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DVHC

Statement of Delaware Valley Healthcare Council of HAP  

Before the Pennsylvania Department of Public Welfare   

Presented by

Curt Schroder
Regional Executive
Delaware Valley Healthcare Council of HAP

Philadelphia, PA
January 3, 2014

Secretary Mackereth, I am Curt Schroder, Regional Executive for the Delaware Valley Healthcare Council of HAP (DVHC), which represents approximately 60 acute and specialty care hospitals and health systems in southeastern Pennsylvania and the patients they serve.

I appreciate the opportunity to present the views of hospitals and health systems in southeastern Pennsylvania on the proposed Healthy PA plan and the corresponding waiver. 

We strongly believe that expanding Medicaid eligibility for uninsured individuals is important to improving the health status of Pennsylvanians and is in the best economic interest of the commonwealth. We urge the Pennsylvania Department of Public Welfare (DPW) to submit a waiver that would allow such expansion to occur no later than July 1, 2014.

DVHC Supports Expanded Medicaid Coverage for Pennsylvanians

DVHC and its member hospitals and health systems have long advocated for the opportunity to expand health insurance coverage for individuals and their families. Having health insurance coverage is an important step to better health. Insured individuals are more likely to receive needed health care at the right time and in the right setting. Insured individuals with complex or chronic conditions are more likely to manage their care, avoiding an escalation of health problems.

Healthy people are employable, show up to work, and have higher productivity. Healthy children have better success in school. Pennsylvania has approximately 500,000 individuals with incomes at or below 138 percent of the federal poverty level who are uninsured.

In southeastern Pennsylvania there are 162,327 uninsured adults that could benefit from the coverage expansion provided through Healthy PA. The hospital community recognizes that if approved, the waiver would provide increased health care coverage for these consumers through the use of premium assistance to purchase private coverage plans offered in the federally-facilitated marketplace (FFM), the commercial market, or through employer-sponsored insurance (ESI). 

It is important to note that Pennsylvania’s uninsured are primarily working adults with 75 percent living in a household with one working adult. Expanding eligibility for Medicaid would provide them with health coverage, regular access to routine and preventive care, and ultimately, better health.

Why Strengthening Medicaid Is Important to the State’s Economy

Not only will expanding Medicaid eligibility be important to improving the health of low-income working adults and their productivity, it will also benefit the state’s economy. For this reason DVHC urges DPW to submit a proposal that has the likelihood of being approved by the Centers for Medicare & Medicaid Services (CMS) and can be implemented by July 1, 2014.

Hospitals depend upon government funding like Medicaid as a critical source of revenue. DVHC understands that DPW is willing for the Healthy PA proposal to be designed to assure that Healthy PA Private Coverage Option participants will be counted toward Medicaid provider eligibility requirements for disproportionate share, the 340B prescription drug program, and critical access hospital payment policies.

These funding streams are essential for the continued viability of the region’s hospitals. DVHC appreciates the commonwealth’s intent to secure this payment stream for hospitals through the Healthy PA proposal. This will help hospitals continue to provide essential health care services for their communities and will maintain employment opportunities.   In addition, three studies conducted in spring 2013 by RAND Health, the Pennsylvania Economy League, and the state’s Independent Fiscal Office demonstrated the positive economic impact of expanding Medicaid coverage with an estimated $1.7 billion in additional tax revenues.

Increasing the number of Medicaid eligibles could result in more than $3 billion annually in positive economic activity, producing a seven-year change in state gross domestic product of nearly $24 billion. Plus, this expanded economic activity will support 35,000–39,000 jobs. Therefore, delaying expanded Medicaid coverage until January 2015 would prevent Pennsylvania from taking advantage of federal funding that would boost the economy.

Hospital Concerns about the Healthy PA Proposal

Although DVHC fully supports expanding health insurance coverage and decreasing the number of uninsured, we have concerns about certain aspects of the Healthy PA proposal and urge revisions to the waiver before submitting it to CMS. First of all, hospitals provide care to all who need it, regardless of financial or insurance status. Twenty-four hours a day, seven days a week, individuals can go to a hospital and receive care.

Therefore hospitals are in a unique position to assist uninsured consumers with insurance enrollment when they present for emergency services. Unfortunately, according to the Healthy PA waiver proposal, there is no retroactive coverage for the expansion population because coverage begins the first month after enrollment, not at the beginning of a hospital stay as is the case under the current Medicaid program.

This is a problem for hospitals because it means increased uncompensated care. Since the onset of the recession in 2007, in southeastern Pennsylvania uncompensated care has risen by 40 percent over five years totaling $363 million in fiscal year 2012. We cannot afford for this to continue.

One way to resolve this issue would be to allow new eligibles to be covered in the state Medicaid program until they are enrolled in a Qualified Health Plan (QHP) of the FFM. New Medicaid eligibles should not be subject to a delay in health coverage.

In addition, Pennsylvania hospitals do not support placing arbitrary limits on inpatient hospitalization for non-emergencies and rehabilitation services. We have concerns that the Healthy PA proposal calls for a limited number of days for inpatient psychiatric and drug and alcohol treatment. Given the fact that there would be emergency admissions covered for medical conditions, it is important to clarify how any limit to behavioral health services may affect achieving federal parity requirements under the Affordable Care Act. Ultimately, the proposed benefit limit could exacerbate the uncompensated care provided by hospitals and result in less than optimal coverage for consumers.

The hospital community appreciates that the Healthy PA waiver would allow hospitals and providers to negotiate rates with the QHPs according to the Healthy PA Private Coverage Option. It is critical that the DPW refrain from becoming involved in the free market exchange between providers and insurers. 

However, DVHC opposes DPW’s plan to offer Medicaid eligibles coverage through a private option that would mean patient financial liabilities from services rendered by out-of-network providers. Failure of the Healthy PA Private Coverage Option to cover out-of-network deductibles, co-payments, and/or coinsurance will result in bad debt for providers and will undoubtedly cause confusion for consumers who would otherwise have no deductibles and minimal co-payments. This places hospitals in an untenable position of being a debt collector and facing media backlash when collecting what is owed.

The Healthy PA Proposal Limits Health Care Access for Medicaid Eligibles

DVHC does not believe we can stress enough how important it is for Pennsylvania to expand Medicaid coverage before January 2015. Our most vulnerable citizens ought to have insurance available to them and access to health care as soon as possible. 

The waiver requests that there be an allowance for the commonwealth not to cover Federally Qualified Health Centers (FQHCs) in the Healthy PA Private Coverage Option as required by federal law. These providers are important in southeastern Pennsylvania’s safety net and a failure to include FQHCs in the Medicaid provider networks could result in access to care problems for consumers. 

DVHC suggests that the commonwealth provide the new Medicaid eligibles with a choice of at least two QHPs with silver plans on the marketplace and at least one plan option that has a FQHC. Although DVHC understands the commonwealth’s intent to implement a program that instills personal responsibility for Medicaid recipients, we are concerned with how the premium sharing component of Healthy PA is designed. 

It seems both unreasonable and unnecessary to expect individuals earning as little as $5,745 per year to comply with premium cost-sharing. This will create a barrier to health insurance coverage for low income consumers that coverage expansion is otherwise designed to help. 

Furthermore, the waiver denotes that “if the eligible adult or household fails to pay their premium for the three subsequent months, the adult’s or household’s eligibility will be terminated,” which contradicts the goal of increased coverage for uninsured Pennsylvanians.

In addition, the Healthy PA waiver would require newly eligible adults 21 years of age or older who are working less than 20 hours per week to register with JobGateway, the online system currently utilized for Pennsylvania’s Unemployment Compensation Program. 

As a condition of initial and continuing eligibility, Medicaid participants would have to engage in specified work search-related activities. The waiver denotes that “non-exempt individuals who successfully complete 12 approved work search activities per month during their first six months will continue to be eligible for health care coverage.” 

DVHC believes this is an unrealistic requirement and would cause compliance difficulties for Medicaid consumers. The fact that the waiver stipulates that “failure to comply with the work search activities will result in a three-month period of ineligibility for Medicaid and Healthy PA Private Coverage Option” contradicts the goal of increased coverage and access to health care for uninsured Pennsylvanians.

The bottom line is that Healthy PA’s proposed new requirements for program participation that could result in coverage suspensions or terminations for the newly eligible and existing Medicaid beneficiaries could pose barriers to access to needed health care for consumers. 

As such, it would not provide adequate protection and coverage for a very vulnerable population. Also, coverage suspensions or terminations are potential barriers to payment that will force providers to bear the risk for individual non-compliance with premium payment and job search requirements even when services are still required.   

Healthy PA Proposal is too Complex   

Finally, as drafted, The Healthy PA proposal is extremely complex. The proposal requires 23 waivers which is more than has been granted to any other state for Medicaid expansion. Healthy PA includes considerable involvement, oversight, and requirements for the state because of the complexity of conditions and processes included. DVHC has concerns about the costs to establish the systems needed to implement and monitor the program and DPW’s ability to create the necessary infrastructure based on the proposed design.

For example the waiver would require the commonwealth to create a new state bureaucracy to enable the DPW (not the federally facilitated marketplace) to make payments to insurers for premium and cost sharing for Private Option recipients. This high level of complexity could prevent CMS from approving The Healthy PA proposal.

Conclusion

For appropriate health care for low-income working adults and for the state’s economy, we believe expanding Medicaid eligibility and covering more Pennsylvanians makes sense as soon as possible.

Pennsylvania hospitals and health systems look forward to working with the DPW and the commonwealth to resolve the key concerns related to the proposed benefit packages for low-income Pennsylvanians, including the work search requirement and personal responsibility/cost-sharing. Further, DVHC will assist in any way we can to ensure a start date of July 1, 2014, to assure increased access to care for our state’s most vulnerable patients.

Thank you for the opportunity to present the council’s, and the hospital community’s, views on Healthy PA. I am happy to answer any of your questions.

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