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Forecasting the Impact of Healthcare Reform Presented by: Richard L. Rollins

Forecasting the Impact of Healthcare Reform Presented by: Richard L. Rollins Rollins Capital Strategies f or West Virginia HFMA, January 23, 2014. Agenda. Change in Uninsured Population Expansion of Medicaid Change in Gross Revenue Bad Debts and Charity Care Medicare Payment Updates .

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Forecasting the Impact of Healthcare Reform Presented by: Richard L. Rollins

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  1. Forecasting the Impact of Healthcare Reform Presented by: Richard L. Rollins Rollins Capital Strategies for West Virginia HFMA, January 23, 2014

  2. Agenda • Change in Uninsured Population • Expansion of Medicaid • Change in Gross Revenue • Bad Debts and Charity Care • Medicare Payment Updates Rollins Capital Strategies

  3. Agenda (continued) • Other Adjustments • Disproportionate Share • Exchange Reimbursement • Commercial and Other PayorContractuals • Summary Rollins Capital Strategies

  4. Patient Protection and Affordable Care Act • Signed Into Law 3-23-10 • The Anticipated Impact of PPACA is Profound and Far Reaching • In Order to Plan for Impact, You Must Understand the Specific Changes That Will Occur Rollins Capital Strategies

  5. Change in Uninsured Population • Based on March, 2012 Congressional Budget Office Estimates, Prior to Supreme Court Decision • Assumes That Medicaid Will be Expanded Per PPACA Requirements Rollins Capital Strategies

  6. Change in Uninsured Population

  7. Reallocation of Uninsured

  8. Change in Gross Revenue • Assumes That Gross Revenue Will be Reallocated But Will Not Change in Total • Assumes No Change in Historical Use Rates Rollins Capital Strategies

  9. Inpatient Gross Revenue

  10. Inpatient Gross Revenue

  11. Outpatient Gross Revenue

  12. Outpatient Gross Revenue

  13. Bad Debts and Charity Care • Assumes That the Change in Uninsured Will Translate to a Commensurate Change in Self Pay Gross Revenue • This Will Then Translate to a Commensurate Reduction in Bad Debt and Charity Levels Rollins Capital Strategies

  14. Bad Debts and Charity Care (continued) • Assumes That Individuals Purchasing Coverage Through the Exchange Will Continue to Produce Bad Debts • Primarily a Result of High Deductible/Coinsurance Plans Rollins Capital Strategies

  15. Bad Debts and Charity Care

  16. Medicare PaYMENTaDJUSTMENTS • Medicare Payments Will be Reduced Regardless of the Change in Uninsured • Adjustments Are Based on IPPS Final Rule Rollins Capital Strategies

  17. Medicare Payment Update

  18. Medicare Inpatient Payment

  19. Medicare Outpatient Payment

  20. Other Adjustments 2013 and 2014 based on IPPS Final Rule. 2015-2017 assumes the same relationship of adjustment factor to reduction to fund in 2014.

  21. Medicare Disproportionate Share

  22. Medicaid Contractuals

  23. Medicaid Disproportionate Share (1) DSH decrease % based on AHA estimates

  24. Exchange Reimbursement • Will the Exchange Pay Based on Existing Commercial Rates, or • Discounted Commercial Rates, or • Rates Similar to Medicare or Medicaid Rollins Capital Strategies

  25. Exchange Reimbursement (1) For purposes of presentation, it is assumed the Exchange will pay based on Medicare like rates.

  26. Commercial and Other PayorContractuals • Ability to Cost Shift Will be Lessened • Commercial Carriers Will Likely Attempt to Lessen Impact of Previous Cost Shifting Rollins Capital Strategies

  27. Blue Cross Contractuals

  28. Commercial Contractuals

  29. Other Government Contractuals

  30. Other Insurance Contractuals

  31. Self Pay Contractuals

  32. Summary

  33. Change in Uninsured Population • Question: What Happens if Commercial Insurance Cancellations are Higher and the Change in Uninsured is Lower Than CBO Estimate? • Answer: Train Wreck Rollins Capital Strategies

  34. Change in Uninsured and Exchange if CBO Estimates are Incorrect

  35. Reallocation of Uninsured

  36. Inpatient Gross Revenue

  37. Outpatient Gross Revenue

  38. Bad Debts and Charity Care

  39. Exchange Reimbursement

  40. Blue Cross Contractuals

  41. Self Pay Contractuals

  42. Summary

  43. Summary • Potential Impact of PPACA is Profound and Far Reaching • To Cope With Impact, Hospitals Will Need to Change the Way They Operate • To Plan for the Needed Changes, a Hospital Must Understand the Impact That PPACA Will Have on Their Operations • A Hospital Will Need to Plan Strategies and Operational Changes to Mitigate Impact

  44. Questions & Answers Rollins Capital Strategies

  45. Richard L. Rollins Rollins Capital Strategies Roswell, Georgia (919)618-4698 rrollins@rollinscapst.com Rollins Capital Strategies

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