Doña Ana County indigent hospital care faces overhaul

March 03--LAS CRUCES -- An overhaul is on the way for a taxpayer-funded program that has pumped millions of dollars into low-income and uninsured patient care in Las Cruces' major hospitals. The government has ended the two-decade-old program Sole Community Provider, which subsidized hospitals in mainly rural areas with the idea of keeping them afloat financially. In its place comes a new version of the hospital-subsidy program.

Part of that setup is laid out in a measure, Senate Bill 268, recently OK'd by the state Legislature. It's awaiting final signature. A second prong to the overhaul is still up in the air.

The revisions coincide with federal health-care reform, which is expected to lead to more insured patients and more Medicaid-covered patients in Doña Ana County. That's expected boost patients' ability to pay or generate reimbursement for health care, including at hospitals. Also, the changes were tied into a statewide controversy questioning the propriety of counties' arrangements with hospitals to secure funding. That had stirred the ire of federal officials.

Hospital and Doña Ana County officials say the next generation of the program seems OK so far, but some uncertainties remain.

A look back

The Sole Community Provider program, in place in New Mexico since 1993, gave blanket payments to certain hospitals each year. The idea was to keep them financially solvent in areas where a patient population with a relatively high poverty rate couldn't pay for care that hospitals were obligated to give.

The program was always funded by a roughly 3 to 1 match of federal dollars to state dollars. In Doña Ana County, county officials -- who have a state mandate to cover indigent health-care costs -- sent as much as $10 million to the state per year, which in turn combined it with three times that amount in money from the Centers for Medicare & Medicaid Services, county officials said.

That funding was channeled back to Memorial Medical Center, which provides the bulk of indigent and uninsured hospital care in the county. MountainView Regional Medical Center in recent years has got some of the dollars.

In 2010-11, for instance, Memorial Medical Center received $38.5 million in Sole Community Provider dollars, generated from both the county and the federal government, according to Doña Ana County numbers. MountainView Regional Medical Center received $1.4 million the same year.

'Indigent' care given

There are two broad categories of patients who benefitted from the Sole Community Provider program: those deemed as "indigent" according to a legal definition and those who didn't qualify as indigent legally but who also couldn't pay their hospital bills.

"Indigent" under the state's definition has sometimes been referred to as the "working poor," because it describes people who are typically able to provide for themselves, except when it comes to medical expenses. These patients also aren't eligible for Medicaid.

"It's kind of odd, but people who have no income do not qualify for the county's indigent program," said Jamie Michael, acting director of Doña Ana County's Health and Human Services Department.

In the 2012-13 financial year, about 6,900 indigent patients -- a total of about 17,700 visits -- were treated at Memorial Medical Center, according to data self-reported by the hospital to the county. The mean average of all the hospital's costs in treating them was $12.2 million over the course of the year, according to the numbers.

At MountainView Regional Medical Center, about 270 people -- or slightly more than 400 visits -- were treated under indigent care in the same year, according to the county's numbers.

Doña Ana County has a tax in place specifically dedicated to pay for indigent care.

A 1/8 of 1 percent sales tax -- dubbed the "second one-eighth" because of how it's described in state law -- generated up to $4.5 million yearly for indigent care. And Doña Ana County has shunted that money to the Sole Community Provider program at the state level to be returned with the 3 to 1 match to local hospitals, county officials said.

More charity care

But there were more patients with unpaid medical bills who didn't qualify as "indigent," Michael said.

"'Indigent' is only one category of uncompensated care for a hospital," she said.

To cover other categories of uncompensated patient care, other county revenue also was channeled into the Sole Community Provider program.

Doña Ana County often sent part or all of a different 1/8 of 1 percent sales tax, called the "third one-eighth," to the state generate even more matching dollars from the federal government, according to county officials. That tax revenue isn't restricted to being spent upon indigent care, though it can be spent on that, Michael said.

In addition to the county's indigent care, Jim McGonnell, Memorial Medical Center's chief financial officer, said the hospital has its own internal charity program to cover those uncompensated care expenses for people who don't meet the county's indigent qualifications. And that charity program was backed, ultimately, by the Sole Community Provider program.

"Sole Community Provider is more of a funding mechanism; whereas, the Doña Ana County indigent program and our charity program are the methods for actually discounting the patient bills," he said.

When the county pitched in money to the Sole Community Provider program, Michael said it attempted to make sure that amount was "at least equal to the cost of care (hospitals) are providing to people who do qualify for the indigent program."

But otherwise, the county didn't have direct control over how Sole Community Provider funds were spent once they reached the hospital.

"You can't draw a straight line between the dollars they get from Sole Community Provider to the patient that was cared for under Sole Community Provider because it's just a lump sum given to hospitals, so they can exist," Michael said.

"They may use it for a variety of things, but it's to help them exist in small communities where there is a lot of uncompensated care," she said.

The driving factor in how much total Sole Community Provider funding local hospitals received was the dollar amount contributed by local counties, according to state documents. Less funding resulted in a smaller federal match; more resulted in a greater match. But that's changing with the overhaul.

Changes on the way

In place of the Sole Community Provider will be a new program, called the Safety Net Care Pool, to cover uncompensated hospital care. But overall, it will be funded at an overall lower level across the state than Sole Community Provider, according to a state overview of the changes.

"Everybody recognized that hospitals were going to need some type of reimbursement, especially the ones in smaller, more rural communities in order to continue to be viable hospitals," Michael said.

The creation of the Safety Net Care Pool was spelled out in Senate Bill 268, which is on the desk of Gov. Susana Martinez.

Going forward, there will still be a 3 to 1 match in federal to state funding, county officials said. The state will pitch in some money toward that, but it's also looking to counties to contribute funding.

The recent bill calls for counties to pitch in revenue that's equivalent to a 1/12 of 1 percent sales tax to help fund the new measure. That's less than an initial proposal that called for more.

Michael noted that Doña Ana County for years has pitched in more sales tax revenue than that for Sole Community Provider. But the exact source of the required 1/12 of 1 percent from within the county's budget will have to be decided by the county commission, she said.

"I'm pleased they're only requiring the 1/12," she said. "That still allows counties some resources to cover their local programs."

The Sole Community Provider program formally ended December 2013, Michael said.

But the county already had made payments to the program for the county's 2013-14 year, which ends June 30, so those dollars are still benefitting local hospitals at the moment.

Rate increase

Though Sole Community Provider program was overseen by the Centers for Medicare & Medicaid Services, the Doña Ana County hospital patients who collectively benefitted from it weren't individually eligible for those health-care entitlement programs, according to Michael.

However, with the advent of federal health-care reform, more Doña Ana County residents become Medicaid-eligible.

A related component of the overhaul is an increased reimbursement rates to hospitals for patients who are eligible for Medicaid. It was a recognition that high rates of Medicaid patients still could pose financial problems for hospitals, according to the county.

The concern with Medicaid payment, said Memorial Medical Center CEO John Harris, is that government sources of payment, historically, have "never really paid their fair share of the cost of health care."

"They're significantly lower than other forms of payment," he said. "The way hospitals have stayed open in the past is largely based on commercially insured patients that pay more."

In all, it's believed that about 19,000 people across Doña Ana County are newly eligible under the state's revamped Medicaid program called Centennial Care program, according to Harris.

But just because they're eligible doesn't mean they'll actually sign up -- meaning hospitals still wouldn't be getting paid when those patients show up at their doors for care.

"The challenge of this is how fast are the charity care and indigent care patients going to enroll and actually become a part of Centennial Care -- where hospitals will be reimbursed," Harris said. "That's the big question."

Memorial Medical Center officials said they have application counselors on hand to help residents find out if they're eligible for Medicaid. To talk to someone over the phone or make an in-person appointment, call 888-982-9144.

In addition to Medicaid, Harris said there may be previously uninsured patients who'll find insurance coverage under the state's new health exchange.

Memorial Medical Center is run by a private company, LifePoint Hospitals, which has a 40-year lease on the city- and county-owned hospital campus.

To be decided

There's a second prong to the new Safety Net Care Pool that remains to be fully decided.

It relates to how the state Human Services Department, once it combines county dollars with the federal matching funds statewide, will redistribute them to individual hospitals to cover uncompensated patient care, Michael said. The timeline for that decision isn't known, she said.

That will impact how much MountainView Regional Medical Center and Memorial Medical Center receive to cover the expense of unpaid patient bills.

Harris said at least one difference from Sole Community Provider is known.

"In today's model, it has to be done on the basis of cost," he said. "In other words, if your reimbursement exceeds your cost for actual indigent care, you're going to be writing a check to the federal government."

With all the changes, there are some uncertainties, Harris acknowledged. For starters, the legislative bill hasn't been signed into law. It's also not known how quickly patients will sign up for Medicaid.

And the state hasn't determined the parameters for allocating the dollars to hospitals.

But Harris said the legislation is a start.

"In the end, we're hoping the governor signs this bill," he said. "And we're looking for a fair and equitable distribution of the funds to the hospitals that qualify across the state. There will probably need to be additional funds added in order to cover just the costs of this type of care, but they passed the lion's share of it through the Legislature."

Diana Alba Soular may be reached at 575-541-5443.

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