Hospitals short on funds for low-income patients

April 22-- Apr. 22--BOSTON -- Hospitals that serve large numbers of uninsured and low-income patients in the Merrimack Valley and the North Shore are getting shortchanged by the state, say lawmakers who are pushing proposals to plug the funding gaps.

Hospitals and health insurers pay $330 million a year into the so-called safety net fund -- a pool of money that helps pay for care for hundreds of thousands of low-income residents who are uninsured or underinsured -- with the state supposed to chip in $30 million.

But the state hasn't put money in the fund in several years, despite a directive from the Legislature that it set aside "up to" $15 million.

Gov. Charlie Baker didn't include safety net funding in his $43 billion budget proposal for the coming fiscal year, but a House budget rolled out last week calls for a $15 million transfer.

"Community hospitals are vital to providing health care in low-income gateway cities and we need to help them," said Rep. Frank Moran, D-Lawrence, who has proposed an amendment to the fiscal 2020 budget requiring a state contribution of $15 million per year. "The shortfall needs to be addressed, but we need to figure out a long-term solution."

The top provider for Medicaid patients is North Shore Medical Center, which runs Salem Hospital and Union Hospital in Lynn. Other "safety net" hospitals in the region include Lawrence General, Holy Family Hospital in Methuen, Holy Family Hospital at Merrimack Valley in Haverhill, and Anna Jaques Hospital in Newburyport.

Through their spokespersons, community hospital executives declined to comment about the wrangling on Beacon Hill over funding for the safety net program.

But the Massachusetts Health and Hospital Association backs plans to boost funding.

"The shortfall in the health safety net is a concern for all hospitals -- as the responsibility for funding it falls on hospitals alone -- over and above the annual assessments they pay to fund the heath safety net," Catherine Bromberg, the association's spokeswoman, said in a statement. "This will provide needed support for uninsured and underinsured patients."

The association is also concerned about a proposal to move money from the safety net fund into a Medicare savings program to help certain senior citizens pay for care, saying that "will create instability" in the program for hospitals.

Many community hospitals are struggling while serving large numbers of low-income patients, collecting from low-paying government insurance programs, and getting below-average reimbursements from commercial insurers, advocates say.

Ellen Murphy Meehan, a consultant for Lawrence General and other community hospitals, said the safety net is important and the shortfall needs to be addressed.

Still, she said, the fund does little to make up for vast disparities in what commercial health insurers pay different hospitals for the same procedures.

"We need a structural fix," she said, "or we're going to lose some of the most important health care providers in the state."

Community hospitals also chafe at the fact that large, teaching hospitals like Beth Israel Deaconess, Tufts Medical Center and Lahey Hospital & Medical Center, get money from the fund. Under current guidelines, hospitals with prices below 120 percent of the statewide median are eligible for safety net funding.

When an uninsured person gets care at a hospital or community health center, rather than billing the patient, the hospital can bill all or part of the cost to the health safety net. Many beneficiaries are elderly patients with Medicare but who can't afford the deductibles or co-pays, according to state data. Some are immigrants who are ineligible for coverage because they are undocumented or are waiting for asylum claims to be processed. Others are relatives of workers who can't afford a family health plan.

Beacon Hill has wrestled for years with the issue of state funding for community hospitals, with seemingly little progress.

The House approved a bill last year that would have required insurers and big teaching hospitals to pay hefty assessments to buttress community hospitals. The Senate approved a plan that sought to buoy community hospitals by setting a "floor" for the payments they get from insurers.

Neither chamber could iron out major differences between the proposals.

Baker, a Republican, clashed with lawmakers two years ago over his administration's plan to cut $60 million from the safety net fund, partially by changing eligibility standards. The Democratic-controlled House and Senate ultimately rejected the proposal, citing concerns from health care advocates about the impact on low-income patients.

Heath care coverage, in the meantime, is one of the state's biggest expenses.

Medicaid costs have doubled in the past decade and now account for nearly 40 percent of state spending.

Massachusetts spent $16 billion on its Medicaid program, known as MassHealth, and Commonwealth Care, a state-subsidized health insurance program, in fiscal 2014, according to the state's Center for Health Information and Analysis. MassHealth serves more than 1.9 million people -- more than one-fifth of the state's population.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group's newspapers and websites. Email him at cwade@cnhi.com.

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