Maryland Health Services Cost Review Commission Overview of the Uncompensated Care Methodology 03/20/2014

Objectives Update results of applying uncompensated care policy Approx ½% increase in uncompensated care 2013>2012 Consider impact of Affordable Care Act and Medicaid Expansion Reduction in UCC by about 1% due to PAC expansion Evaluate variables given changing uninsured Expansion populations Undocumented immigrant populations Other contributors to bad debts and charity care

What is Uncompensated Care (UCC) in Maryland? The HSCRC’s provision for uncompensated care in hospital rates is one of the unique features of rate regulation in Maryland. Uncompensated care (UCC) includes bad debt and charity care. By recognizing reasonable levels of bad debt and charity care in hospital rates, the system enhances access to hospital care for those citizens who cannot pay for care.

Maryland UCC Methodology The HSCRC uses a regression methodology as a vehicle to predict actual uncompensated care costs in a given year. The uncompensated care regression estimates the relationship between a set of explanatory variables and the rate of uncompensated care observed at each hospital as a percentage of gross patient revenue.

Maryland UCC Methodology (continued) A 50/50 blend of the predicted value for the hospital’s uncompensated care rate based on the last available year of data and three-year moving average is used to calculate a hospital’s preliminary amount in rates. The hospital’s preliminary amount in rates is then adjusted for charity care and the amount of uncompensated care in rates across all hospitals are 100% Pooled.

Current UCC Explanatory Variables The following variables are included as explanatory variables: The proportion of a hospital’s total charges from inpatient non-Medicare admissions through the emergency room; The proportion of a hospital’s total charges from inpatient Medicaid, self-pay, and charity cases; The proportion of a hospital’s total charges from outpatient non-Medicare emergency department charges; and The proportion of a hospital’s total charges from outpatient Medicaid, self-pay, and charity visits.

New UCC Explanatory Variables under Consideration The current emergency room variable is no longer working, so a replacement variable is needed Existing variables may need to be replaced as nature of uninsured changes Evaluate alternative variables Remaining contribitors to uncompensated care

Impact of Medicaid Expansion on UCC PAC population PAC represents about 1% of charges Estimated to account for about 15% of uncompensated care, based on historical data Up to 1/3 of uncompensated care for some hospitals Focus on considering in 2015 UCC estimates

What is the Primary Adult Care Program (PAC)? PAC is a health care program for low income adults age 19 and over who have minimum income. Individual Maryland residents age 19 or over who do not qualify for full coverage through Medicaid or receive Medicare are eligible if their income does not exceed $1053 a month. PAC covers the cost of prescriptions, primary care, mental health care, hospital emergency room services, treatment for addiction, and other limited services. PAC does not cover inpatient or outpatient hospital services or specialty services. You do not need to have a medical condition to qualify.

PAC Inpatient and Outpatient Charges, Gross Patient Revenue, Uncompensated Care Amount and Percent by Hospital for Fiscal Year 2013 HOSPID Hospital Name PAC Inpatient Charges PAC Outpatient Charges Gross Patient Revenue ($) Uncompensated Care ($) Uncompensated Care Percent 210001 Meritus Medical Center 3,873,372 1,094,130 301,350,700 21,682,200 7.20% 210002 Univ. of Maryland Medical Center 19,401,160 3,097,748 1,241,601,500 67,006,500 5.40% 210003 Prince Georges Hospital 2,230,604 469,614 249,192,600 38,639,500 15.51% 210004 Holy Cross Hospital of Silver Spring 1,053,206 394,493 461,351,200 42,720,100 9.26% 210005 Frederick Memorial Hospital 2,542,352 426,871 337,093,700 20,318,600 6.03% 210006 Harford Memorial Hospital 1,250,120 289,893 104,451,400 12,160,700 11.64% 210008 Mercy Medical Center, Inc. 3,491,140 2,693,123 470,759,600 39,008,100 8.29% 210009 Johns Hopkins Hospital 12,251,177 3,902,844 2,132,419,000 90,951,400 4.27% 210010 Univ. of Maryland Shore Medical Center at Dorchester 998,649 592,738 59,897,900 4,186,100 6.99% 210011 St. Agnes Hospital 4,747,087 1,013,755 404,669,900 32,204,000 7.96% 210012 Sinai Hospital 5,865,969 1,594,209 684,516,800 37,059,900 5.41% 210013 Bon Secours Hospital 5,758,774 1,183,557 121,044,100 23,113,200 19.09% 210015 Franklin Square Hospital 3,776,005 630,823 469,792,200 33,166,000 7.06% 210016 Washington Adventist Hospital 1,264,915 170,861 260,716,100 34,587,700 13.27% 210017 Garrett County Memorial Hospital 178,334 135,072 42,302,400 4,593,400 10.86% 210018 Montgomery General Hospital 1,090,640 198,495 166,869,100 10,997,700 6.59% 210019 Peninsula Regional Medical Center 3,851,304 1,403,163 412,641,500 28,334,500 6.87% 210022 Suburban Hospital Association,Inc 708,260 76,570 280,578,500 14,223,100 5.07% 210023 Anne Arundel General Hospital 2,096,937 772,892 541,867,800 28,229,300 5.21% 210024 Union Memorial Hospital 4,215,526 1,644,962 406,581,900 33,074,500 8.13% 210027 Braddock Hospital 2,191,586 1,118,495 314,237,300 21,637,900 6.89% 210028 St. Marys Hospital 1,056,149 606,681 154,603,000 13,099,300 8.47% 210029 Johns Hopkins Bayview Med. Center 8,814,346 1,375,348 596,807,300 55,404,000 9.28% 210030 Univ. of Maryland Shore Medical Center at Chestertown 367,692 117,179 62,791,800 6,363,400 10.13% 210032 Union Hospital of Cecil County 1,582,610 1,173,969 153,372,900 13,323,600 8.69% 210033 Carroll County General Hospital 1,523,784 198,951 249,075,200 11,694,600 4.70% 210034 Harbor Hospital Center 2,528,756 395,285 201,141,000 17,275,600 8.59% 210035 Univ. of Maryland Charles Regional Medical Center 888,311 207,535 137,003,900 10,219,200 7.46% 210037 Univ. of Maryland Shore Medical Center at Easton 867,557 665,993 186,358,600 10,917,000 5.86% 210038 Univ. of Maryland Medical Center Midtown Campus 4,571,084 2,918,350 216,173,800 32,904,000 15.22% 210039 Calvert Memorial Hospital 1,001,876 447,700 138,862,900 8,548,200 6.16% 210040 Northwest Hospital Center, Inc. 2,094,846 218,385 248,252,700 20,881,800 8.41% 210043 Univ. of Maryland Baltimore Washington Medical Center 3,224,099 522,807 376,812,800 36,844,300 9.78% 210044 Greater Baltimore Medical Center 1,184,083 405,260 421,137,700 13,135,500 3.12% 210045 McCready Foundation, Inc. 43,572 449,212 17,975,600 1,495,300 8.32% 210048 Howard County General Hospital 1,282,404 416,574 278,901,600 16,701,900 5.99% 210049 Upper Chesepeake Medical Center 1,268,543 424,108 283,588,000 16,858,800 5.94% 210051 Doctors Community Hospital 1,067,479 231,163 216,854,500 20,137,500 9.29% 210055 Laurel Regional Hospital 1,074,031 72,401 121,542,100 17,298,700 14.23% 210056 Good Samaritan Hospital 2,120,043 526,513 295,736,800 19,525,100 6.60% 210057 Shady Grove Adventist Hospital 1,797,960 180,475 348,706,200 23,215,600 6.66% 210058 Univ. of Maryland Rehabilitation and Orthopaedic Institute 1,078,213 212,660 115,227,400 5,988,400 5.20% 210060 Fort Washington Medical Center 236,239 159,459 46,176,400 5,723,300 12.39% 210061 Atlantic General Hospital 521,446 877,566 99,487,100 7,638,100 7.68% 210062 Southern Maryland Hospital 2,048,205 657,135 144,983,300 9,922,800 6.84% 210063 Univ. of Maryland St. Josephs Medical Center 2,051,182 383,842 337,661,500 17,305,500 5.13% 218992 Univ. of Maryland (MIEMSS) - 474,129 188,680,900 42,108,600 22.32% Statewide Totals 127,131,631 37,222,989 15,101,850,200 1,092,424,500 7.23%