadedPDF/anf_14.pdf. www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=14 748. caid DSH low-income utilization rate is the sum of two ratios.caid DSH low-income utilization rate is the sum The first is the share of the are paid by Medicaid or by state and local hospital’s total revenue for patient services that subsidies. charges for charity care minus any The second is the percent of total hospital subsidies for such care. B S In 1983 HCFA issued regulations that prohibited Medicaid federal regulations that prohibited In 1983 HCFA issued home care to no for inpatient hospital and nursing matching payments referred be paid under the Medicare program, more than what would upper payment limit.” to as the “Medicaid 2014] 25%. rate above utilization a low-income having \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 23 1-MAY-14 14:53 but as originally written there was no upper limit or ceiling on the fed- there was no upper limit or ceiling but as originally written were met. payments as long as the requirements eral match for DSH had great latitude in defining other hospitals as eligible for DSH funds. as eligible for DSH other hospitals latitude in defining had great to capita income relative on a state’s per is calculated based (FMAP), average.the national state, on from state to FMAP differs Although 57% of the Medi- 43% and the federal government average states pay caid program’s cost. over the next few decades was at times quite different.over the next few decades was at times A sizeable frac- of states, used for general revenue tion of DSH funds were, in a number purposes. program in thirty-nine In a 1995 survey of the Medicaid DSH the program were state govern- states, the primary beneficiaries of ments.were retained by states, suggesting One third of the DSH funds currently generated by DSH pro- that “only a small share of the funds uncompensated care.” grams are actually used to cover be adhered to in the DSH payments. be adhered to in the most care to for hospitals that were providing matching payments covered under whether or not the patients were low-income patients, care. Medicaid or were receiving charity called the program in 1994 “a worthy idea gone terribly awry.” called the program in 1994 “a worthy income utilization rate is specifically calculated in part on the basis of the basis part on in calculated is specifically rate utilization income subsidies after by the hospital provided care of charity the percentage care are subtracted. for such according to officials, “money is fungible” at the state level, the funds according to officials, “money is fungible” budgets. could be used to balance overall state 34929-nde_28-1 Sheet No. 99 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 99 34929-nde_28-1 34929-nde_28-1 Sheet No. 99 Side B 05/07/2014 15:37:06 149 146 [Vol. 28 ed Competition g 147 e of Mana g note 138, at 4. Mechanic For example, in West Officials in the George 145 supra , 150 EARNE ETHICS & PUBLIC POLICY note 134. note 134, at 4. LAW, supra supra . 60, 110 (1994). note 139, at 2–3. EV 144 note 29, at 208–09 supra Program costs increased so rapidly that federal Program costs increased so rapidly , . L. R supra Mechanic, , 148 ISKA note 138, at 6. ROOK OORE see also & L supra , , 60 B & M at 5–6; EARNE OUGHLIN MITH NOTRE DAME JOURNAL OF Id. Id. ed Care g Once states understood the possibility of these financing strategies, Once states understood the possibility Federal dismay over this problem concerned only secondarily the only secondarily concerned over this problem Federal dismay State A requests a donation or imposes a tax on a hospital of $10 donation or imposes a tax on a hospital State A requests a million. of $12 million to The state then makes a DSH payment means of increased Medi- the hospital, either as lump sum or by caid rates. $2 million and “costs” the state This nets the hospital $2 million. the $12 million as a “legitimate” The state then claims percent match, receives $6 Medicaid expense and, assuming a fifty million from the federal government. Final result: the provider the state is ahead by $4 netted $2 million from the transaction; $6 million; and Medicaid million; the federal government is out this transaction. recipients may or may not benefit from 149. H 146. 147. S 148. Hearne cites $17.4 billion in 1992. H 145. C 150. 144. Sparer. Rosenblatt attributes this insight to Edward Rand E. Rosenblatt, cites $600 million in 1989. Mechanic, and Mana Equality, Entitlement, and National Health Care Reform: The Challen Equality, Entitlement, and National Health Care The genesis of the problem was the failure of Congress to tie the The genesis of the problem was to specific beneficiaries and ser- bestowal of DSH funding to care given vices and to cap the total funds provided. An illustration of how the program could work follows: An illustration of 188 is context, different in a somewhat made observation, Rosenblatt’s “[m]ost ironi- flow funds may the poor,” name of “in the here: apposite the “poor’s while power most political the those with back to cally” ‘social account’” is charged. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 24 1-MAY-14 14:53 the DSH program payments shot from less than $600 million in 1989 to the DSH program payments shot from $17.4 billion in 1992. failure of the funds to be used for uncompensated care.used for uncompensated the funds to be failure of primary The share of the federal the funds to increase involved the use of concern payments.Medicaid share of the federal of states to increase The ability by HCFA which part from a regulation issued in 1985 payments arose in care providers donations from private medical allowed states to receive federal Medicaid and use these funds to draw down or to tax providers to the federal matching rate. dollars according officials became alarmed. General called the use of pro- The Inspector virus” and “egregious.” vider donations and taxes an “uncontrollable H.W. Bush Administration at the Office of Management and Budget, H.W. Bush Administration at the Office Virginia the state began collecting millions of dollars in donations from collecting millions of dollars Virginia the state began large nonprofit hospitals. which were The funds became state funds, the origi- the hospitals in an amount that exceeded then given back to nal donation. a federal the hospitals were paid, the state received Once the match was retained by the state.match but most of While there was state budget. hospital, the largest gain was to the a net gain by the 34929-nde_28-1 Sheet No. 99 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 99 34929-nde_28-1 34929-nde_28-1 Sheet No. 100 Side A 05/07/2014 15:37:06 . EV . J. 189 157 The NG . R E IN 151 F EW ARE C , 328 N As David Smith EALTH 160 Teresa A. Coughlin et al., , 22 H The law also specifically ram see also g ., 118, 118–19 (1998). State and Federal Payment Policies for 158 g FF in A g 152 Chan EALTH 159 , 17 H note 139, at 3. The law prohibited the use of donations and The law prohibited supra , The American Health Care System—Medicaid 154 note 134, at 9. note 138, at 6. ISKA note 143. note 138, at 6–7. note 52, at 210. The Growth of Medicaid DSH is Curtailed supra The law was intensely negotiated between the Bush The law was intensely & L supra supra supra supra , , , A. 153 LSON EARNE EARNE OUGHLIN Id. State DSH payments were also capped at the 12% level but were also capped at the 12% State DSH payments The law set a national limit of 12% of total Medicaid spending limit of 12% of total Medicaid The law set a national the Medicaid Disproportionate Share Hospital Pro g ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON 156 One effect of the cap was to lock in the highly inequitable distribu- cap was to lock in the highly inequitable One effect of the In 1991 Congress enacted the first legislative reform of DSH with reform of DSH the first legislative enacted In 1991 Congress The effect of the law was to limit the growth in the DSH program, The effect of the law was to limit the 155 [T]he DSH experience provides a good example of how the flexi- [T]he DSH experience provides a good system of fiscal federalism bility and loopholes in our American 156. Teresa A. Coughlin & David Liska, 157. H 154. 155. 42 U.S.C.A. § 1396b(w)(2)(B) (West 2013); 159. H 153. C 158. Mechanic, 160. Morgan, 151. John K. Iglehart, 152. O . 896, 898 (1993). ED Medicaid Disproportionate-Share Hospitals M 137, 139 (2000). Reformin 2014] if not illegal.” irregular “highly as the program HCFA, saw and \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 25 1-MAY-14 14:53 for the DSH program, thereby curtailing further escalation of a pro- thereby curtailing further escalation for the DSH program, to over 13% in from about 2% of spending in 1990 gram that had risen 1992. state’s allotment up or down based on the individual were to be phased of DSH. had much higher or lower percentages since some states tion of DSH funds at the state level. For example, by 2001 there were of at least $1,000 per resident five states that reported a DSH payment states that reported DSH payments below the poverty level and sixteen of less than $100 per poverty level resident. the Medicaid Voluntary Contribution and Provider-Specific Tax Provider-Specific Contribution and Voluntary the Medicaid Amendments. though the controversies were far from over.though the controversies were far from The DSH program by this and a vehicle for fundamentally time had become politically explosive stakeholders. divergent strategies among powerful Administration and the National Governor’s Association, and was a the National Governor’s Association, Administration and compromise measure. provider taxes that were not broad based.provider taxes that had to be “bona The taxes harmless for the not be written to hold providers fide” and could cost. protected the use of intergovernmental transfers as a source of financ- protected the use of intergovernmental “loophole,” which had not been ing, considered by some to be another in wide use prior to the legislation. and Judith Moore put it, political implications were powerful, threatening alliances between alliances threatening were powerful, implications political and budget- political both the at officials government and federal state ary level. the next on measures over embarked As a result, Congress lessening loopholes, while on program that clamped down two decades funds. by increasing available the blow 34929-nde_28-1 Sheet No. 100 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 100 34929-nde_28-1 34929-nde_28-1 Sheet No. 100 Side B 05/07/2014 15:37:06 at 6–9. [Vol. 28 Others Id. available at 162 The Office of the 166 note 134, at 8. ETHICS & PUBLIC POLICY 161 supra LAW, As a response to these continued As a response 168 165 163 note 29, at 208. supra note 134, at 8. , note 138, at 7. note 138, at 7. OORE supra supra supra , , & M The 1993 amendments also prohibited DSH payments to also prohibited DSH payments The 1993 amendments at 7–8. This is consistent with the history of the DSH program as “intensely politi- EARNE EARNE MITH NOTRE DAME JOURNAL OF Id. Id. 164 CMS agreed, yet the increase in DSH limits for public hospitals CMS agreed, yet the increase in DSH The hospital-specific limits were transitioned such that certain, usu- The hospital-specific limits were transitioned The use of intergovernmental transfers in which states use public transfers in which of intergovernmental The use enable venturesome and public-spirited officials to work a power to officials public-spirited and venturesome enable of good. those greedy, punish and the shrewd also reward They lies, and breed share, with their make do rules and live by the who distrust, and cynicism. hypocrisy, 167 166. Health Insurance Program Benefits The Medicare, Medicaid, and State Child 162. H 164. H 167. These included findings that as much as 90% of DSH payments to some hospi- 168. 163. Mechanic, 165. 161. S cal and rife with special deals.” Mechanic, Improvement and Protection Act of 2000 (BIPA 2000) required that public hospitals in Improvement and Protection Act of 2000 (BIPA care cost for the two fiscal years all states have a DSH limit of 175% of uncompensated beginning after September 2002. public hospitals already had this higher California’s limit. Inspector General Janet Rehnquist for Administrator for Cen- Memorandum from Scully (Dec. 27, 2001), ters for Medicare and Medicaid Services Thomas https://oig.hhs.gov/oas/reports/region6/60100069.pdf. tals were returned to the state; the calculation of uncompensated care costs varied widely; many hospitals overstated uncompensated care costs; and some states included the cost of providing care to prisoners even though this was not supposed to be allowed. 190 \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 26 1-MAY-14 14:53 was left intact for those years. ally state-owned, hospitals could continue to receive DSH payments of ally state-owned, hospitals could continue and uninsured cost.up to 200% of their Medicaid shortfall Congress limit on DSH payment several made exceptions to the hospital-specific times. limit for public hospi- In 2000, for example, the hospital-specific increased from 100% to 175% of tals for the years 2003 and 2004 was cost. the unreimbursed Medicaid and uninsured funds from state, local, or county health care facilities as the state match facilities as the state health care state, local, or county funds from dona- with the provider as we saw above, much the same way works in curtailed. law had partially taxes that federal tions and states Inventive line also began to use other practices.willing to push the Some states, hospitals, or grossly inflated charges at public for example, reported hospitals than the more in DSH payments to certain paid significantly for Medicaid and uninsured patients. total cost of caring hospitals, such as mental health institutions, that did not have at least a mental health institutions, that did hospitals, such as 1% Medicaid utilization rate. problems, in 1993 Congress imposed a hospital-specific limit to DSH Congress imposed a hospital-specific problems, in 1993 of unreimbursed be no more that the total cost payments, which could for an individual enrollees and uninsured patients care to Medicaid hospital. Inspector General, upon review of this prospective increase, concluded Inspector General, upon review of this finding multiple irregulari- that it should either be delayed or repealed, ties. provided DSH payments to hospitals with few Medicaid patients, espe- to hospitals with few Medicaid provided DSH payments is the financial where most care for adults cially at mental hospitals the state. responsibility of 34929-nde_28-1 Sheet No. 100 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 100 34929-nde_28-1 34929-nde_28-1 Sheet No. 101 Side A 05/07/2014 15:37:06 191 OUS- R AVID In the 1997 & D 170 ht Be Too Late for LA to g The UPL payments CHNEIDER As mentioned, Con- As mentioned, S ies Are Utilized 175 g NDY 169 A in Even the most minimal infor- Even the most minimal 172 (Apr. 2, 2000) (quoted note 134, at 9. note 155, at 155. note 140, at 107. Transfer System Could Save Medicaid, but It Mi supra supra ICAYUNE In a 2002 RAND/Urban Institute report, however, In a 2002 RAND/Urban -P supra Other Medicaid Maximization Strate , The state DSH payment reports also sometimes correlated The state DSH payment 171 IMES at 107–08. at 108. The authors cite to one example, in which “Pennsylvania’s hospital YNN , T 173 B. 174 Id. Id. ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON In response to the tightening federal strictures on DSH payments, In response to the tightening federal When forty states were surveyed about their DSH programs in programs their DSH about surveyed were forty states When 175. Steve Ritea, 174. 171. Balanced Budget Act of 1997, Pub. to meet the requirements of A State plan under this title shall not be considered 105–33, L. No. § 4721 (1997): payments to hospitals to take section 1902(a)(13)(A)(iv) (insofar as it requires a disproportionate number of into account the situation of hospitals that serve October 1, 1998, unless the State low-income patients with special needs), as of a description of the methodology has submitted to the Secretary by such date to disproportionate share used by the State to identify and to make payments the basis of the proportion of low- hospitals, including children’s hospitals, on hospitals.income and Medicaid patients served by such The State shall provide the disproportionate share pay- an annual report to the Secretary describing hospital. ments to each such disproportionate share 172. W 173. 169. Coughlin, 170. Mechanic, Get on Board specific report for FY 1998 showed a total of $41 million in DSH payments whereas the state claimed $546 million in DHS payments on Form HCFA-64.” 2014] \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 27 1-MAY-14 14:53 1997, states were netting 40% of the financial gains while hospitals were while hospitals gains the financial 40% of netting states were 1997, funds. new additional 60% of about receiving maximization” strategies to states began to use other “Medicaid increase the federal share of funds. One of the primary ways states exploitation of the upper payment could do this was through creative limit rules (UPL). DSH program is mandatory for While the Medicaid schema underlying funding of the states, UPL “programs” are not. The of the DSH program in DSH’s early state portion of UPL resembles that years. the process: “Borrow $20 from a A Louisiana journalist described friend. Show it to your Dad. you $50. He gives Give the $20 back to your friend.$50 fatter.” Walk away with a wallet researchers found that “compliance with this requirement appears lax that “compliance with this requirement researchers found is limited.” and federal enforcement an accounting generated by HCFA providing poorly with information accuracy into calling the former’s of state DSH expenditures, question. mation was often not provided by states, such as accurate hospital iden- not provided by states, such as accurate mation was often tification. gress continued to pay attention to DSH payments to hospitals, though to hospitals, to DSH payments to pay attention gress continued the program. and expanding between curtailing it still vacillated Relia- states did not exist, and on DSH programs information ble and detailed systems. accurate reporting to develop resisted attempts Balanced Budget Amendment, Congress required states to report to states to Congress required Budget Amendment, Balanced payments to DSH it used to identify and make HCFA the methodology and Medicaid of the proportion of low-income hospitals on the basis hospital the hospitals, and to include individual patients served by information. 34929-nde_28-1 Sheet No. 101 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 101 34929-nde_28-1 34929-nde_28-1 Sheet No. 101 Side B 05/07/2014 15:37:06 EDI- M The [Vol. 28 http:// ILLIONS OF EALITY AND 182 CCOUNTABIL- B : R A T MPROVING ’ The federal IMITS : I OV available at NTERGOVERNMENTAL L AR 179 http://www.gao.gov/ When these UPL W 178 AYMENT P UG OF 183 T http://www.kff.org/medicaid/ 5–6 (2004), available at NFORMATION ON THE PPER Federal law provides that provides law Federal I ,U 176 Because states’ Medicaid rates Because ORE , GAO-04-574T, I CHEMES ETHICS & PUBLIC POLICY M 177 S EYOND THE available at FFICE 6 (2008), http://nashp.org/sites/default/files/Medi- B EEDS NINSURED LAW, O U OVING INANCING THE AYMENTS F 2 (2002), : CMS N & P ., M available at In the case of DSH, Congress capped total In the case of DSH, Congress capped TATE S 184 EDICAID note 134, at 14. note 134, at 9. CCOUNTABILITY EDICAID The GAO found that some states clearly used the The GAO found that some states clearly M INANCING A T F 6 (2006), supra supra ’ 181 UPPLEMENTAL NON OV CHWARTZ ET AL S ’ ACILITATED S F EDICAID In a 2006 survey of thirty-five states, Teresa Coughlin and In a 2006 survey of thirty-five states, OMM at 8–9. NTEGRITY AVE C ONYA M I NOTRE DAME JOURNAL OF 185 Later the same day, the county hospitals, through an day, the county hospitals, through Later the same CAID Id. Id. Id. PENT ON , GAO-08-614, M H ITY S AISER 180 ISCAL Although the Medicaid DSH and UPL programs have been Although the Medicaid DSH and FFICE 184. S 183. Mechanic, 179. U.S. G 180. 181. 182. 177. 42 C.F.R.178. § 447.272(b)(2) (2013). Mechanic, 176. are made on the basis of 1115 Waiv- Other supplemental Medicaid payments 185. 42 U.S.C.A. § 1396r-4(f) (West 2013). , K F O OLLARS RANSFERS LLUSION IN www.gao.gov/new.items/d04574t.pdf. new.items/d08614.pdf. 4043-index.cfm.). by CMS.ers which are state specific demonstrations approved U.S. G caid_Fiscal_Integrity.pdf?q=Files/Medicaid_Fiscal_Integrity.pdf. T SEAU I D 192 what and pays what Medicare between the difference on are based services. for comparable pays Medicaid \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 28 1-MAY-14 14:53 described as a “tug-of-war” between the federal and state governments, described as a “tug-of-war” between curbed some of the most fiscally over time the federal government has problematic practices. intergovernmental transfer, sent all but about $6 million of the funds transfer, sent all but about $6 million intergovernmental an intergovernmental transfer.back to the state through These funds the result- a separate general fund that “recycled” were deposited into additional federal in now-“state” dollars to generate ing $149 million matching dollars. funding for states on several different occasions, most recently under funding for states on several different the ACA. funds for non-Medicaid purposes, such as K-12 education. funds for non-Medicaid purposes, are generally much lower than Medicare, these states can make large states can make than Medicare, these much lower are generally payments—UPL payments—to or category of hospi- a specific hospital as the limits. As long upper payment violating the aggregate tals without hospitals or class of a single hospital limit is not breached, aggregate on the UPL funds received. does not have a limit such aggregate Medicaid expenditures may not exceed what Medicare exceed what not may expenditures Medicaid aggregate such services. paid for the same would have payments are made to public hospitals, some states’ general funds ulti- to public hospitals, some states’ general payments are made of the benefits.mately reap most a 2004 General For example, provided (GAO) report described how Michigan Accounting Office hospitals as a UPL payment. $122 million to county match for these payments was $155 million, making a total of $277 mil- was $155 million, making a match for these payments the UPL pro- to the county hospitals under lion that was provided gram. “absence of reliable data protects states that engage in questionable “absence of reliable data protects of efforts to change the program in practices and limits the momentum patients.” ways that would benefit low-income 34929-nde_28-1 Sheet No. 101 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 101 34929-nde_28-1 34929-nde_28-1 Sheet No. 102 Side A 05/07/2014 15:37:06 26 186 193 188 ?, g The 187 -of-War over g Tu g oin g http://www.nhpf.org/ It may be convenient to rity to Medicaid Financin g available at 192 Fiscal Inte g F. 7 (2000), note 175. Y note 175. ’ Restorin OL note 176, at 21–22. The UPL regulations may be P supra supra . 1, 2–3 (1981). , , supra EV Gordian Knots: The Situation of Health Care Advocacy for the but also may increase the likelihood of cuts to but also may increase the likelihood EALTH R note 176, at 6. determined The report states that CMS had The Federal-State Medicaid Match: An On Supplemental funds “count” toward total Medi- Supplemental funds “count” toward H 191 Medicaid, DSH, and the Safety Net L ’ OUSSEAU OUSSEAU 190 supra AT C. & R & R , Ed Sparer, , GAO-08-614, 760 N . . g g LEARINGHOUSE Even though some of these funds are presumably used to Even though some of these funds are CHNEIDER CHNEIDER . 1469, 1478 (2007). 189 See, e. See, e. , 15 C FF A ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON While Medicaid supplemental payment programs may have supplemental payment programs While Medicaid Even though it has been difficult to trace all the ultimate uses to Even though it has been difficult to 189. S 188. GAO-08-614, 192. 190. Karen Matherlee, 191. S 186. Teresa A. Coughlin et al., 187. EALTH that $23 billion was spent on DSH and non-DSH supplemental payments in 2006, but the that $23 billion was spent on DSH and non-DSH information was incomplete. Poor Today found at 42 C.F.R. § 447.321 (2012). library/issue-briefs/IB760_MedicaidMatch_12-15-00.pdf. H Practice and Policy, 2014] to funds back of transfer the intergovernmental that found colleagues of than 1% for less and accounted decreased greatly had the state spending.that the provider taxes if the IGTs and Yet at the same time, from the are subtracted payments to fund the supplemental state used pro- spending in these the share of the paid to providers, total being some of suggesting that funds was 80%, to federal grams attributable were continuing. federal officials that most interested the problems UPL pay- limited the federal government to UPL, while With respect them, the the state methodology for calculating ments by tightening was particularly to assess the payments being made government’s ability methods. of the lack of accurate reporting difficult because \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 29 1-MAY-14 14:53 allowed federal funds to stabilize state budgets and maintain Medicaid to stabilize state budgets and maintain allowed federal funds is mixed. economic circumstances, the evidence services in difficult As were not used it is clear that in some states the funds mentioned earlier, general revenue and were instead used for for health care purposes, purposes. make positive changes, states as well as hospitals have had wide discre- make positive changes, states as well use of the funds over much of the tion and little accountability for the life of the program. the program, to the extent they cause taxpayers to view the Medicaid the program, to the extent they cause program as both profligate and overfunded. caid spending, yet are not always used, as we have seen, to provide caid spending, yet are not always actual care for Medicaid recipients.This discrepancy not only distorts spending and care provided the relationship between Medicaid through the program, “charge” supplemental payments, in all their myriad uses, to the “social “charge” supplemental payments, in is manifest. account” of the poor, but the injustice put, proponents of the health which DSH and UPL funds have been GAO was unable to provide any estimate of the total national 2006 non- provide any estimate of the total national GAO was unable to total amount payments such as UPL, stating “the DSH supplemental 2006 is unknown of payments made in fiscal year and distribution to CMS.” not separately report all their payments because states did 34929-nde_28-1 Sheet No. 102 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 102 34929-nde_28-1 34929-nde_28-1 Sheet No. 102 Side B 05/07/2014 15:37:06 EALTH EDICARE [Vol. 28 H . 182, 186 M FF AND . A OSPS 1 (1999). 197 EALTH . H UB YSTEMS ON THE P , Mar. 29, 1981 § 6 (Maga- ROGRAMS S , 20 H P NOF ’ IMES The authors take partic- SS EALTH Gabow’s view was different: Gabow’s A 199 H 194 L AYMENT ’ P , N.Y. T 193 AT ETHICS & PUBLIC POLICY President Reagan used the meta- President Reagan , N OSPITAL 195 LAW, H OSPITALS AND OLBERT e; Safety Nets a Public Hospital Work T H g g HARE ET ua In the midst of severe cuts to social welfare In the midst of severe g note 29, at 157. S N 196 Makin ENNIFER supra These authors explain that the major sources of These authors explain that the major , AFETY On Lan & J S 198 OORE AGNANI F & M ISPROPORTIONATE at 9, 19. at 186. D YNNE MITH EPENDENCE OF NOTRE DAME JOURNAL OF Id. Id. Id. AND D EDICAID HE When the DSH program was enacted, the term “safety net” was not was enacted, the term “safety When the DSH program was firmly entrenched in the By 1999, the “health care safety net” We saw it more like penicillin.We saw it cocaine do you transform How into penicillin? sup- federal government why shouldn’t the And provide ours, when these institutions hospitals like port safety-net insurance by default?our national health to convince We needed opposed and most powerful legislators who one of the smartest these dollars. DSH to support accessing 195. S 194. 199. 197. 198. L 196. William Safire, 193. Patricia A. Gabow, M ., T YS (2001). zine Desk), at 9. S 194 the in stakeholders biggest of the one have become safety net care funds. the concerning debate at Denver the chief Gabow, Patricia fed- of take advantage to fully state’s reluctance her described Health, that a legislator claimed late 1990s when payments in the eral DSH hospitals.” cocaine of public “DSH is the \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 30 1-MAY-14 14:53 often used to refer to health care. often used to refer health policy and medical literature. Writing for the National Associa- Systems (NAPH) in 1999, Lynne tion of Public Hospitals and Health “safety net hospitals” as “those Fagnani and Jennifer Tolbert described to anyone in need regardless of whose stated mission is to provide care their ability to pay.” funding for unreimbursed care provided at safety net hospitals are state funding for unreimbursed care provided Medicare and Medicaid DSH pro- and local tax appropriations, and the grams. members of NAPH transferred Even though hospitals that were payments back to their state treasur- almost 70% of their Medicaid DSH still managed to raise Medicaid ies in 1996, the Medicaid DSH program payments above costs to member hospitals. programs, Safire proclaimed: “Using the circus metaphor of a ‘safety proclaimed: “Using the circus metaphor programs, Safire the ‘truly needy’ seek to allay fears of many of net,’ the budget cutters is not about to of the ‘falsely needy’) that society (but not, one assumes, the sawdust below.” shove them off the high wire onto phor “social safety net” in 1981, with William Safire declaring in that net” in 1981, with William Safire phor “social safety net around as a spokesmen carry the safety year that “[a]dministration kind of security blanket.” ular note of how the DSH program lacked accountability for how the ular note of how the DSH program a major barrier to reforming the funds were spent and that this was program. data on “how states spend DSH There was simply no national 34929-nde_28-1 Sheet No. 102 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 102 34929-nde_28-1 34929-nde_28-1 Sheet No. 103 Side A 05/07/2014 15:37:06 195 205 AFETY aniza- g S J. 254 OSPITAL S ’ ETHODS IN M NQUIRY MERICA eted Federal Health NAPH H g . A , 49 I NST . I NNUAL ans, Tar A g OSP 200 H 482 (1991). The safety net hospital offi- Quantitative Surveys, in NQUIRY The Social Role of Not-for-Profit Or . I 206 Fiscal Shenani EALTH AND . 345 (2005). ESULTS OF THE Medicaid Disproportionate Share Hospital Pay- . H Another study found that the non- Another study found CON CON UB 204 . P L ’ , 2010: R , 29 J. E AT note 141. ., N , 120 Q. J. E YSTEMS S supra , The authors concluded that “hospital subsidies The authors concluded that “hospital (2012). EALTH 208 AMAN ET AL Since the Medicaid and DSH funds cannot usually be Since the Medicaid H OUGHLIN URVEY S. Z 202 S When lump sums were provided, however, charity care When lump sums were provided, This effect was hypothesized to be due to greater This effect was & C BAID 233–40 Sugarman & Daniel P. Sulmasy eds., 2010). (Jeremy Some hospital officials told surveyors that the funds were surveyors that officials told Some hospital U 207 203 Id. Id. Id. 201 ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON THICS OSPITALS AND As mentioned above, little is known as well about how hospitals how well about as little is known above, As mentioned In other research, subsidies provided to hospitals in New York in In other research, subsidies provided 206. Robert A. Pearlman & Helene E. Starks, 208. 202. 203. Katherine Baicker & Douglas Staiger, 204. 205. Hui-Min Hseih & Gloria J. Bazzoli, 201. K 207. Kenneth E. Thorpe & Charles E. Phelps, 200. O . E H ED ET HARACTERISTICS (2012). ment: How Does It Impact Hospitals’ Provision of Uncompensated Care? Care Funds, and Patient Mortality M N C Studies such as these provide indirect support for the hospital officials’ Studies such as these provide indirect likely veracity in the survey. is the possibility, however, that There the use of DSH funds could, for responses to the survey question about example, reflect social desirability bias. 2014] and receive, entities much individual how them, who receives funds, of the program.” share their states finance how \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 31 1-MAY-14 14:53 tions: Hospital Provision of Charity Care that receive DSH payments use the funds. DSH payments that receive hospital In a 1995 survey, the hos- was placed in DSH revenue usually surveyors that officials told indirectly could have where the money operating fund pital’s general and Medicaid underpay- care the cost of uncompensated covered ments. expand services in the clinics.used specifically to hospitals used Some types of capital windfalls” and made many the funds as “short-term expenditures. did not increase. resources as a result of the funds. resources as a result traced, there are few ways, other than surveys, to determine the impact ways, other than surveys, to determine traced, there are few of the funds.reliability of the surveys necessarily depend on the Such reporter. though unver- may indeed have been accurate, The answers ifiable. mortality rates has provided evidence that patient One study funds at public proportion to the availability of DSH decline in inverse hospitals. appear relatively inefficient in targeting revenues toward the uninsured appear relatively inefficient in targeting profit hospital provision of uncompensated care in California fell fol- of uncompensated care in profit hospital provision was inelastic in DSH reductions, but the reduction lowing the 1997 with the size of the reduction. value, that is, only loosely correlated cials may have perceived that it would be expected and socially desira- cials may have perceived that it would to provide services related to the ble to report that the funds were used patients.needs of Medicaid and uninsured low-income Without objec- cannot be made. tively verifiable data, a definitive determination uncompensated care did increase the 1980s on the basis of the cost of when matching payments were the provision of charity care modestly provided. 34929-nde_28-1 Sheet No. 103 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 103 34929-nde_28-1 34929-nde_28-1 Sheet No. 103 Side B 05/07/2014 15:37:06 . 731, EV [Vol. 28 . & R ES R A 2010 NAPH ARE This is worrisome This . C 213 ED 209 How Federal and State Policies , 64 M ETHICS & PUBLIC POLICY LAW, Medicaid DSH payments covered almost a Medicaid DSH payments covered almost 210 note 77, at 13. 211 216 supra ., The definition of unreimbursed care used by NAPH, The definition of unreimbursed care Anthony T. Lo Sasso & Dorian G. Seamster, Anthony T. Lo Sasso & Dorian G. Seamster, at 15. at 19. 212 AMAN ET AL NOTRE DAME JOURNAL OF Id. Id. Id. Id. Id. Id. See Reflecting the generally more precarious financial status of Reflecting the generally more precarious Without Medicaid DSH, the overall NAPH member margin Without Medicaid DSH, the overall 214 Not all hospitals that receive supplemental payments are in similar receive supplemental payments Not all hospitals that 215 215. 216. 211. Z 214. 212. 213. 209. 210. 740 (2007). The authors were unable to determine at what point the funds became untraceable, that is, the funds were not traceable at either the state or hospital level. Affected Hospital Uncompensated Care Provision in the 1990s Affected Hospital Uncompensated Care Provision 196 patient. to the pool from received revenues of the use some Hospitals to support went fraction a substantial care, but uncompensated support simply retained.” or were activities hospital other \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 32 1-MAY-14 14:53 safety net hospitals, the average margin for NAPH members was just safety net hospitals, the average margin for all hospitals was just over over 2% in 2010 while the average margin 7%. and even further to negative 10% would have dropped to negative 6%, without UPL payments. circumstances with respect to the role the funds play in their organiza- respect to the role the funds play circumstances with tions.in 2013) contin- America’s Essential Hospitals NAPH (renamed and the in the Medicaid DSH discussion, ues to be a vocal stakeholder DSH funds improving the finan- organization makes a strong case for cial status of safety net hospitals. nearly 20% of the care NAPH In 2010, uninsured patients, and nearly 30% hospitals provided was delivered to was provided to Medicaid patients—numbers at far in excess of those non-safety net hospitals. however, is not the same as the cost of Medicaid shortfalls and unin- however, is not the same as the cost are directed toward) because sured costs (the costs that DSH payments as well. it includes losses from Medicare patients quarter of the cost of NAPH member hospitals’ unreimbursed care that quarter of the cost of NAPH member payments covered more than year, and other Medicaid supplemental 10% more. report observed that “Medicaid DSH and other supplemental Medicaid report observed that “Medicaid DSH viability of safety net hospi- payments are essential to the financial tals.” with respect to supplemental payments, as they much more closely they much more payments, as to supplemental with respect on the payments made than matching lump sum payments resemble care. cost of uncompensated basis of the UPL As already discussed, or volume of uncompen- with the cost have no connection payments at payments, while capped and DSH that a hospital provides, sated care care, often a hospital expended on uncompensated the total amount payments, are with that figure, and, like UPL have little connection through IGTs.often diminished another study of Toward that point, in 2000, researchers in the decade from 1990 to all hospitals nationwide significant effect DSH spending had no statistically found that Medicaid care.on hospital uncompensated considered to be The estimate was (marginal) Medi- researchers asking, “where are the robust and left the going?” caid DSH dollars 34929-nde_28-1 Sheet No. 103 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 103 34929-nde_28-1 34929-nde_28-1 Sheet No. 104 Side A 05/07/2014 15:37:06 197 222 223 221 EDERAL F ARRANTED W S I INALLY NGOING F OSTS : O RE C A In a letter to state http://www.wsha.org/ ARE 218 EDICAID C available at OSPITAL note 134, at 14. H 2010 EQUIREMENTS supra R 220 , GAO-10-69, M This requirement was to be imple- was to be This requirement FFICE 217 O NCOMPENSATED EPORTING U MPLEMENTED IN I 224 FFSET O DSH R DSH CCOUNTABILITY A T ’ , 42 C.F.R. § Fed. Reg. 77,904, 77,904 (2008) 447.299(c)(11), (15); 73 OV . g EDICAID AYMENTS TO P Id. See, e. In the letter, CMS went even further to ensure compliance by went even further to ensure compliance In the letter, CMS ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON III. M 219 As mentioned previously, the DSH rules specify that one method As mentioned previously, the DSH In an effort to obtain data that had long been missing, Congress that had long been to obtain data In an effort 224. As already mentioned, in some years, public hospitals could receive federal 217. 42 U.S.C.A. §§218. 1396r-4(j)(1)-(2) (West 2013). U.S. G 219. Center for Medicaid & State Oper- Letter from Jackie Garner, Acting Director, 220. 221. 42 U.S.C.A. §222. 1396r-4(b)(3)(B) (West 2013). 42 U.S.C.A. §223. 1396r-4(a)(1) (West 2013). VERSIGHT OF (“Under those hospital specific limits, a hospital’s DSH payments may not exceed the costs incurred by that hospital in furnishing services during the year to Medicaid patients and the uninsured, less other Medicaid payments made to the hospital, and payments made by uninsured patients (‘uncompensated care costs’).”). matching payments for up to 200% of their uncompensated care costs, though these increased payments ended in 2004. Mechanic, The first component of uncompensated care, for the purpose of the The first component of uncompensated 42 U.S.C. §state DSH report required under 1396r-4, is the patients, and the second com- unreimbursed cost of care for Medicaid of care for uninsured patients. ponent is the unreimbursed cost may be made to a hospital Since 1993, federal matching DSH payments consists of these two components up to its hospital-specific limit, which of uncompensated care. O (2009). 2009), ations, to State Medicaid Directors (July 27, DSH payments, by statute, are directed toward hospitals that “serve a DSH payments, by statute, are directed patients with special needs.” disproportionate number of low-income 2014] \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 33 1-MAY-14 14:53 files/65/Final_DSH_7.27.09.pdf. stating that the information from the years 2005 to 2010 in the reports from the years 2005 to 2010 stating that the information the findings draw weight except to the extent that “will not be given care cost esti- reasonableness of State uncompensated into question the for Medicaid of prospective DSH payments mates used for calculations State plan year 2011 and thereafter.” receive payments is based in part for determining which hospitals must care provided by the hospital. on the amount of uncompensated added a provision to the Medicare Prescription Drug, Improvement, Medicare Prescription provision to the added a to report required states 2003 (MMA) that Act of and Modernization indepen- and to obtain an programs to CMS on their DSH specific data uncompensated certain data concerning audit verifying dent certified payments to hospitals. care and mented beginning in 2004, but CMS did not issue proposed regulations in 2004, but CMS did not issue proposed mented beginning law until 2005.implementing the was not finalized The proposed rule reporting on to be implemented in 2009 with states until 2008, and was for the years 2005 and 2006. their DSH programs Medicaid directors, however, states were told they would not be consid- however, states were told they would Medicaid directors, the reports by unless they failed to provide ered out of compliance 2010. 34929-nde_28-1 Sheet No. 104 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 104 34929-nde_28-1 34929-nde_28-1 Sheet No. 104 Side B 05/07/2014 15:37:06 225 http:// http:// [Vol. 28 available at available at http://www.aha.org/advocacy- at 77,913. ETHICS & PUBLIC POLICY available at Id. LAW, In response, in January 2012, CMS proposed a In response, in January 2012, CMS The 2008 rule also did not consider whether The 2008 rule also 228 226 , Letter from Rick Pollack, Exec. Vice President, Am. Hosp. Ass’n., to , Letter from Rick Pollack, Exec. Vice President, . g at 77,914. NOTRE DAME JOURNAL OF See, e. Id. 227 The American Hospital Association and other hospital organiza- The American Hospital Association A point of considerable controversy has been the definition of the definition been has controversy of considerable A point 225. for Medicaid & State Operations, Letter from Sally K. Richardson, Dir., Ctr. 228. 226. Hospital Payments, 73 Fed. Reg. Medicaid Program; Disproportionate Share 227. Marilyn Tavenner, Acting Adm’r., Ctrs. for Medicare & Medicaid Servs., Re: CMS 2315-P: Marilyn Tavenner, Acting Adm’r., Ctrs. for Medicare Payments–UninsuredMedicaid; Disproportionate Share Hospital Definition, (Vol. 77, No. 11) (Jan. 18, 2012) (on file with author) Health Care Fin. Admin., to all State Medicaid Dirs. (Aug. 17, 1994), Health Care Fin. Admin., to all State Medicaid 198 had no by patients who costs incurred most states included Accordingly, only than including provided, rather for the specific service coverage This allowed complete lack of health insurance. costs due to a patient’s because the cost of services that were uncompensated hospitals to count limits, for exam- his annual or lifetime coverage an individual exceeded service in ques- policy expressly did not cover the ple, or because his tion. final rule on the Administration published the When the Bush this convention requirements in 2008, however, MMA’s DSH reporting was changed. have no health the 2008 final rule, “patients who Under provided” of third party payment for services insurance or source of the individ- of the services, but to coverage referred not to coverage covered the whether or not his or her insurance ual him- or herself, services in question. \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 34 1-MAY-14 14:53 issues/letter/2012/120216-cl-cms-2315-p.pdf; Letter from Bruce Siegel, President & CEO, Nat’l Ass’n of Pub. Hosps., to Marilyn Tavenner, Acting Adm’r, Ctrs. for Medicare & Medicaid Servs., Re: CMS-2315-P: Medicaid Program; Disproportionate Share Hospital Payments –Uninsured Definition, (Feb. 17, 2012) (on file with author) tions decried the change in the definition of an uninsured person in tions decried the change in the definition the 2008 regulations. “patients who have no health insurance or source of third party pay- party of third or source insurance health have no who “patients a hospital’s of calculating the purpose for provided” for services ment DSH limit. have from HCFA, states on guidance Since 1994, based their costs” from definition of “allowable to use their been permitted they choose. any other definition state plan or from Medicaid www.naph.org/Main-Menu-Category/Our-Work/Safety-Net-Financing/Medicaid-and- DSH/DSH-Reporting-and-Audit-Rule/NAPH-Submits-Comments-on-Proposed-Rule- Regarding-Medicaid-DSH-Uninsured-Definition-January-2012.aspx?FT=.pdf. downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SMD081794.pdf for states to include in this definition (stating that “HCFA believes it would be permissible which would apply to the service for which individuals who do not have health insurance the individual sought treatment”). 77,904, 77,911 (Dec. 19, 2008). include payments made under a state or This did not local program for the indigent or uninsured. rule that would return the definition to its 1994 .rule that would return the definition The defini- the DSH limit includes costs for tion clarifies that the calculation of a cap has been reached or when a services provided to patients when the costs are attributable to charity care or bad debt; rather, CMS to charity care or bad debt; the costs are attributable based on an individual’s insur- required hospitals to segregate charges of calculating a hospital’s DSH ance status alone for the purpose limit. 34929-nde_28-1 Sheet No. 104 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 104 34929-nde_28-1 34929-nde_28-1 Sheet No. 105 Side A 05/07/2014 15:37:06 It 199 229 On the In the 235 231 It may be that with the It may be 230 Allowable costs, according to the final rule, Allowable costs, according to the Yet, when a service is provided to a patient Yet, when a service is provided to 232 236 On the other hand, bad debt related to nonpayment of On the other hand, bad debt related , 42 C.F.R. § 447.299(c)(15)(iii) (2013): . g 233 42 U.S.C.A. §§ 300gg-11(a)(1)(A), (B) (West 2013); 42 U.S.C.A. Insurance claims that are denied as a result of improper Insurance claims that are denied Id. See, e. See ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON 234 Given Medicaid’s long history of determining eligibility for benefits long history of determining eligibility Given Medicaid’s The uninsured uncompensated amount also cannot include amounts associated The uninsured uncompensated amount also with third party coverage for with unpaid co-pays or deductibles for individuals the inpatient and/or outpatient hospital services they receive or any other unreimbursed costs associated with inpatient and/or outpatient hospital services provided to individuals with those services in their third party coverage benefit package. 235. Medicaid Program; Disproportionate Share Hospital Payments, 73 Fed. Reg. 236. 42 C.F.R. § 447.299(c)(11) (2013). 232. Hospital Payments, 73 Fed. Reg. Medicaid Program; Disproportionate Share 233. 234. 229. Program; Disproportionate For the text of the proposed rule, see Medicaid 230. 2012). 77 Fed. Reg. 31,499, 31,504, 31513 (May 29, 231. 77,904, 77,913 (Dec. 19, 2008). § 18022(b)(1) (West 2013). 77,904, 77,911 (Dec. 19, 2008). Share Hospital Payments—Uninsured Reg. 2500, 2506–07 Definition, 77 Fed. (Jan. 18, 2012) (to be codified at 42 C.F.R. § 447.295). 2014] plan. health patient’s under the covered is not service specific \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 35 1-MAY-14 14:53 billing are not allowed to be included for the same reason. billing are not allowed to be included deductibles and co-pays is not an allowable cost because it is attributa- deductibles and co-pays is not an allowable coverage for the service pro- ble to people with health insurance vided. may be on the books as bad debt or charity.may be on the books as bad debt or As long as the cost is from her income or wealth might be, it an uninsured person, no matter what is allowable. local indigent health care program, whose care is paid for by a state or ultimate elimination of annual and lifetime limits from most health limits from most and lifetime elimination of annual ultimate for indi- requirements health benefit” policies and “essential insurance ACA, the issue of policies enacted through the vidual and small group provided to the count uncompensated costs of care whether or how to dwindle to relative insignificance. underinsured will payment side, supplemental payments such as UPL payments must be payment side, supplemental payments a hospital’s total uncom- counted as reimbursement when calculating pensated care costs. meantime, however, the 2008 rule remains in effect with only the May the 2008 rule remains in effect meantime, however, been made. 2012 changes having it is perhaps an applicant’s income and assets, in part by examining in determin- income nor assets are considered surprising that neither or source of third has “no health insurance ing whether an individual of a hospital’s services provided,” for the purpose party payment for DSH limit. that are relevant status and scope of coverage It is insurance and not the DSH program hospital-specific limit, in determining the fact of being indigent. would expressly bring costs of care for the underinsured into the ambit into underinsured for the costs of care bring expressly would DSH limit.of the instead the rule, and has not finalized CMS, however, that is in May 2012 and clarifying language correction issued a technical refers to definition that the uninsured with an interpretation consistent not the person. provided and the service 34929-nde_28-1 Sheet No. 105 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 105 34929-nde_28-1 34929-nde_28-1 Sheet No. 105 Side B 05/07/2014 15:37:06 7 EDI- TATE 241 ISPRO- EARS ESONIA [Vol. 28 D 369 New Y . U., S A. D http://www. ASH ECENT EDICAID R . W : M , GAO-12-694, M ANDOLPH EO , G ASICS FFICE 238 available at B O AYMENTS IN HE ROJECT P , T P (1985). Presumably, this is because Presumably, ETERS OLICY h Performance Health Care System for Vul- 237 P g , Commonwealth Fund (Mar. 8, 2012), 8 (2009), P ETHICS & PUBLIC POLICY CCOUNTABILITY http://www.healthreformgps.org/wp-con- NDIGENT The Numbers Game: DSH Payments, Uninsured (2009). UPPLEMENTAL I A T ’ S EALTH The total reduction in federal DSH The total reduction LAW, ROVOST OV State Politics and the Fate of the Safety Net, H P 240 ROGRAM EALTHCARE Toward a Hi EDICALLY ORE IN available at H M M When enacted, the ACA reduced Medicaid When enacted, the HRISTIE These payments were equal to roughly one These payments were equal to roughly 239 , C (DSH) P ODERN 243 for Safety-Net Hospitals g ILLIONS B See also Medicaid DSH and the Affordable Care Act DSH and the Affordable Medicaid OSPITAL NTERGOVERNMENTAL , 39 M H , I A. SSISTANCE FOR THE EPORTED ING HARE at 9. A R K S NOTRE DAME JOURNAL OF CAID Id. Id. Id. PORTIONATE About $14.4 billion in non-DSH supplemental payments, some About $14.4 billion in non-DSH supplemental TATES 242 The Government Accountability Office (GAO) recently reported The Government Accountability Office When health care reform began to be seriously negotiated in 2009, reform began to be seriously negotiated When health care 242. 243. 241. Katherine Neuhausen et. al., 239. Matthew DoBias & Jennifer Lubell, 240. Deborah Bachrach et al., 237. 238. in a patchwork fashion and also States and counties support public hospitals : S ATHLEEN ROGRAMS OF (2012); Alison Mitchell, Cong. Research Serv. R42865 Medicaid Disproportionate Share Hospital Payments 11,22 (2013) tent/uploads/dsh-crs-12-9.pdf (describing the extensions of the DSH reductions enacted by Congress and the updated total reduction. Counts Roil Senate Eng. J. Med.1675 (2013). See also U.S. G modernhealthcare.com/article/20090928/NEWS/909259995. nerable Populations: Fundin http://www.commonwealthfund.org/Publications/Fund-Reports/2012/Mar/Vulnera- ble-Populations.aspx. target programs for people not eligible for Medicaid through various efforts.target programs for people not eligible for Medicaid For exam- care programs.ple, by 1985, thirty-four states had indigent health R & K P 200 of on behalf received that are as amounts not counted are the costs limits. of DSH purpose for the patients \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 36 1-MAY-14 14:53 that $17.6 billion in federal and state DSH payments were made in that $17.6 billion in federal and state 2010. in 2010, but the exact amount of which were UPL payments, were made did not separately report non-DSH is not known because some states payments.combined total of the roughly $32 The federal share of the supplemental payments was approx- billion in DSH and other Medicaid imately $19.8 billion. hospital associations agreed to reductions in Medicaid DSH payments agreed to reductions in Medicaid hospital associations population under which over 90% of the nation’s as one part of a deal would become insured. DSH payments beginning in 2014 with two years of relatively small in 2014 with two years of DSH payments beginning the reductions by larger reductions. By 2019, reductions followed that would have of the federal matching payments represent nearly half reform. been available without extended the billion through 2020 but Congress spending was $18.1 of $22 billion. 2022 for a total reduction reductions twice through the DSH program payments are not intended to diminish the state and the state diminish to not intended are payments program the DSH in some this means that care, though to indigent local commitment for to a hospital double payments could be substantial cases there indigent care program. under an patients covered 34929-nde_28-1 Sheet No. 105 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 105 34929-nde_28-1 34929-nde_28-1 Sheet No. 106 Side A 05/07/2014 15:37:06 251 201 In As avail- 253 250 Finally, 252 DSH and UPL DSH 244 Therefore it was not Therefore it was 247 Two proposed bills before Congress Two proposed bills 246 note 241, at 1675. 245 note 241, at 12. note 138, at 13. supra supra supra , EARNE The final rules were to be in effect for only two years. The final rules were to be in effect ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON http://www.chcs.org/usr_doc/Medicaidsupplementalpaymentbrief.pdf. 249 248 Prior to the enactment of the two year delay, CMS had finalized its of the two year delay, CMS had Prior to the enactment Hospital associations, researchers, and advocates for the safety net for the safety and advocates associations, researchers, Hospital 247. Mitchell, 248. 113-67, 127 Stat. 1165 § Bipartisan Budget Act of 2013, Pub. L. No. 249. 1204. Share Hospital Allotment Reduc- Medicaid Program; State Disproportionate 250. 78 Fed. Reg. 57,293 (Sept. 18, 2013). 251. 42 U.S.C.A. § 1396r-4(f)(7)(B)(i) (West 2013); 78 Fed. Reg. 57, 293, 57,294, 252. Low DSH states are states whose DSH payments total only between 0 and 3% 253. 42 U.S.C.A. § 1396r-4(f)(7)(B)(iii) (West 2013); 78 Fed. Reg. 57, 293, 57,294, 246. Neuhausen, 244. for Health Care Strategies, Deborah Bachrach & Melinda Dutton, Center 245. H tions, 78 Fed. Reg. 57,293 (Sept. 18, 2013) (to be codified at 42 C.F.R. pt. 447). The tions, 78 Fed. Reg. 57,293 (Sept. 18, 2013) earlier: Medicaid Program; State Dispropor- proposed rules were published four months 78 Fed. Reg. 28,551 (May 15, 2013) (to be tionate Share Hospital Allotment Reductions, codified at 42 C.F.R. pt. 447). 57,304-57,308, 57,311-57,313 (Sept. 18, 2013). of their total Medicaid budget. 42 U.S.C. § 1396r-4(f)(5)(B). 57,308-57,309, 57,313 (Sept. 18, 2013). “Low DSH” states would be subject to a smaller reduction. “Low DSH” states would be subject They Fit in Payment Reform?Medicaid Supplemental Payments: Where Do (2011), able at 2014] payments. fee-for-service hospital of Medicaid third \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 37 1-MAY-14 14:53 proposed rules on the Medicaid DSH Health Reform Methodology the Medicaid DSH Health Reform proposed rules on as the proposed substantively largely the same (DHRM) which are rules. increasingly urged policymakers to reconsider the DSH reductions fol- the DSH reductions to reconsider urged policymakers increasingly half of the states Court ruling and with only about lowing the Supreme Medicaid. planning to expand postponed the reductions and the President’s budget proposal and the President’s postponed the reductions delay in the reductions. included a one-year surprising that the bipartisan budget agreement signed by President bipartisan budget agreement signed surprising that the reductions. The included a two year delay in the Obama in December a doubling remain budget neutral through Medicaid DSH reductions through 2016 and an extension of the reductions of the reduction for 2023. payments, in other words, are a significant part of hospital reimburse- of hospital part a significant are other words, in payments, ment. pay- Medicaid supplemental importance of some states, the In particularly great.ments is reported 2002, five states For example, in for inpa- payments regular Medicaid DSH payments exceeded that their tient hospitalizations. CMS must “[take] into account the extent to which the DSH allotment CMS must “[take] into account the neutrality calculation for a cover- for a State was included in the budget 1115 as of July 31, 2009.” age expansion approved under section directed under the ACA, CMS imposed the largest percentage reduc- directed under the ACA, CMS imposed lowest percentage of uninsured tions on either (1) states with the target their DSH payments to hospi- residents, or (2) those which fail to uncompensated care volumes. tals with high Medicaid inpatient and not consider what effect, if any, a the final rules, CMS expressly did Medicaid expansion would have state’s decision to take up the ACA’s 34929-nde_28-1 Sheet No. 106 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 106 34929-nde_28-1 34929-nde_28-1 Sheet No. 106 Side B 05/07/2014 15:37:06 , see EW 258 INANC- [Vol. 28 F NINSURED , 367 N ET U . 1830, 1832 ATIONAL AND N FF : N THE A AFETY & S EALTH XPANSION EDICAID E ELIABLE M , 30 H , R http://www.kff.org/medicaid/ NON ’ EDICAID 259 OMM ETHICS & PUBLIC POLICY C USTAINABLE available at ACA M CMS did note, however, that “hos- however, did note, CMS , S Health Reform Holds Both Risks and Rewards for http://www.naph.org/Main-Menu-Category/ AISER LAW, 254 ., K QUITABLE available at The Secretary may wish in the next iteration of The Secretary may Medicaid Expansion Opt-Outs and Uncompensated Care Medicaid Expansion Opt-Outs and Uncompensated MPLICATIONS OF THE OLAHAN ET AL 257 I , NAPH, E 20, 24 (2012) (finding that, e.g., states in the East South Central 20, 24 (2012) (finding that, e.g., states in the H OHN IEGEL , J S . NALYSIS OVERAGE g A 256 C at 57,294. DSH 3–4 (2012), At the same time, at least one study has found that even in one study has found time, at least At the same RUCE . 2365, 2365–67 (2012). NOTRE DAME JOURNAL OF Id. See, e. ING TATE ED 255 -S EDICAID OST AND BY - Alternatively, CMS may wish to provide no such consideration to Alternatively, CMS may wish to provide The delay in DSH reductions will potentially allow CMS to substan- reductions will potentially allow CMS The delay in DSH 256. John A. Graves, 259. B 254. 78 Fed. Reg. 57,293, 57,295 (Sept. 18, 2013). 255. 257. 78 Fed. Reg. 57,294, 57,312 (Sept. 18, 2013). 258. . J. M C Dennis P. Andrulis & Nadia J. Siddiqui, : M HE NG TATE T (2011). region of the country could reduce their uninsured population by 58.3% with only a 5.8% region of the country could reduce their uninsured average increase in state Medicaid spending), upload/8384.pdf. Publications/Safety-Net-Financing/May-2012-Medicaid-DSH-Policy-Brief.aspx?FT=.pdf; also S Safety-Net Providers and Racially and Ethnically Diverse Patients Advocates for the safety net tend to favor rewarding states that make Advocates for the safety net tend to or not the state participates in “good” use of their DSH funds, whether the expansion. recommends that CMS take The NAPH, for example, states to provide more of their special measures to both incentivize and protect DSH payments to DSH funds to true safety net hospitals uncompensated costs and/or a hospitals with a high rate of uninsured rate. high Medicaid inpatient utilization E 202 reduction. its DSH size of on the \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 38 1-MAY-14 14:53 states that forego the expansion, their hospitals, and their uninsured states that forego the expansion, their states that do not expand Medicaid, there will be (or would have been be (or would have there will do not expand Medicaid, states that in a nontrivial decrease for 2014 and 2015) of DSH funding in the case DSH funds. states’ decisions particularly in regard to tively alter the methodology, CMS’s author- Medicaid. While it may be beyond on whether to expand there are alter- a state’s decision on expansion, ity to expressly consider rule: the the three factors in the current native ways to weight to which the people in each state, the extent percentage of uninsured volumes of Medi- payments to hospitals serving high state targets DSH to hospitals with whether states target DSH payments caid patients, and equal weight to care. The final rule gives high levels of uncompensated each of these factors. regulations, for example, to provide detailed criteria for allocating DSH to provide detailed criteria for regulations, for example, within each active and generous safety net hospitals funds to the most time to target their DSH pay- community, and allow states additional their share.ments accordingly in order to maximize Doing so may help of care for individuals who would to maintain at least a certain amount decision of their state to forego the have Medicaid coverage but for the minimal cost to the state. expansion, despite the correspondingly pitals in states implementing the new coverage group that serve Medi- that group new coverage the implementing in states pitals payments in DSH reduction a deeper may experience patients caid coverage the new were to implement would if all states than they group.” 34929-nde_28-1 Sheet No. 106 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 106 34929-nde_28-1 34929-nde_28-1 Sheet No. 107 Side A 05/07/2014 15:37:06 , 203 265 260 the 262 and HRONICLE EFORMS AND It recom- . C R note 240, at 6. 267 OUST For example, supra ARKET , H 261 , M XCHANGES That is, when supplemental E 264 the Medicaid Disproportionate-Share Hospital Pro- g UESTIONS ON note 244, at 8. Q Reformin supra SKED A State Takes Charity Care Money from UTMB. http://www.houstonchronicle.com/news/houston-texas/hous- Specifically, the Commonwealth Fund Commission Specifically, the Commonwealth Fund . w926, w927 (2009). DSH and UPL payments are generally lump sum pay- DSH and UPL payments 266 notes 141–144 and accompanying text. FF REQUENTLY A 263 available at at 10 (emphasis in original). at 6–7. Id. See supra Id. EALTH 12 (2012), http://www.cms.gov/CCIIO/Resources/Files/Downloads/ ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON The Commonwealth Fund Commission on a High Performance The Commonwealth Fund Commission At the same time, some health policy researchers believe that the some health policy researchers believe At the same time, 263. Aaron McKethan et al., , 28 H 266. The Commonwealth Fund Commission recognized that some safety net hospi- 267. 261. 262. . Harvey Rice, 264. Bachrach & Dutton, 265. 260. CMS, F EDICAID ram Apr. 1, 2013, ton/article/State-takes-charity-care-money-from-UTMB-4398633.php. g tals have the ability to cross-subsidize care to low-income patients because their status as academic medical centers attracts larger numbers of privately insured patients and allows for higher negotiated rates from commercial payers. The focus of their report is accord- ingly on the hospitals that do not have this ability. Bachrach et al., exchanges-faqs-12-10-2012.pdf. M 2014] for states subsidies offer special to to decline decision The populations. required degree than a lesser to programs Medicaid expand their that regard. in this thinking of CMS’s indicative may be the ACA under more in providing would be interested wonder why CMS One might fail to expand Medicaid, to states that supplemental funding generous are in how such payments opacity given the troublesome particularly remain even ultimately such payments indeed, to what extent used and, to states. than reverting coffers rather in hospitals’ \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 39 1-MAY-14 14:53 Health System made several recommendations recently to sustain safety Health System made several recommendations high quality care for vulnera- net hospitals financially while promoting ble populations. reduction in DSH funding and the enhanced reporting for both DSH funding and the enhanced reporting reduction in DSH an opportunity to supplemental payments provide and UPL or other critical sources of and accountability for these increase transparency funding.with the Medicaid previously, “a general problem As discussed for docu- lack of transparency and accountability DSH program is the for vulnerable impact of federal spending on care menting the direct populations.” ments unconnected to any specific patient or service and untied to to any specific patient or service ments unconnected in patient care. cost-effectiveness, or improvements quality measures, that Medicaid supplemental pay- Therefore researchers have suggested comprehensive payment reform ments may “weaken or undermine efforts and sound purchasing strategies.” recommended first that enhanced payment through Medicaid should recommended first that enhanced of Medicaid patients “ reflect both a disproportionate number delivery of high-quality, coordinated, and efficient care.” delivery of high-quality, coordinated, Medicaid payments are made independent of patients’ experiences and Medicaid payments are made independent provision of high quality and cost- without tying the payment to the an opportunity” to improve care. effective care, “their use squanders mended that states target increased Medicaid payments to safety net mended that states target increased despite improvements in accountability, officials in Texas very recently in accountability, officials in Texas despite improvements fund. are retained by the state’s general stated that DSH funds 34929-nde_28-1 Sheet No. 107 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 107 34929-nde_28-1 34929-nde_28-1 Sheet No. 107 Side B 05/07/2014 15:37:06 HE 272 ODERN . 13, 15 [Vol. 28 #2: T Medicaid Other g ED , 32 M 273 RIEF B . J. M NG SSUE I E EW ATCH There are several con- There are several W 307 N 270 AIVER http://www.communitycatalyst.org/ , W ETHICS & PUBLIC POLICY Utah Gets Federal Approval Limitin . e to 25,000 Low-Income Uninsured Finally, in targeting Medicaid DSH targeting Medicaid Finally, in g ATALYST LAW, available at C 268 Charity Patients? While the last suggestion promotes trans- last suggestion While the , Who Needs Medicaid?, , (2002), OMMUNITY 269 , C A Boston advocacy group concluded concerning A Boston advocacy group concluded When More Means Less ETWORK 271 ILLER N M ARE C at 20. at 12. ICHAEL 6 (2002). NOTRE DAME JOURNAL OF Id. Id. Id. What Are the Complexities For Advocates of Medicaid Enrollees and For Advocates of Medicaid Enrollees What Are the Complexities RIMARY Criticizing Medicaid supplemental payments, even in the service of supplemental payments, even in Criticizing Medicaid P 271. Mark Taylor, 270. David E. Rogers et al. 269. 273. 268. 272. M B. EALTHCARE TAH Services to Some to Provide a Basic Health Packa (1982). doc_store/publications/waiver_watch_issue_brief2_the_utah_primary_care_network_ apr02.pdf. H U Another subtle source of conflict among advocates was the waiver’s Another subtle source of conflict of pitting current Medi- strategy, whether intentional or unintentional, of uninsured people. caid enrollees’ needs against those 204 in effective the most that are models delivery utilize care that hospitals populations. for vulnerable services coordinating be could This a trans- paid through are that hospitals the rate by increasing achieved accountable process. parent and \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 40 1-MAY-14 14:53 the situation that “opposition is futile and more likely to harm ongoing the situation that “opposition is futile any concrete benefits.” working relationships than to produce parency rather than improved quality of care, it offers the opportunity improved quality of care, it offers parency rather than outcome payments to individual or aggregated to ultimately tie DSH step which may ultimately prove worthwhile. measurements, a than slash, fund- to preserve and better target, rather reform that seeks game.ing may be a dangerous of Medi- Broadly speaking, criticisms people, can of improved care for low-income caid, even by advocates to dismantle the program. encourage efforts funds, the Commission recommended as a best approach that hospitals approach that as a best Commission recommended funds, the Medi- a percentage of the and receive each uninsured patient “bill” for services.in exchange for these caid rate are ensures that payments This patients. tied to specific stant problems facing advocates of Medicaid enrollees and other low- stant problems facing advocates of income patients who need medical care. Some of these difficulties were decided to implement a §encountered in Utah when the state 1115 for primary health care Medicaid waiver that provided reimbursement uninsured Utahns, but which services for a limited number of and hospitals for specialty depended upon charity care from physicians part by cutting benefits for certain care and paid for the program in Medicaid recipients. from a Utah nonprofit health A spokesperson no opportunity to stop the waiver: advocacy group stated that there was a train without brakes, and it was “It became clear to us that this was going to happen.” national health care advocacy organizations, such as Families USA, were national health care advocacy organizations, the waiver would “do consider- more vocal about their concerns, stating 34929-nde_28-1 Sheet No. 107 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 107 34929-nde_28-1 34929-nde_28-1 Sheet No. 108 Side A 05/07/2014 15:37:06 205 277 , 17 280 Advocates, & L. 815, 837 Y ’ Many of the As one of us 274 OL 282 279 . P OL P The assumption among EALTH 278 ed Care Policy Consensus for Welfare Recip- g , 22 J. H note 122, at 124. note 122. Even under the circumstances, the advo- Even under the circumstances, 276 supra supra , , The Medicaid Mana 405, 421 (2010). Y Medicaid, Low-Income Pools, and the Goals of Privatization ’ OL note 279, at 837. USMANO USMANO Healthy Voices, Unhealthy Silence: Advocacy and Health Advocacy and Voices, Unhealthy Silence: Healthy , Colleen Grogan and Michael Gusmano explore why Gusmano explore Grogan and Michael , Colleen supra L. & P & G & G at 98–102. at 4. at 98. at 8. OVERTY ROGAN ROGAN The authors also offer some ways to overcome such silences. offer some ways to overcome such The authors also Id. Id. Id. Id. P Political infeasibility, lack of data, and lack of a solution all con- Political infeasibility, lack of data, and ON ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON 275 The concern of the advocates centered on their realization that The concern of the advocates centered In the book, 279. Colleen M. Grogan, 280. Laura D. Hermer, 278. 277. 275. G 276. 281. Grogan, 282. G 274. 281 . J. EO ients: A Reflection of Traditional Welfare Concerns (1997). G This fact led the authors to consider the practical and theoretical rea- to consider the practical and This fact led the authors on certain topics.sons for public silence concern that the The primary services provided express publicly was whether the advocates would not care would be “mainstream.”under Medicaid managed The use of the concerned about by advocates meant that they were word “mainstream” access to providers that differed the possibility of “apartheid” care or managed care and people between people enrolled in Medicaid plans. enrolled in commercial managed care 2014] families.” low-income good for than more harm ably \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 41 1-MAY-14 14:53 providing care through managed care organizations was not the same providing care through managed care of providers.as improving access to a broad range inter- In fact, in later to find that their access was views enrollees “were angry and hurt they have always had access restricted to the same Medicaid providers to.” advocates. tributed to the silence of the Connecticut The book studied the actions of the staff members of several nonprofit the actions of the staff members of The book studied managed during a transition to Medicaid organizations in Connecticut care. ine- subject to a situation of political Although the advocates were for all of the power, this did not seem to account quality and unequal authors. observations of the cates were not docile concerning several aspects of program details. concerning several aspects of program cates were not docile policymakers that simply enrolling Medicaid patients in managed care policymakers that simply enrolling that is “mainstream,” when this would be equivalent to obtaining care treatments equivalent to that of term refers to access to providers and not proven valid. commercially insured patients, has Policy for the Poor Policy for to that are a concern about major issues may be silent advocates them. organizations were also “resource dependent” on the agencies where organizations were also “resource dependent” then, may have difficulty because of the possibility of unintended harm of unintended possibility of the because difficulty may have then, working to maintain the need from criticisms; necessary from arising from the are cut; and or services even when enrollment relationships income. people with low carved out among and losers are way winners noted in another context, “[T]he concept of ‘mainstreaming’ has noted in another context, “[T]he to pertain to the locus and nature evolved so that it no longer appears the nature of coverage.” of the care provided, but rather to 34929-nde_28-1 Sheet No. 108 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 108 34929-nde_28-1 34929-nde_28-1 Sheet No. 108 Side B 05/07/2014 15:37:06 Y ’ ies g OL 290 . P [Vol. 28 OL P Political Strate EALTH Opportunities; Major g , 34 J. H Often, safety net prov- Despite—andpart in 287 285 284 The small number of people of small number The ed Care Reforms ETHICS & PUBLIC POLICY g 283 This reasoning can be problem- 291 LAW, Institutional safety net providers have Institutional safety note 240. . 1159, 1177 (2006). & L. 839, 862 (1997). ES note 122, at 126. Y 289 ’ supra . R The Influence of Health Policy and Market Factors on the OL supra Health Reform and the Safety Net: Bi . P , ERVS S Medicaid and the Politics of Groups: Recipients, Providers, and Medicaid and the Politics of Groups: Recipients, OL 426, 430 (2004). Colleen M. Grogan & Michael K. Gusmano, P USMANO THICS note 73. EALTH See also For example, there is no legal requirement that DSH For example, there EALTH notes 200–206 and accompanying text. & G supra . & E 288 , Bachrach et al., . , , 41 H g ED In general, providers tend to be more interested in reim- tend to be more interested in In general, providers at 125. at 130. at 6–7. , 22 J. H ROGAN IEGEL g 286 NOTRE DAME JOURNAL OF See, e. Id. Id. See supra Id. 292 When cutbacks in care for vulnerable people are made, most often, When cutbacks in care for vulnerable Grogan and Gusmano note that only about 1% of the organiza- that only about Gusmano note Grogan and , 32 J. L. M 287. Karl Kronebusch, 292. 286. 290. S 285. 288. Gloria J. Bazzoli et al., 289. 291. Bruce Siegel et. al., 283. 284. G Policy Makin of Safety-Net Providers in Response to Medicaid Mana Hospital Safety Net Risks & L. 5 (2009). 206 per- to both leading addressed, to be need efforts would advocacy their of interest. conflicts and actual ceived \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 42 1-MAY-14 14:53 safety net hospitals claim that whatever was undertaken “had” to be safety net hospitals claim that whatever by pointing out that if they done: “[S]afety net administrators respond will be threatened, resulting do not take these steps, their basic viability essentially in no care for anybody.” tions attempting to influence policy in Washington claim to represent influence policy in Washington claim tions attempting to the poor. funds must be used for any specific purpose and this may be one reason for any specific purpose and this may funds must be used to greater pro- not consistently been shown to lead that the funds have care. vision of uncompensated bursement rates as compared to enrollees or potential enrollees who compared to enrollees or potential bursement rates as interested in eligibility. may be relatively more a financial incentive to capture the Medicaid population in part to capture the Medicaid population a financial incentive funds.because of the supplemental interests may Thus the providers’ of the Medicaid population. not be aligned with the best interests atic because it is rarely the case that only one certain set of actions must atic because it is rarely the case that financial problems are prima- be undertaken or even that institutional rily attributable to one cause. is also the problem that the people There rarely, if ever, actively involved, most affected by policy decisions are above, may not be effective when and even advocates, as mentioned or economic, is at stake.their own survival, whether political Some of care reform seem to better rec- the more recent publications on health important first step in ameliorating ognize these potential conflicts, an them. and groups involved and the close ties among these people also some- people these ties among the close and groups involved and more difficult. deliberation times made because of—these the process of conclude that the authors challenges, partici- among to greater understanding can lead public deliberation policy outcomes. improvements in pants and other vulnerable to represent the interests of poor or iders are assumed people. interest in many providers have a clear conflict of Yet these circumstances. 34929-nde_28-1 Sheet No. 108 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 108 34929-nde_28-1 34929-nde_28-1 Sheet No. 109 Side A 05/07/2014 15:37:06 207 ONCLUSION IV. C ON UNEASY RELATIONSHIP BETWEEN MEDICAID AND CHARITY CARE CHARITY AND MEDICAID BETWEEN RELATIONSHIP UNEASY ON The importance of Medicaid in the provision of medical care for medical of the provision in of Medicaid importance The inconsistency funding mirrors much of this Medicaid supplemental of the substantial amount of Perhaps most disturbing is that much changes for the better in the Yet there are many reasons to expect 2014] \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 43 1-MAY-14 14:53 many Americans, some of whom are the most vulnerable among us, vulnerable among whom are the most some of many Americans, overstated.cannot be provided has not the same time, Medicaid At basis of alone or on the of impoverishment on the basis health coverage or need—even measure of vulnerability any consistent though the ACA with the most people of finally covering out the promise initially held all have pervaded whim, and discretion Inconsistency, lowest income. firmly rooted in a and have kept the program aspects of the program conception of charity. nineteenth century may differ. the reasons for the inconsistency and whim, though and uninsured benefits to vulnerable Medicaid Whatever their actual the largest the safety net hospitals who shoulder populations and to consid- DSH and UPL represent insufficiently load in treating them, health care for gaps in the funding and delivery of ered solutions to who lack private coverage.low-income Americans Congress, rather the privately the vast disparities in care between than addressing the uninsured on hand and Medicaid enrollees and insured on the one and oblique partial solution that the other, instead chose an opaque funds to hospitals that could point allowed enterprising states to funnel sheet, if not to a person who to uncompensated care on a balance received needed care. that does potentially cover the funding through the Medicaid program years simply disappeared like a glass cost of uncompensated care has for of water poured onto the desert sand. the money goes, it And wherever is tallied to the poor’s social account. It may be that this non-traceable given the backlash against pub- funding was viewed as necessary initially lic programs associated with “dependence.” The fact remains that the from these payments with lit- entities with the most power have gained the people behind the uncompen- tle ability to assess the benefits to sated care numbers.has been deeply enmeshed in the The process state relationships.political complexities of federal and As such, Medi- uncompensated care have been caid program details and funding for a byproduct of power subject to a largely unintentional mercilessness, struggles. future. to have the broad base and The Medicaid program continues and recalcitrant states may ulti- flexibility to expand under the ACA funds too attractive to reject. mately find the enticement of federal forth, supplemental payments are After decades of struggles back and on a trajectory toward much greater transparency and accountability. History shows that declaring Medicaid to be a program not linked to welfare or tainted with charity was not enough to change the program’s image. Yet many improvements related to processes of enrollment and coordination of care that are currently available could be used to make Medicaid “mainstream” in the sense that counts for enrollees. Still 34929-nde_28-1 Sheet No. 109 Side A 05/07/2014 15:37:06 Side A 05/07/2014 Sheet No. 109 34929-nde_28-1 34929-nde_28-1 Sheet No. 109 Side B 05/07/2014 15:37:06 [Vol. 28 ETHICS & PUBLIC POLICY LAW, NOTRE DAME JOURNAL OF 208 to enhance is how of which the least not uncertainties, are many there who or in Medicaid enrolled who are people of the voice the public need charity.may and at both the federal is implemented As the ACA issues. of these we should be cognizant state levels, \\jciprod01\productn\N\NDE\28-1\NDE105.txt unknown Seq: 44 1-MAY-14 14:53 34929-nde_28-1 Sheet No. 109 Side B 05/07/2014 15:37:06 Side B 05/07/2014 Sheet No. 109 34929-nde_28-1