House Public Health, Welfare And Labor Committee
Video
Transcript
Bills discussed (5)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1010
· 1 mention in transcript
Matched: “…, you'll see Representative Altus has asked that his bills, HB 1010, HB 1011, and HB 1032 be placed on the”
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Pre-2017 bill | ||
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HB1011
· 1 mention in transcript
Matched: “…see Representative Altus has asked that his bills, HB 1010, HB 1011, and HB 1032 be placed on the”
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Pre-2017 bill | ||
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HB1018
· 1 mention in transcript
Matched: “…to run those. The only other bill we have on the agenda is HB 1018 by Representative Nichols. Is Representative Nichols here t…”
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Pre-2017 bill | ||
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HB1023
· 1 mention in transcript
Matched: “…yberry's. What's your bill number, Representative Mayberry? HB 1023. So we'll set that for special order at 10 o'clock on Janua…”
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Pre-2017 bill | ||
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HB1032
· 1 mention in transcript
Matched: “…ative Altus has asked that his bills, HB 1010, HB 1011, and HB 1032 be placed on the”
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Pre-2017 bill |
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It's good to have you in committee today. We announced that you were home working hard in your district at our first organizational meeting, and everybody gave you a pass and understood, but it's good to have you here today. I don't think we have too much. We're going to have a couple presentations, but we do have a couple items on the agenda. If you'll look on your tablet, you'll see Representative Altus has asked that his bills, HB 1010, HB 1011, and HB 1032 be placed on the
deferred calendar at this time. So once those bills go onto the deferred calendar it will take a, it at least takes, is it two days? It takes a two days notice before those bills are pulled off the deferred and come back onto the active calendar. So you'll at least have a couple days heads up if he decides to run those. The only other bill we have on the agenda is HB 1018 by Representative Nichols. Is Representative Nichols here to run his bill hey if not I didn't expect that but we will pass over that
at this time after we pass over that I believe three times it will go to the deferred calendar also so there's that representative Overby she representative over replaced a packet or a magazine on your desk I'm going to recognize her to explain what
Representative Betty Overbey
Unverified
1:26
that is representative Overby you're recognized Thank you, Mr. Chair. Dr.
Ann Bynum gave me this, and basically the heading of the magazine is actually the picture of rural health in Arkansas,
A Call to Action. It's one of the best. I've read through this twice, and every time I've gone through it, And then I've just kind of, you know, flipped the pages, and I'll find something new in there. And it's very educational about rural Arkansas. And I thought you might like looking at this. Thank you. Thank you,
Representative Overbin. You may have said it, but that also is Preston
Bynum's wife, so just for point of reference.
Also, without objection, I'm going to go ahead and set a special order of business for January 31st. That is a week from Thursday, I believe, for Representative Mayberry's. What's your bill number, Representative Mayberry? HB 1023. So we'll set that for special order at 10 o'clock on January 31st if nobody objects. All right. Thank you. On the agenda, the only two things that we have today are presentations from Dr. Joe Thompson,
Surgeon General, and also Dr. Ron from UAMS. We'll start with Dr. Ron. If you and whoever is accompanying you would join us at the end of the table and state your name for the
Speaker 8
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record, you're recognized to give your presentation
Speaker 9
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about UAMS. Good morning. I'm Dan Ron. I'm Chancellor at UAMS, and I've been asked to kind of provide a description of UAMS scope of activities, importance to the health of
Arkansas, and spend some time on what some of the issues are that we're facing. I'm distributing or having distributed to you three documents, one of which is called UAMS fast facts, one of which is on the distance health infrastructure that is in the process of being developed through the state called under the broadband technologies opportunity program. It's euphemistically called the VTOP and we call that e-link. And then another one is a description of our AHEC centers. So what I thought I would do is just take a very few minutes and talk about UAMS organization operations and finance.
and then a little bit about what some of the issues are that we're facing. I've been told I have about 15 minutes. Okay. All right, so UAMS is, I'm the chancellor of UAMS. I report to the president of the University of Arkansas system under the governance of the Board of Trustees. In the role as chancellor, I've been in that role for the past three years. I have responsibilities for all activities of the university and the academic medical center. So UAMS is the only health sciences university in the state of Arkansas,
and it's the only academic medical center. It's often kind of euphemistically referred to as the med school or the med center, but we're organized with six different colleges, a number of institutes that focus on research, focus on research, education, and care. The Area Health Education Center program is under UAMS. The Center for Rural Health, through which Ann Vitam, you know, led the development
of this picture of rural health in Arkansas, is a component of UAMS. We have comprehensive relationships with Arkansas Children's Hospital. Our pediatric medical programs and specialty programs are housed at Arkansas Children's Hospital as is the research conducted by UAMS faculty through the Children's Hospital Research Institute.
We have a very robust relationship with the Central Arkansas VA Hospital as well. So our six colleges, our mission, our overall purpose as a public academic health sciences university and medical center is to engage in activities that result in better health. We're really an asset for the health of the people of Arkansas. We accomplished that mission by educating and training the next generation of health professionals. We have 63 now different health professions programs.
By providing care from preventive services through really complex quaternary services on a referral basis. And by conducting research in areas relevant to human health and disease and translating research findings into improved approaches to health and disease. We have the colleges of medicine, pharmacy, public health, allied health or health professions, nursing and the graduate school. We have the medical center through which our faculty in the College of Medicine practice
and provide care. The clinical system is really the foundation in many ways of all of our activities. We need to have a robust clinical system with excellent quality and excellent teaching faculty in order to educate and train those who are going to go out and provide care to us in the future and to the next generation. We also need that clinical system as the platform for research. So the entire scope of activities that occur at UAMS are very much wrapped up in the activities
of the medical center. And in that regard, the policy decisions that get made at the federal level and the state level regarding health system change have a very big impact on all activities at UAMS. We're located, I'm going to come back to that in a moment, we're located in central Arkansas, but we do have employees and we have activities in every county. The area health education centers operate family medicine residency programs and clinical
practices around the state, you know where the AHECs are. And we have the aging centers program that were funded through the tobacco tax, also located geographically around the state. So we have a presence statewide. Our activities are funded through a really highly leveraged budget. 9% of our budget comes from state appropriation.
We're in the B budget. We're not formula driven. That budget has been relatively stable, but it has not been growing during the period of time in which I've been chancellor for the last three years. So that's 9% of the budget. We have 2,800 students in our 62 different degree programs. Those we generate tuition revenue from those students, but tuition is only 2% of our total operating budget.
So we're very different from the other institutions of higher education. On this fast facts sheet on the third page, there's a pie chart and a listing of how our budget is comprised. We're very different from the other colleges and universities in the state in which the majority of the operating budget comes from tuition and state appropriation. Those two are only 11 percent of our operating budget. So you can see patient care and the year that this is projected for the current fiscal year, we project patient care revenue will comprise 71 percent of our budget and grants and contracts
11 percent and then gifts others. That's really our universe of funding streams. State appropriation, tuition, clinical revenue through the medical center and the practice of the faculty, philanthropy in supporting the operating budget, which is a relatively small piece, and then grants and contracts. So extramural funds that are earned by the faculty comprise 82 percent of our operating budget, right, the clinical revenue plus the grants and contracts.
We use that to cross-subsidize unfunded teaching costs and other activities that are not fundable. We have a total employment base of 10,000 individuals, faculty and staff, and we have a very significant impact on the budget, on the economy of the region and the state. Second to state government, we're the largest public employer. We have a total budget, you can see there, of nearly $1.3 billion.
And then in addition, there's the budget impact of Arkansas Children's and the budget impact and the health impact through the VA system and through the other entities with which we have relationships. I used the Battelle Memorial Institute to
Speaker 17
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do an economic impact analysis, and their analysis two and a half years ago was that if we consider the Central Arkansas VA,
Speaker 9
11:13
Arkansas Children's, and UAMS, the collective economic impact is around $4 billion annually. As we look to the future, as we look to the future, we need to be a part of the health
system redesign and improvement of performance of the health system in the state. We're engaged here in Arkansas in, I think, the most ambitious and significant health system redesign in the last 46 years since Medicare and Medicaid were created federally. The goals are better health care, better patient experience, and lower cost.
Those are the goals, to improve the health of society overall. And because of the way we're so important to the future workforce and because of the capacity we have to conduct research having to do with population health, we need to be very much involved, and we are very much involved in these efforts led by Dr. Joe Thompson, who will be speaking in a moment, about health system redesign in
Speaker 17
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the state. The health system redesign, though, is focused on changing the way dollars flow, right?
Speaker 10
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Bundled payments, payment for care coordination and enhanced payment at the primary care level, bringing cost
Speaker 9
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growth down. So achieving these goals for society has an impact on our operating budget since 71% of our operating budget is clinical revenue. So as we look to the future, our operation and our strategic focus needs to be very much aligned with the state's overall goals or else we can have significant difficulties
in funding our operation and in making the right strategic investments in the
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future. UAMS, the research, the grants and contracts,
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and the patient care is very much involved. Those revenue streams are very much involved with decisions that will be made at the federal level and at the state level. Right now, federally, we don't yet know what the specific strategies will be to manage
cost growth of the federal budget and reduce the deficit. We do know that the Medicare program is targeted for cost reductions, and we also know that the National Institute of Health, which is our primary source of research funding, is also targeted for reductions. We anticipate that we will be at risk of about $10 million in reductions in funding through the Medicare program and through the NIH. In addition, in our recent experience in Arkansas has mirrored the health system in the state.
We now know, you know, that 25 percent of working-aged adults in Arkansas are now uninsured. We have seen an increased amount of uninsured care at UAMS with no new revenue stream to pay for this. So we monitor that by billed charges. That's the standard way of monitoring cost of uninsured care. And by billed charges, we incurred $203 million in expense for charity care and bad debt in
the fiscal year that ended June 30th of this year, $203 million in billed charges. That went up from $175 million in billed charges the year before. The Arkansas Hospital Association has done an analysis of the impact of uninsured care, and they, according to their methodology, they said the cost of the uninsured care, Not the bad debt. The uninsured care to UAMS last year was 66, or 2014, projected to be $66 million.
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We can't sustain that. We cannot sustain that trend, which is why it is so important that we redesign the health system in the state and
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get a rational health system that brings everyone into a system of care so that we can enable ourselves as a state and UAMS as an operation to be able to have reliable funding streams focused on this goal of a healthier population, better
health care with higher quality, better coordinated care and patient experience and lower cost. These are critical issues. We're not going to get into those today. I'll just leave it with those introductory comments and answer questions you have. One other point I'd like to make has to do with the distance health infrastructure that has been built through the BTOP grant that UAMS has administered on behalf of the state. This is a $102 million grant that has enabled the construction of a distance health infrastructure
that is among the best, if not the best, in the nation. This is another critical element of the infrastructure for the future, to enable care coordination to occur statewide across the whole continuum of care for each patient. We will not optimally use that unless we also continue down the pathway of health system change and payment reform that enables the use of that infrastructure in the most positive way for the state.
So we're building this infrastructure, again, on behalf of the state in order to focus on this goal of better health for all and a more efficiently operating system, so I'll stop at that point. Thank you, Dr. Rahn.
We do have a couple questions. I wanted to ask
one or two quick ones. You mentioned, you alluded to the Medicare cuts and how those will impact your institution and really hospitals across the state. I was talking to somebody that said something last week that I had not previously thought
of, which when we were talking about the Medicare cuts, kind of shrugged his shoulders and just said, do you actually think Congress is going to follow through with that? And I guess it was a question that I had not thought of. And so given that brief for context that the Medicare cut was essentially an agreement been arrived at in ACA as a way to bring down the net cost of the bill, but it was also assuming the Medicaid expansion. That was before Medicaid expansion was optional for states to accept or not. And so the question is, is the hospital association on a national
level and your institution lobbying Congress to, are they going to readdress that Medicare cut? Do you see that as
Speaker 9
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a possibility? Well, you know, our principal advocacy agency at the federal level is the Association of American Medical Colleges, you know, coming at it from the academic medical center perspective. We have unique expenses. We have residency education expenses. We get a disproportionate share of sick complex patients. We have all of our teaching expenses.
And so we're advocating that that not be lost in this dialogue and that the academic enterprise continue to be supported. We believe that there are going to be federal cuts in support of residency education. We believe that's going to happen. That puts us at jeopardy. We also believe that the assumption of enhanced efficiency
and through the value-based purchasing program of Medicare is going to result in reduced payments, and we're already seeing reduced payments for readmission and for avoidable events that are incurred as expenses. Yeah, and the preservation of physician reimbursement that was in the legislation passed on the 1st or 2nd of January assumed that that would be paid for by reduced hospital expenditures for Medicare and by reduced indigent care payments.
So it's in the discussion. We just don't know where it's going to land. And we have to plan for this in some way because we don't have a way to replace those dollars if they go away. We do not believe with the budget pressure that you're under that you're going to write a new check to UAMS to offset cuts that would happen at the federal level. It's a very complex calculus right now with very large numbers that are at risk.
Okay. Okay. Representative Love, you're recognized for a question. Thank you, Mr. Chairman. Dr. Rowan, I'm looking
Representative Fredrick J. Love
Unverified
20:39
at a couple of things. Down here, you said the tuition was 2% of what you are taking in, but here it says 3. Yeah, it
Speaker 32
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says 3. I misspoke. Or it says 5, actually. No, it's 3. Sorry. Tuition is 3%.
Representative Fredrick J. Love
Unverified
20:57
All right, so with your projected revenue, are you?
Speaker 8
21:00
Oh, I see what you're saying. Are you saying you're going up on your tuition?
Speaker 9
21:06
Yeah, these numbers are wrong. Gifts and other, that line is 5%. The tuition is $32 million. That's the 3%. The pie graph is correct. The table is wrong. I apologize for that. That's Cherry Duckett's
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fault. She can withstand being thrown under at least one bus.
Representative Fredrick J. Love
Unverified
21:39
And then number two, I was looking at your uncompensated care, and you're basically saying that there's no new monies coming into UAMS. And here's my thing. You mentioned $175 million. Then you said last year it was $203 million. And then you said the Arkansas Hospital Association
projected it would be $66 million this year. Right. And so I'm at a loss.
Where are we getting our figures? How does it reduce
Speaker 9
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almost $100 million? Ours is billed charges. Okay. Billed charges. And then there's a cost-to-charge ratio, which is generally about 50% for us. Ours included what I quoted to you was what we discount for charity care for the uninsured, and then also it included bad debt, which are those that in theory we ought to be able to collect from,
but we've been unable to collect from. So embedded in that, $203 million is about $100 million of cost. A portion of that is bad debt, and a portion of that is charity care for the uninsured. And that's the number that the hospital association estimated at $66 million for UAMS. I mean, there are a lot of numbers out there, right? You're looking at a lot of different numbers, and it gets confusing. But it's a large number, and it's a growing number.
Whether we look at cost, whether we look at the bad debt category, whether we look at the charity category, it's a
Representative Fredrick J. Love
Unverified
23:17
growing number. Okay. And my last question, Mr. Chairman, is this. I know you didn't want to get into the Medicaid and the Medicaid expansion piece, but here's the thing. I'm looking at the uncompensated care number. I'm hearing you saying that
you're not going to get any new revenue. And so can you basically share with the committee how you feel that either Medicaid expansion will actually affect UMS, positively or negatively?
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MR. Yeah. Again, I would like to, again, for the purposes of simplicity, I would like to
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refer back to the Hospital Association data. And the Hospital Association has done a hospital-by-hospital analysis. And that analysis projects for UAMS that expansion of Medicaid would have a $28 million positive impact on UAMS's budget, $28 million positive impact, which would take that projected 2014
cost in this for the uninsured in that category from $66 million down to $38 million. It's still a big negative number, but it is a significant improvement. that, we're continuing down this trend line of more and more incurred cost without a new revenue stream to offset it. Thank you, Dr. Rahn. Thank you, Mr. Chair. Thank you, Representative Love. In that vein, real quick,
Dr. Rahn, a question I've asked and haven't quite been able to
get my head around, it's just a very simple arithmetic to me. We're roughly looking at about 500,000 uninsured people in the state right now. I believe that's ballpark on the number. So if $250,000 would be covered under the Medicaid expansion, I could very easily deduce that another $250,000 would be compelled to buy private insurance through the mandate, perhaps receiving a subsidy, perhaps not.
But either way, those additional uninsured would be covered through a private carrier. Is that correct? Yes. Which reimburses at a much higher rate than Medicaid, which is Medicaid, you're probably losing money on most patients, private insurers, you're making it, or self-pay. Is
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that correct? Well, I don't know where the rates will be in the insurance
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exchange, and you've got folks who are closer to that exact work than I am through the insurance department who can answer that question.
But you're right. No private carrier reimburses you for a – Below Medicaid. Correct. So I guess all I'm trying to figure out, and this is not something anybody said to me, I could be way out in left field and nobody's been polite enough to tell me, but it's just if there's 500,000 uninsured in the state right now, only 250,000 are covered under the Medicaid expansion, that's going to mean 250,000 more people on a private plan that reimburses at a higher rate than Medicaid. I don't see, and I haven't seen that factored into any of these uncompensated care numbers.
Speaker 9
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It has been factored into the RAND analysis that Dr. Thompson, the consultation that Joe had conducted, and I think he's the best person to talk about that. You know, we've got so many moving parts, sir, where we've got the goal of converting care to episode-based payments in the commercial arena as well as within Medicaid. We want to reduce the rate of growth across the entire spectrum.
There's a lot of unknowns with regard to what percentage of the individuals who are eligible for insurance, be it subsidized or not, through the exchange, will they all get enrolled. What will the overall impact of that be? And will there be an ability, if we have sufficient enrollment of individuals through the exchange and also the Medicare side, will it be possible to eliminate some of the state's expenses
associated with indigent care now through various entities? And
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there are just many, many moving parts. Oh, I agree. And I guess the point of
my question is, you know, it takes a week to snap out a study on Medicaid and how much money it's going to save on expansion, but whenever I ask about the new number of private insured and what that means for hospitals, it's always too hard to quantify. And I guess that's kind of the number that I'm trying to find. If we're going to have equal amount of people on a private plan, that has to affect the hospital's bottom line also,
uncompensated care and beyond. So that's just kind of the point of the question. Hopefully we can get that quantified in
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a better way. I think as we go down the pathway, you know, So we will be
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able to narrow things down. And there's another issue for us that I just want to just
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mention to you. The majority of our budget is personnel. We have done a lot since I got here to take expense out of UAMS's operation. But we do have 10,000 employees.
And to simply fund an average of 2 percent raises is about $15 million a year. And so we have to keep generating revenue to support the operation in excess of this year's budget if we're going to continue our scope of activities. And then we need to be aligned with this state's strategy overall so that we can make the changes
that are necessary within our operation to maintain the impact
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that the institution's been able to have historically. MR. Okay. All right. Thank you,
Dr. Ron. Representative Meeks and then Hammer, you recognize for a question. MR. Thank you,
Representative Stephen Meeks
Unverified
29:30
Mr. Chair. Representative Burris kind of touched already on what I wanted to talk about, but I just wanted to make sure that we, again, in my mind that we've addressed it, the fiscal cliff deal that was passed by Congress at the beginning of January did include cuts, Medicaid, not
Medicare, but Medicaid, from what I understand, Medicaid payments, to hospitals. Is
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fiscal cliff cuts? No, I'm not familiar with Medicaid cuts in the legislation that was passed federally. You know, there's preservation of physician reimbursement, and there was the anticipation that further savings would be achieved through Medicare, but I'm not familiar
with, you know, Medicaid dollars federally are linked to the program design, so I'm unaware of specific cuts. We're at risk. We're at risk with regard to how the budget reduction decisions are made when Congress really gets down to that work. Right, and, again, I don't know the full details.
Speaker 58
30:41
I just read in the news where there was going to be some, from what I understand,
Representative Stephen Meeks
Unverified
30:47
total across the whole system across the United States, that there was going to be a reduction of $4.2 billion in Medicaid payments to hospitals.
And, again, it may be just terminology
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with Medicare, Medicaid. I believe you're referring to Medicare and disproportionate share of
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the charity program. Okay. And then second question is, again, a long line of what
Representative Stephen Meeks
Unverified
31:11
Representative Burris is saying, getting paid something, of course, is getting better than getting paid nothing. But have you guys actually done a cost analysis to see how much you are losing by taking Medicaid patients?
Because from what I understand, every time you see a Medicaid patient, you do lose something. And I think in order for us to be optimal is that we would rather have everybody on a private insurance plan, but we know that that may
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not be possible. But do you know how much you lose by taking Medicaid? Well, UAMS is unique in that we have certain costs that we are permitted to include in Medicaid associated with residency, education.
And so we do an end-of-year Medicaid cost reconciliation that covers a set amount of costs for the institution. So we're different from other hospitals in that regard in the state. It doesn't fully cover our cost, but there are a set of allowable costs that are included within that. We in Arkansas Children's have that kind of an arrangement.
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can get the number for you of what our kind of fully loaded cost is compared with what we end up with through Medicaid at the end of
the year. I can get that for you. I would appreciate that. Thank you. Okay. Thank you, Mr. Chair. Thank
you, Representative Meeks. Representative Hamer, you're recognized.
Then Representative Link. Thank you, Mr. Chair. Dr. Ron, just a couple questions along a couple different directions without getting too deep. If a – sorry, I lost my thought for a second there.
$203 million is the figure that you stated a while ago. Does that – did that figure include losses to the entire UAMS system, whether it's a clinic out in rural Arkansas or whether it's children or whether it's the main campus? Yes. Okay. And do you know what your collection rate is against that $203 million? I'm sure it's, you know, pennies, but do you happen to know what
Representative Stephen Meeks
Unverified
33:37
the collection rate is that offsets that price of $203 million?
Speaker 9
33:42
For those individuals who remain uninsured, we collect 5% to 6%. So is it fair
to conclude the 203 less 5% to 6% would be the actual number then? No, those
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33:58
are the losses. Those are the losses from our audited financials. Okay.
And I'd like you to help me set my perception straight on something to get my mind around something.
And my perception in the past has been that if you didn't have insurance, you could
go to UAMS and you would be able to get your health care needs met. And as a state, we would just absorb it into the budget and take care of it. Is that an incorrect perception or is that
Representative Stephen Meeks
Unverified
34:30
a correct perception of the way business has been done
Speaker 9
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in the past? UAMS is a component of the state. We're a public institution and we're absorbing it. But we don't have an account. we can draw from that's external to the state appropriation that we receive at the beginning
of the year in order to offset these. So we're really up against it. I mean, we're operating just about break even within the hospital right now, and we're looking on the medical center component of the budget. The medical center's budget is about $530 million, so it's a
we're just about breaking even. Okay, so if Medicaid is expanded and everybody has health insurance that you mentioned a while ago in answer to Representative Meek's question is you say that you can exempt certain costs.
That seems to be one of the perks or privileges of being the UAMS system that you've been able to build into your bottom line, you know, certain exemptions for the Medicaid plan. And if everybody is covered under the Medicaid system and everybody in a hypothetical world has coverage that walks in your door, are you going to lose those exemptions then, and are you going to have to adjust your budget accordingly because now anybody can go anywhere to get seen because they've got the insurance policy?
Representative Stephen Meeks
Unverified
35:59
So how is that going to play into your
Speaker 9
36:02
future? So you've asked a number of questions there. Yes, sir. Thank you. So you're right. I mean, we see some patients because of an inability to pay, and they're not able to get care in their home community, and they come to UAMS. We see some of that. Now, if we expand Medicaid, then it's better for them, and they may have and should have better access closer to home,
and that would be a good thing in terms of access for those patients. But then that can actually be another one of these moving pieces for UAMS. Will we see a decrease in our volume? You know, costs would go down if that happened because we would not have the uninsured, but then we've got our teaching programs and our other programs to support. So that's a big issue. Another issue is as the payment reform initiative goes forward,
We need to have conversations, which hasn't happened yet. We need to have conversations with Mr. Selig, who's over here, and with Dr. Allison about how will we, you know, what are the implications for some of the unique issues that UAMS has. We have higher costs, and because of the teaching mission that we have, you know, How will that be considered in the bundled payment initiative relative to hospitals that don't have those higher costs?
And what are the implications for our operation? We haven't really worked through that, but that is something that we need to
work through. Okay, to one specific question in that group then. So do you see that you're going to
have to adjust the way that you do business because certain of those exemptions are no longer going to qualify to you because everybody's going to have insurance that when they either come in your door, Baptist, Saleem Memorial, Jefferson Regional, wherever, you're now competing for customers that have the ability to
Speaker 9
38:07
pay? I believe we're going to have to adjust everything associated with our business.
Speaker 64
38:12
As we all focus on this goal of keeping people healthy
Speaker 9
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and moving away from a volume of services reimbursement system to how we achieve the best outcomes for patients, we're all going to have to change our business models. And UAMSs, because of the way things are so interconnected, is going to have to change even more. Okay. And then one last
question, and you can set me straight as far
as the direction I'm going. If somebody out there just says, I'm going to pay the penalty, I'm not going to get the health insurance,
and they come down with a catastrophic event and they show up on your door, or any facility for that matter, specific to UAMS, do you have any way of projecting how that's going to continue to cost you
Representative Stephen Meeks
Unverified
39:05
as a hospital based on the numbers that
Speaker 9
39:10
you're working? We don't have any way of knowing what percentage of those individuals who are responsible, who will be responsible for purchasing health insurance and through the exchange with the subsidy that will be there, what percentage of them will act responsibly and what percentage will not.
We do not know that. We certainly, however, have the ethical responsibility and the legal responsibility. If someone shows up with a catastrophic illness, we treat them, and that will continue. We just don't know as we sit here what percentage of the population will remain uninsured. We just don't know. Okay. Thank you. Thank you, Mr. Chair. Thank you, Representative
Hamer. Representative Link told me that I asked my question so perfectly he no longer needed to ask a question.
So we'll scratch them from the list. Any other questions for Dr. Ron? Okay. One final one that triggered in my mind. It's a short one, I think. The 9%, is that GR, special revenue? Is that every – you label
Speaker 10
40:17
it same appropriation. Yeah, it's in the B budget. It's general
revenue. So, okay. So things like tobacco tax, grants for AHEC systems, or just whatever – that's not included in that 9%?
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No, that is Cherry, correct? Yeah, that's all of it wrapped together.
Speaker 9
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Okay. So, yeah, there's tobacco settlement dollars in there. There's tobacco tax dollars in there. There's the general revenue dollars in there. That's the total appropriation. Okay. That's what
I want to know. Thank you. Okay. No other questions? Dr. Ron, thank you for being here. Thank you.
Next, we have Dr. Thompson, Surgeon General, and I think he's going to talk about some of MR. You recognize Dr. Thompson. MR. Thank you, Mr. Chair. I'm Joe Thompson.
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I am a physician in Dr. Ron's College of Medicine and Public Health.
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For the last 15 years, I have spent much of my time, if not all of my time now, at the Arkansas Center for Health Improvement, which is a policy development unit administratively housed inside of UAMS, but broadly supported by the health, health care, and business community. Since 2007, when the legislature codified the role of the Arkansas Surgeon General, Governor
Beebe has asked me to serve in that role. For three years before that, Governor Huckabee asked me to serve in the same role as a senior cabinet-level advisor to coordinate the different complexities that Dr. Ron just alluded to across the different health agencies of state government. I work closely with Dr. Halverson at the Health Department, John Selig and Andy Allison at the Human Services Department, along with their other divisions. You may or may not know, you run the largest state-based employer-sponsored health insurance
company of the state and public school employees through the Employment Benefits Division of the Department of Finance and Administration. You also run health plans in higher ed, in the state police, a number of health plans that are across the state. You have injury prevention options that are in the state police. So all of this, the complexities of our health care system, which now consume about one out of every $5 in the state, are largely under state control one way or another. I didn't mention the insurance department, which regulates private health insurance.
So the role of a cabinet-level kind of coordinator, if you will, was deemed first by Governor Huckabee to be important, secondly codified by the legislature in 2007, and Governor Beebe asked me to continue in that role where I do now. Now, I don't do it by myself. Our Center for Health Improvement serves as the base. We have about 40 people who work there. We secure extramural funds, as Dr. Ron alluded to, to the tune of about $3 million a year to fund the policy development work that we do.
We strive to have connections, if you will, across other states to identify what they have done that worked and what they have done that did not work so that we can assess what could work for your decisions and deliberations. Some of the activities that we have been successful with over the last decade, and our center has been in place for about 15 years, but included the Tobacco Settlement Act, which funds the programs that Dr. Ron alluded to, our childhood obesity efforts that got picked up and we were asked to lead the nation through the Robert Johnson funded childhood obesity
effort over the last four years. The AR Health Network's health insurance benefit for small business came out of a health insurance roundtable that we ran from our center. The Clean Indoor Air Act, the tobacco tax, which funded about 20 new programs. And finally, what's active now is the electronic health record and information exchange, which our state was the first state nationwide under Ray Scott's leadership to have approval by the feds to move clinical information between hospitals and clinics electronically so that no longer did you have to carry your record one place to the next.
As I look forward, and I look forward to having open discussions individually or collectively with you as a committee, there are four major areas that all the moving parts that Dr. Ron alluded to are going to have to interface with. One is the financing of our health care system, both how we contain costs and improve the efficiency while we gain financial access for individuals, how we make sure we have Accessibility, a workforce out there to take care of people. It's not enough to just give them an insurance card if you choose to do that.
There has to be a workforce out there to deliver the care. Finally, the care that's delivered we need to make sure is high quality. We don't want to cut corners on our payment improvement effort and end up eroding the quality of care that patients receive. And finally, continued efforts to reduce the risk that people have so that they don't need the health care system that is growing more and more costly. So in those four areas, we have under the financing, We have our Arkansas Payment Improvement Initiative, which is different from the Medicare cost containment efforts. There was some discussion earlier on that.
We have the efforts around evaluating the opportunities for Medicaid expansion and the health insurance exchange. The concept of team-based care on our workforce and the use of non-physician providers in a quality, safe way is important. The patient-centered medical home and the quality aspect to get wraparound services for individuals. And finally, continued risk reduction efforts in two major areas, three really, tobacco, obesity, and injury prevention. Those are the three ways that we keep people from needing the health care system downstream.
I think our health care system is at a tipping point. 25% of 19- to 64-year-olds have no source of health insurance, and while they may show up at UAMS, we know that people without health insurance do not get, despite UAMS and other clinical providers' efforts, the quality outcomes that people with health insurance have. Individuals who do not have health insurance utilize about 60% of the same care that an insured person does. It's just later. It's in the emergency room. It's in more costly settings. We need to pull them up and get them care that they need earlier.
The Affordable Care Act, I publicly say, is a disruptive act. Disruptive is not good or bad. It's just disruptive. What we do with it, what you choose to do with it, is an opportunity to take the positives and make the positives benefit the citizens of Arkansas and to avoid the negatives. Both are there. One of the questions that you ask of Dr. Ron there are three different cuts because of the Affordable Care Act. Actually, two cuts and one that's separate from the Affordable Care Act. There are Medicare hospital payments being cut now.
The payment improvement effort of Medicare actually only has a downside risk. they penalize hospitals for readmission the Arkansas strategy bonuses hospitals for doing the better service delivery the dish payments for charity care that dr. Ron alluded to those will be eliminated in the Affordable Care Act so the charity care programs that have largely helped UMS be able to offer support will be eliminated through the Affordable Care Act under the assumption that states would expand Medicaid to get people financial access and finally separate from the Affordable Care Act and representing me because I
think this is what you are probably referring to. The sustainable growth rate reduction that was put in place by Congress in 1997 automatically cuts physician payments every year unless Congress kicks it down the road. That was in the federal fiscal discussions, and it was temporarily fixed through the spring, but it will come right back, and you'll hear it in the discussions. The rate was greater than 20 percent cut to physician payments that President Clinton and the Republican Congress signed back in 1997 to quote balance the budget. So you got the Medicare hospital cuts,
the dish payment cuts as part of the Affordable Care Act. You have the SGR cuts that were part of the balanced budget act in 1997. On the Medicaid payment side, as part of the Affordable Care Act, primary care physician payments have been increased in our state starting in January to the same level as the Medicare payments. It used to
Speaker 79
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be private insurance was more than Medicare and Medicare was more than Medicaid. Medicaid and Medicare are now equal for the
Speaker 77
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primary care providers. So all of these are a complex set of moving parts.
Your decisions will have ripple effects. There will be no simple decision that you make that doesn't have a cascade of effects across the health care system. And I and my team, along with all the other agencies on the executive branch, stand ready to provide any information and sometimes our best understanding of what the potential cascade of effects could be. So thank you for your attention. I want to introduce Suzanne McCarthy. Suzanne, if you'll just raise your hand there. Suzanne will be over here all the time. If you have questions or you need time or information,
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Suzanne can be an important source for you on a
daily basis. Thank you for having me this morning. Thank you, Dr. Thompson. My question, do you recall that I can about quantifying the benefit of those quarter of a million people that are going to be compelled to purchase private insurance through an exchange or whatever means because of the mandate associated with ACA. Have you seen anything that quantifies that benefit to hospitals and providers? In the
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RAND study that we did commission, and with
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all due respect, it took them about three or four months to get it together, not a week,
and we need to come back and look at the private sector impact. It did not quantify the individual hospital cost, but the net benefit to the state was a little over half a billion dollars, about $550 million a year, most of that flowing out into the rural parts of the state where our uninsured are higher. We have some counties with as many as 35 to 37 percent of the working age population uninsured. So the benefits of the Affordable Care Act, while they will assist the large central hospitals like UAMS, most of the benefit flows out to rural Arkansas to help stabilize our health care system
where small employers have been unable to offer private insurance because it's doubled in the last 10 years. And those rural hospitals, rural clinics are where the greatest burden of the uninsured are. So we can look at that and try to get a more county-specific effort estimate for you because I do think the private side equation is important not only to look at how the insurance exchange is, whether it is or is not, optimally successful in getting people signed up and what the potential driving force of the penalty is for the individual mandate.
When you say $550 million net benefit to the state, what is that in the context of? I'm not sure I
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understand. The RAND report looked at the potential for expanded Medicaid coverage and participation as expected in the commercial sector. In other words, some people potentially not participating. It looked at the cuts that are in the Affordable Care Act that I mentioned for the Medicare hospital payments, for the DISH payments, for some of the other reductions, and it looked at the job impact of having a stabilized health care system.
It essentially said and estimated that if you choose to expand Medicaid and if we in a marginal or in a expected way, not an optimal way but in an average way, implement the exchange either as a state partnership with the feds or federal only, that we would end up with 400,000 individuals with insurance, either 200, 250 on Medicaid, another 150 to 200 on private, that we would save 2,300 lives a year because of people getting earlier and more effective care, that it would generate 6,200 jobs, again, mostly in rural Arkansas
in our health care system for individuals that do not now pay for their care, and that it would net about $550 million a year statewide. We're in the process of trying to
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break that down county by county, and we'll be glad to come back and share that with you when we have
that completed. Yeah, and again, not to just beat a dead horse, but I just think that would be very helpful because you're talking at least probably an equal number of people that are going to have private insurance. And, you know, when I talk to a hospital director, they'll tell me the money they lose on the services they provide. I mean, you're going to lose less money on a Medicaid patient versus an uninsured patient that doesn't pay.
But it seems like the real benefit here is those quarter million people that are going to have health insurance who are going to actually reimburse a provider or a hospital at a net positive. They're going to make money. And I just haven't seen that really talked about or discussed nearly as much as I have the
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Medicaid expansion side. I think we'll try to be responsive to that. I would say I think you're going to see a, I won't say a blending, but the requirement that Medicaid now pay Medicare. One of the reasons the private rates are higher than Medicare and Medicaid has been
the hospitals have cost shifted the uninsured onto those of us that have private insurance, and therefore the rates are higher. I think you're going to see, or the intention is, with more or at least most individuals having either a private or a public access point to financial coverage, the variation between private sector payment and public sector payment will narrow because the cost shift will be less justifiable. What are we going to get closer to, the Medicaid rate
or the private right now? Well, I think you've
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already seen the Affordable Care Act require Medicaid to come up to Medicare,
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and my best guess is it will be somewhere between the Medicare and the private sector rates. Any
other questions for Dr. Thompson? Representative Mayberry. I just had one quick
Representative Andy Mayberry
Unverified
53:38
comment. You made a comment a while ago about the Affordable Care Act being disruptive, but that not necessarily being a good or a bad thing. I'm sure there are a lot of school kids out there who would love to have you as their advocate when they bring that note home from the teacher that says they're disruptive,
But Dr. Joe Thompson says that's not necessarily
a bad thing. All right. Any other questions, comments, jokes for Dr. Thompson? All right. Thank you, Dr. Thompson. Thank you, Mr. Chair. And I always tend to mess up things the first time, and I think I did that here. Representative Mayberry, I think I
said – I think we got the wrong bill number for your special order. it was 10 37 let me look real
quick to be honest I've got a text that corrected
me so yeah I think 10 37 so if without objection
we'll just so you have the right bill number I said 10 23 it's actually 10 37 and that special order is set for a week from Thursday on the 31st unless there's any other business to come before the committee we will stand adjourn until Thursday at 10 a.m. thank Thank you.
Agenda
CALL TO ORDER
CHAIR COMMENTS
Documents
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Speakers
Representative John Burris Chair
Unverified
Representative Betty Overbey
Unverified
Speaker 8
Speaker 9
Speaker 17
Speaker 10
Representative Fredrick J. Love
Unverified
Speaker 32
Speaker 33
Speaker 36
Speaker 41
Speaker 11
Representative Stephen Meeks
Unverified
Speaker 58
Speaker 50
Representative Kim Hammer Chair
Unverified
Speaker 64
Speaker 44
Speaker 75
Speaker 77
Speaker 79
Speaker 80
Representative Andy Mayberry
Unverified