AAMC Reporter, May 2000: Caring for the Nation's Uninsured

VOLUME 9, NUMBER 8

JORDAN J. COHEN, M.D., PRESIDENT

MAY 2000

Caring for the Nation's Uninsured

by Jennifer Proctor

Abdulla M. Abdulla, M.D., chief of Cardiology at MCG, is one of many who contribute to the school's mission of care for the state's uninsured population.

Academic health centers have a unique, three-sided mission-the education of physicians, creating new knowledge, and the provision of care to the underserved. But as the number of Americans who lack health insurance grows to epidemic proportions-approximately 44 million people-and the marketplace becomes increasingly competitive, the strain on one side of that mission is apparent. While providers are striving to offer quality care, hospital administration is struggling to keep the bottom line in check.

These strains are further exacerbated by The Balanced Budget Act of 1997, which made significant changes to Medicare and Medicaid reimbursement formulas.

A recent Institutes of Medicine report, "America's Health Care Safety Net: Intact but Endangered," cites the toll that rising numbers of uninsured, Medicaid policy changes and government subsidy cuts are having on safety- net providers. The report calls for a new government initiative, in the form of competitive grants, to provide funds to ease the burden on safety-net institutions.

In addition, the report proposes a new government oversight faction to review safety-net providers' conditions and the impact of federal and state policies.

A Closer Look

Safety-net providers agree they need help.

At the Medical College of Georgia (MCG), in Augusta, uninsured patients travel from all over the state to receive care. "When the school's clinics were established in 1956, there was agreement that our missions were education and providing care to uninsured patients," says Darrell Kirch, M.D., senior VP for Clinical Activities and dean of the School of Medicine. "Initially, all the costs for this care were subsidized by the state legislature. Now, less than 13 percent of the school's uninsured care funds come from the state."

In late 1999, the Georgia Department of Audits released an analysis of MCG's uninsured and uncompensated care costs. Auditors found that, in FY 1998 alone, the hospital and clinics provided approximately $42 million in uncompensated care. The auditors observed that, given the recent changes in health care, the hospital cannot afford to absorb uninsured patient costs any longer.

Perhaps an even more surprising audit finding was that a high percentage of uninsured patients come to MCG's hospital and clinics from outside the Augusta area, even though the care they need may be available closer to home. According to the audit report, approximately $7.6 million in charges were associated with treating uninsured patients who came from communities outside a 50-mile radius to MCG, without accompanying reimbursement. Dr. Kirch believes that quality care must be delivered within a patient's community. "We make an effort to give all patients optimal care, but we can't when they are driving 100 miles or farther for their primary care or to have a prescrip- tion filled," Dr. Kirch adds.

The state audit recommended that the MCG hospital and clinics revise their policy for accepting uninsured patients and clarify their respon- sibility for providing care to the uninsured in Georgia. In the past, the hospital and clinics agreed to care for all Georgia patients, regardless of their ability to pay. In its response, the audit cites a 1998 report: "Every effort should be made to deliver the right care within the respective patient's community or as close to home as possible." In addition, the audit recommends that physicians should send only those patients who are "of teaching interest or who need services that are not available in their local communities to the hospital."

The audit suggests that the status quo at MCG is unacceptable, and Dr. Kirch agrees. He adds that the report contains critical information about the broader subject at hand-care for the uninsured.

"We hope to use this audit to provide objective evidence for increased support, and to put the spotlight on the growing number of the uninsured," Dr. Kirch says. "Until the burden of care for the uninsured is managed, I fear that patients will get substandard care."

Dr. Kirch says every hospital and every physician should be committed to dealing with the problem of the uninsured. "We have a moral obligation to education and improving the health of the entire population."

Facing the Challenges Head-on

Administrators at the University of Texas Medical Branch of Galveston (UTMB) aren't surprised that folks from all over Georgia travel to MCG for care. UTMB was known until recently as "the Free Hospital of Texas" for the same reason. "Patients came from all over, and we were glad to serve them," says UTMB President John Stobo, M.D.

But in the mid-90s, things started to shift. UTMB, the only state-owned general hospital in Texas, saw a rapid increase in the amount of care it provided for the uninsured-30 percent from 1997 to 1999-but didn't see a corresponding increase in revenues. In fact, UTMB faced budget cuts brought on by the BBA and Medicaid reimbursement, as well as inflationary pressures. In 1998, the hospital lost $25 million. In 1999, the hospital was estimated to lose $80 million, which Dr. Stobo says made the hospital unsustainable.

Dr. Stobo says UTMB had to do a hard internal examination. Administration laid off 340 employees, cut 180 inpatient beds, outsourced services, and closed programs.

One of the hospital's most drastic changes was in caring for the uninsured. UTMB arranged contracts with 34 Texas counties to care for uninsured patients in those counties, instead of having patients travel to Galveston. For patients from counties without a contract, patients now pay UTMB a co-payment for services and prescriptions, based on their household income.

"We cannot take all comers, but my worst fear is that some people will go without needed care because they can't afford it," Dr. Stobo says.

Dr. Stobo says his institution has had to look externally for solutions to caring for Texas' uninsured. Recently, UTMB joined with a local private hospital, community-physician groups, and community social-service organizations to raise public awareness and to develop creative solutions to the problem of caring for the uninsured. He adds that enhancing the health status of the uninsured is a necessary first step.

"I hope in 10 years I can look back and say, 1997, '98, and '99 were tough years, but now we have a community- and state-supported system that is providing a needed service to special-needs populations,'" Dr. Stobo says.

Insuring the Uninsured

At the University of New Mexico Health Sciences Center, the mission of providing care to the uninsured is also a significant challenge. New Mexico has the nation's lowest per capita income and the highest rate of non-elderly uninsured, 25.6 percent. "We are a public institution, and we have to be mindful of the health of the entire state," says Arthur Kaufman, M.D., chair of Family, Community, and Emergency Medicine.

Like UTMB, at UNM caring for the uninsured population was a growing financial burden for the state's largest safety-net provider. In 1997, the hospital received $25 million from a county levy and $12 million from the federal government for uninsured patient care. However, uncompensated care costs to the hospital reached more than $55 million, with $10 million more in physician costs.

UNM wanted to maintain its mission, but decided to take it a step further by creating a health plan. Daniel Derksen, M.D., is the executive director of University Physician Associates-the organization that oversees UNM's 500 faculty physicians and 450 residents.

"In order for the program to succeed," Dr. Derksen says, "a shift from the status quo had to occur in patients, providers, and staff." For patients, that meant moving from episodic, acute care that mainly took place in urgent care, emergency, and inpatient facilities to enhanced, community-based, primary-care sites, which UNM helped develop.

He says the administration hoped to institute a seamless model of care for patients on Medicaid and those coming off Medicaid, so they would keep the same primary care physician and system of care. "We created a community-based model that encouraged coordinated care," Dr. Derksen says.

The plan offers a benefits package that includes a choice of primary care provider and primary care clinic, reduced out-of-pocket costs on medications from an approved formulary, access to a 24-hour triage system, and services comparable to those offered by Medicaid, with the exception of behavioral health.

County government organizations, health centers, and social service agencies also collaborated on the project, and a "health commons" model of care was instituted for medical, behavioral, and dental care, as well as mental health services, all coordinated by a social-service case manager.

The plan also invested in the "decentralization" of social services. Case managers and social workers were moved out of inpatient settings into primary care, ambulatory clinics. "You cannot address the problems of the uninsured without addressing the sources of ill health," Dr. Kaufman says. "In order to do that, you need partners."

Dr. Derksen says the health commons model encourages shared responsibility among the consuming public, community leaders, health providers, managed care organizations, and hospitals. These new partners all have a stake in improving health outcomes.

Results

The UNM Care Plan has proven to be an asset to the uninsured community in the Albuquerque area. In the plan's first two years, more than 13,000 people enrolled. Dr. Derksen reports that these plan members receive better preventive services and disease management through the improved access in communities. And undoubtedly, there are financial benefits to the hospital; primarily, fixed revenues can be used more efficiently, and unnecessary, expensive emergency room visits or inpatient hospitalizations have been replaced with responsive health management in an outpatient setting. "Now, plan members are more likely to receive necessary care before a disaster occurs, which requires utilization of expensive inpatient and emergency department services," Dr. Derksen says.

The UNM Health Sciences Center's effort, thus far, appears to be working, but the nation's uninsured population continues to need resources from a shrinking pool. MCG's Dr. Kirch says he believes that having a 100 percent-insured population is an attainable goal, but to get there, academic medicine has to do a better job of educating communities and legislators about the price of care.

"We need to think of a new paradigm, because business as usual is over for academic health centers," UTMB's Dr. Stobo says.

Revised: 04 May 2000