Asserting that the nation's public and teaching hospitals cannot continue to provide an ever-increasing amount of free medical care under the current system, The Commonwealth Fund Task Force on Academic Health Centers recommends revamping the way care for the poor and uninsured is financed in the United States. The Task Force's proposals range from expanding health coverage for the uninsured to revising Medicare and Medicaid payment policies for teaching hospitals.
Academic health centers (AHCs) have a number of missions that benefit society-educating and training doctors, conducting research, providing specialized medical services, and giving free health care to those with no resources or insurance. In its latest report, A Shared Responsibility: Academic Health Centers and the Provision of Care to the Poor and Uninsured, the Task Force says that the amount of charity care provided by these institutions is increasing faster than that provided by other types of hospitals.
From 1991 to 1996, the amount spent by academic health centers on charity cases rose by more than 40 percent as a percentage of gross patient revenues. During this period, public AHCs provided the highest levels of charity care among all hospitals, while private AHCs provided twice as much free care as other private hospitals. Historically, AHCs have financed the cost of charity care through higher charges to insured patients. As competition has increased, however, hospitals have been less able to make cross-subsidies available.
The Task Force report makes a number of policy recommendations for a financing system that more fairly compensates hospitals that provide the bulk of free care to the poor. As a first priority, the Task Force suggests expanding the availability of health insurance coverage through incremental reforms. States and the federal government could also find ways to maximize enrollment of eligible individuals in existing public insurance programs. The Task Force further recommends that Medicare and Medicaid payment policies be adjusted so that hospitals with the largest number of indigent patients are more adequately compensated for the added cost of treating them. Medicare could exclude the cost of treating indigent patients from its payments to managed care plans that contract directly with AHCs for this purpose; instead, Medicare could reimburse hospitals directly.
Facts and Figures
Academic health centers (AHCs) have a number of missions that benefit society-educating and training doctors, conducting research, providing specialized medical services, and giving free health care to those with no resources or insurance. In its latest report, A Shared Responsibility: Academic Health Centers and the Provision of Care to the Poor and Uninsured, the Task Force says that the amount of charity care provided by these institutions is increasing faster than that provided by other types of hospitals.
From 1991 to 1996, the amount spent by academic health centers on charity cases rose by more than 40 percent as a percentage of gross patient revenues. During this period, public AHCs provided the highest levels of charity care among all hospitals, while private AHCs provided twice as much free care as other private hospitals. Historically, AHCs have financed the cost of charity care through higher charges to insured patients. As competition has increased, however, hospitals have been less able to make cross-subsidies available.
The Task Force report makes a number of policy recommendations for a financing system that more fairly compensates hospitals that provide the bulk of free care to the poor. As a first priority, the Task Force suggests expanding the availability of health insurance coverage through incremental reforms. States and the federal government could also find ways to maximize enrollment of eligible individuals in existing public insurance programs. The Task Force further recommends that Medicare and Medicaid payment policies be adjusted so that hospitals with the largest number of indigent patients are more adequately compensated for the added cost of treating them. Medicare could exclude the cost of treating indigent patients from its payments to managed care plans that contract directly with AHCs for this purpose; instead, Medicare could reimburse hospitals directly.
Facts and Figures
- The proportion of uninsured patients served by academic health centers rose from 20 percent in 1991 to nearly 28 percent in 1996.
- The share of indigent care provided by public AHCs in markets with high levels of managed care increased from 23 to 36 percent during the 1991-96 period. Meanwhile, public AHCs' share in markets with low levels of managed care remained nearly constant.
- Medicare and Medicaid payments to faculty practice plans-an integral component of AHCs-have been falling. From 1995 to 1998, these plans' Medicare patient revenues fell by nearly 10 percent, while Medicaid revenues were down 15 percent.