5 ways hospitals can mitigate the risks from a growing uncompensated care burden

Medicine Money
Hospitals should prepare for the risks associated with a rising uncompensated care burden, according to a new report. (Getty/utah778)

Hospitals’ uncompensated care burden is likely to rise following the effective repeal of the ACA’s individual mandate, but there are steps providers can take to mitigate the challenges and risks associated with that trend, according to a new report. 

Consulting firm BDO’s Center for Healthcare Excellence and Innovation compiled five ways hospitals can maximize reimbursements amid higher rates of uncompensated care while avoiding potential false claims litigation. 

The Affordable Care Act changed up the formula for disproportionate share hospital payments, especially as it intended to significantly expand coverage through Medicaid expansion and the exchanges, John Barry, assurance partner at BDO, told FierceHealthcare.  

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The insurance mandate was repealed, but the DSH changes remain, leaving a likely larger pool of uninsured and underinsured patients and a smaller pool of DSH money beginning in 2019, he said. 

“The competition for those DSH dollars is going to be very fierce among hospitals,” Barry said. 

RELATED: Trump claims he repealed the Affordable Care Act. Here’s why he’s wrong 

The Urban Institute estimated that even a partial repeal of the ACA, which would end the mandate and lead to greater number of uninsured patients, could lead uncompensated care costs to increase by $1 trillion or more. The Trump administration has also since recalculated how it will pay hospitals for uncompensated care. 

To toe the line between mitigating these payment cuts by maximizing revenue and committing outright fraud, BDO’s steps include: 

  1. Have a clearly-defined policy on what constitutes charity care.
  2. Build data collection capabilities to ensure optimal reimbursement but that can also warn of fraud risk.
  3. Speed up adoption of electronic health records.
  4. Train staffers from across the hospital, beginning from the top.
  5. Ensure that potential changes to uncompensated care calculations are built into revenue reporting policies. 

Barry said the data piece is crucial, as it can serve as a valuable internal education tool and also provide backup to audits on charity care spending from the Centers for Medicare & Medicaid Services. 

RELATED: The impact of Medicaid expansion on hospital closures 

Tracking trends in uncompensated care spending can allow a hospital to reallocate resources more easily to cover gaps and address needs, he said. 

He also said that currently-used data is outdated, and reimbursement rates reflect figures that are three years old. To ensure proper payment, these rates need to meet the needs of the hospital’s current uncompensated care burdens, he said. 

“This is going to be just another pressure point among pressure points [for hospitals],” Barry said.