Report Title:

Medicaid Reimbursement; Long-term Care

 

Description:

Ensures equity in reimbursements from Medicaid for patients transferred or to be transferred from an acute care hospital to a long-term care facility.  Requires reimbursement rates for long-term care under QUEST Expanded to remain no less than the level of Medicaid rates at the time of QUEST Expanded taking effect.  Requires the Department of Human Services to provide presumptive eligibility through June 30, 2011, to patients waitlisted for Medicaid or QUEST coverage.  Requires the Department of Human Services to report to the Legislature.  (HB2170 HD2)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

2170

TWENTY-FOURTH LEGISLATURE, 2008

H.D. 2

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO HEALTH.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


PART I

     SECTION 1.  Hawaii’s health care system consists of a myriad of services that must be coordinated and integrated to ensure access to quality care at the appropriate level for all of Hawaii’s residents.  A single user of health care often accesses different providers that deliver different products and services, and may transition from one level of care to another over a period of time.

     Acute care hospitals deliver care to the most seriously ill patients.  As such, the cost of hospital care is very high due to high staffing costs, the high costs of technology that permeates hospitals in the form of equipment and supplies, the high costs of medication, and regulatory and quality requirements.

     Patients who receive care at hospitals and recover enough of their health so that they no longer require hospitalization, but are still in need of services, should be transferred out of the hospital to a provider that can appropriately and safely care for their needs.  Such a transfer supports an improved quality of life for the patient and sustains the integrity of the acute care system by creating availability of bed-space for others who may require hospitalization.  This balanced flow of patient movement matches the appropriate provider to the needs of the patient.  In doing so, it better manages the financing of health care.

     The determination about an appropriate level of care is based on the patient’s condition and input from a multi-disciplinary care team.  The provision of long-term care, either in a facility or in a home- and community-based setting, is far less costly than hospital care.

     Unfortunately, due to unique and unusual circumstances, Hawaii has a shortage of beds in nursing facilities relative to its population.  Most of Hawaii’s long-term care facilities, which include skilled nursing facilities, assisted living facilities, adult residential care homes, and foster family homes, are full nearly all the time.  Placement in long-term care is especially difficult when a patient has a medically complex condition that demands resources which are not available at many long-term care facilities in Hawaii.  As a result, many acute care hospital patients who are ready for long-term care cannot be discharged and must wait in the acute care hospital until space becomes available.

     The shortage of long-term care beds is an undesirable situation from three perspectives:

(1)  The quality of life of the patient is diminished;

(2)  A patient in an acute care hospital who is waitlisted for long-term care occupies a bed that may be needed by someone else with an acute illness or injury; and

(3)  Hospital care is very expensive, so the waitlisted patient contributes to higher costs in an acute care hospital.

     Hawaii’s medicaid program can be modified to facilitate the flow of patients from acute care hospitals to long-term care facilities.  When a medicaid-eligible patient is treated by an acute care hospital, medicaid pays a rate for hospital care.  The payment is based upon the level of care needed by the patient.  When the patient is well enough to be transferred to long-term care, the medicaid payment is reduced to a rate that is 20 per cent to 30 per cent of the actual cost of acute care hospitalization.

     If the hospital is not able to transfer the patient to long-term care, the hospital must bear the financial burden of reduced medicaid payments.  In addition, the inability to transfer a patient who is deemed ready for discharge by a physician means that the waitlisted patient uses an acute care bed that may be needed by other, more acutely ill patients.  Thus, there is an opportunity cost to the hospital and the patients.

     At any particular time, a total of about 200 patients in Hawaii’s hospitals may be waiting to be transferred to long-term care.  Patients with certain conditions can be on the waitlist for weeks, months, or even years.  The total loss to hospitals due to waitlisted patients was estimated to be at least $80,000,000 in 2006.

     A significant part of that loss is due to underpayment by medicaid.  The underpayment is unfair to acute care hospitals because medicaid is, in effect, a public-private partnership.  The public sector provides the funding, and the private sector provides the services.  As a result of the underpayment, acute care hospitals and long-term care facilities are weakened financially, and the stability of Hawaii’s entire health care system is diminished.

     In the past, acute care hospitals were able to absorb medicaid losses since payments from commercial and other payers helped to offset the underfunded costs of care for medicaid patients.  Over time, the cost of health care has increased at a faster rate than increases in payments from all payers.  In addition, significant enhancements in medical technology over the past several years have created a greater expectation that acute care hospitals will invest in medical equipment and information technology.  As a result, acute care hospitals are no longer able to cover the underpaid cost of caring for medicaid patients and adequately invest in medical technology.

     The result is that many acute care hospitals are on the verge of financial failure.  For example, Kahuku hospital would have ceased operations due to bankruptcy if it were not annexed by the Hawaii health systems corporation, which is subsidized by state government.  One of the major reasons given for Kahuku hospital’s financial troubles was underpayment by medicaid.  The Hawaii health systems corporation itself is seeking an emergency appropriation largely because of losses due to underpayment by medicaid.  All hospitals in Hawaii face the same problem.

     Acute care hospitals must be supported financially so that they can continue to care for our acutely ill while longer term solutions to the waitlisted patient problem are being developed.  As described more fully in the Waitlist task force report to the 2008 Legislature, pursuant to Senate Concurrent Resolution No. 198 (2007), this is one piece of the problem.  The multi-faceted waitlist problem is being addressed from a number of angles, both legislatively and non legislatively.

     In addition, medicaid payments for long-term care must be addressed with payments for individuals with medically complex conditions, such as bariatric patients and severely obese patients, needing immediate attention.  These payments should be cost-based since the current system of acuity-based reimbursement does not effectively address these types of patients.

     Furthermore, medicaid managed care (QUEST Expanded) is projected to begin in November 2008.  Long-term care providers will need to negotiate rates with managed care plans.  Historical patterns in other states where managed care entered the market resulted in long-term care facility closures due to low payments for long-term care.  The 2008 medicaid reimbursement rates for long-term care facilities in Hawaii, as set by Act 294, Session Laws of Hawaii 1998, and established by medicaid on January 1, 2008, and as amended herein, should be established as the base rate for all future negotiations with managed care companies.  These rates should be the lowest allowable to long-term care providers in future negotiations under QUEST Expanded.  This assurance will maintain Hawaii’s current level of nursing home providers as well as be an incentive for interested entrepreneurs to expand current operations or consider building additional long-term care beds in Hawaii in response to the demand for post acute care.

     The purpose of this part is to provide fair compensation to:

     (1)  Acute care hospitals for the services they provide to medicaid patients who have been treated for acute illnesses and injuries and who have recovered sufficiently so that they should be transferred to long-term care, but for whom long-term care is not available; and

     (2)  Long-term care facilities for services provided to patients with medically complex conditions who prior to admission to the long-term care facility were receiving acute care services in an acute care hospital.

This part also ensures that when Quest Expanded is implemented, long-term care facilities will receive medicaid payments that are at least equal to the rates in effect immediately prior to the implementation of Quest Expanded.

     SECTION 2.  Chapter 346D, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

     "§346D-      Medicaid reimbursement equity; acute-care hospital-based long-term care.  Not later than July 1,     , there shall be no distinction between acute-care-based and long-term-care-based reimbursement rates for patients held in an acute care facility due to a lack of bed space in a long-term care facility.

     §346D-      Medicaid reimbursement equity; medically complex conditions.  Not later than July 1,     , medicaid reimbursements to long-term care facilities for patients with medically complex conditions who, prior to admission to the long-term care facility were receiving acute care services in an acute care hospital, shall be based on actual costs to the long-term care facility.  As used in this section "medically complex condition" means a combination of chronic physical conditions, illnesses, or other medically related factors that significantly impact an individual’s health and manner of living and cause reliance upon technological, pharmacological, and other therapeutic interventions to sustain life.

     §346D-      Medicaid reimbursement equity; QUEST expanded.  Not later than July 1,     , reimbursements received by long-term care facilities under QUEST expanded shall be no less than those received under medicaid immediately prior to the implementation of QUEST expanded."

     SECTION 5.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2008-2009 to increase the acute medical services payment rates and medicaid reimbursements to acute care hospitals for patients who are waitlisted for long-term care.

     The sum appropriated shall be expended by the department of human services for the purposes of part I of this Act.

     SECTION 6.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2008-2009 for medicaid reimbursements to long-term care facilities for patients who prior to admission to the long-term care facility, were receiving acute care services in an acute care hospital.

     The sum appropriated shall be expended by the department of human services for the purposes of part I of this Act.

PART II

     SECTION 7.  On average, there are 200, and as many as 275, patients with medically complex conditions waitlisted daily for long-term care in acute care hospital settings across our state.  Waitlisted patients are defined as patients who are deemed medically ready for discharge and no longer in need of acute care services but who cannot be discharged and therefore must remain in the higher-cost hospital setting.  Discharge timeframes for waitlisted patients range from a few days to over a year.  This represents a poor quality of life placement for the patient, presents an often insurmountable dilemma for providers and patients, and creates a serious financial drain on acute care hospitals with ripple effects felt throughout other healthcare service sectors.

     Regulatory and government mandates create barriers to transferring waitlisted patients.  One such barrier is the delay in completing medicaid eligibility determinations for waitlisted patients.

     Presumptive medicaid eligibility for waitlisted patients should be provided as has been done for pregnant women and children nationwide.  Presumptive eligibility means that the department of human services shall make a preliminary or "presumptive determination" to authorize medical assistance in the interval between application and the final medicaid eligibility determination based on the likelihood that the applicant will be eligible.

     The purpose of this part is to require the department of human services to provide presumptive eligibility to medicaid or QUEST eligible waitlisted patients.

     SECTION 8.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-      Presumptive eligibility under medicaid or QUEST for waitlisted patients.  (a)  The department shall presume that a patient who is on the wait list for medicaid or QUEST coverage is eligible for coverage; provided that the applicant is able to show proof of:

(1)  An annual income at or below the maximum level allowed under federal law or the medicaid Section 1115 waiver approved for Hawaii, as applicable;

(2)  Confirmation of waitlisted status as certified by a health care provider licensed in Hawaii; and

(3)  Meeting the level of care requirement for institutional or home and community based long term care as determined by a physician licensed in Hawaii.

     The presumption shall apply immediately upon application. The patient or guardian shall be notified within forty-five days of the application for continuing coverage under either medicaid or QUEST.

     Waitlisted patients who are presumptively covered by medicaid or QUEST shall be deemed eligible for services and shall be processed for coverage under the State’s medicaid or QUEST program.

     (b)  If the waitlisted patient is later determined to be ineligible for medicaid or QUEST after receiving services during the presumptive eligibility period, the department shall discontinue enrollment of the waitlisted patient and notify the provider and the plan, if applicable, of the discontinued enrollment by facsimile transmission or e-mail.  The department shall provide reimbursement to the provider or the plan for the charges incurred during the period of presumptive eligibility."

     SECTION 9.  The department of human services shall submit a report no later than twenty days prior to the convening of the 2011 regular session of findings and recommendations to the legislature regarding the costs and other issues related to presumptive eligibility.

PART III

     SECTION 10.  New statutory material is underscored.

     SECTION 11.  This Act shall take effect on January 1, 2050; provided that part II of this Act shall be repealed on June 30, 2011.