GMCB holds hospital budgets under targets, total increase 4.3 percent

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GMCB holds hospital budgets under targets, total increase 4.3 percent

Thu, 09/12/2019 - 12:03pm -- tim

by Timothy McQuiston, Vermont Business Magazine The Green Mountain Care Board announced today it has approved Fiscal Year (FY) 2020 budgets for Vermont’s 14 regulated hospitals. The Board provided the hospitals with instructions outlining budget parameters and submission guidelines that included a target of 3.5 percent for growth in net patient revenue from the FY 2019 base to FY 2020 budgets. The GMCB approved an estimated weighted average increase in hospital charges of 3.1 percent. The Board also reduced the system-wide increase in net patient revenue from a requested 4.6 percent to 4.3 percent, totaling a $7.3 million difference.

The Board will issue written hospital budget decisions and orders no later than October 1, 2019.  

The GMCB held a series of public meetings, and after a thorough review of the budgets by the Board’s staff and input from the Office of the Health Care Advocate and Vermonters.

Over several weeks this August, the Board held public hospital budget hearings during which six of the 14 hospitals reported a negative operating margin for FY 2019. Hospitals cited several factors contributing to these losses, including an aging demographic with more costly health care needs; the increasing reliance on high cost temporary workers to offset local workforce shortages; an increase in bad debt and free care connected to uninsured and underinsured patients (including those with high deductibles); the growing cost of prescription drugs; and an unfavorable payer mix, reflecting an increased reliance on government funded plans.

Despite these challenges, Vermont hospitals expressed to the GMCB their continued commitment to moving away from an episodic fee-for-service system focused on treating sickness to a value-based system focused on prevention, wellness, and health.

“With the closure of 113 rural hospitals nationally since 2010, the rural health care crisis continues. This, paired with workforce shortages, aging demographics, and skyrocketing costs of prescription drugs, drives up the cost of health care in Vermont. It is imperative, now more than ever, that we band together in support of a value-based system to continue addressing the underlying cost of health care and to sustainably, predictably, and transparently manage growth in Vermont. The Board will continue to monitor total costs of care at the hospitals and press these institutions to improve efficiencies and coordinate care to reduce costs for Vermonters. The Board is committed to limiting growth in hospitals’ costs while ensuring access to high quality health care for all Vermonters,” said Board Chair Kevin Mullin.

Copley Hospital in Morrisville submitted the biggest increase in net patient revenue (9.8 percent, or $3.3 million, see below) and also was uncertain whether it would participate in the OneCare Vermont ACO Medicaid program because of the cost, the dues of which would be $195,000.

Copley said in its filings: "Historically, we have been prudent stewards of our limited financial resources and have shown a commitment to strategic cost reduction and efficient operations. We are at a point financially where we believe our rates have been cut too far and need the GMCB's help, by approving our FY20 budget as proposed, in order to generate a positive operating margin to fund necessary investments in capital equipment, technology, and infrastructure."

Springfield Hospital, which filed for Chapter 11 bankruptcy in June, after suffering a $11.9 million shortfall in projected NPR in FY2019 and announced last March it would eliminate its birthing center. Its overall net patient revenue presentation for FY20 indicates a reduction of 22 percent. Springfield noted in its bankruptcy announcement that in 2018 over half of Vermont's community hospitals lost money.

Springfield Hospital said in its filing: "In FY 2020 Springfield Hospital plans to improve areas that are currently not meeting expectations in FY19. Access to the appropriate care in the appropriate setting for all residents of our service area remains paramount in our planning and our day-to-day operations. Given our difficult payer mix, challenging demographics, economic outlook, the comparatively poor health status of our residents and the ever increasing social challenges (Poverty, low educational attainment, drug use, crime, etc), this represents a formidable challenge."

Porter Hospital submitted a zero increase in NPR. All other hospitals submitted NPR increases from 2-6 percent.

Information about the hospital budget review process and materials submitted by each hospital are available on the Board’s website at https://gmcboard.vermont.gov/content/2020-Budget.

Change in Charge Request

University of Vermont Health Network

(UVM Medical Center, Central Vermont Medical Center, Porter Hospital)

  Gross Revenue   Net Revenue Increase Assumption        
Category Overall   Total net patient revenue Increase Commercial Payer Increase Self Medicaid   Medicare
 Rate/ Price Pay / Other Increase Increase
Increase Increase    
               
UVMHN (UVMMC, CVMC, PH)
Hospital Inpatient 4.60%   3.50% 4.90% 0.80% 0.00% 1.40%
Hospital Outpatient 4.40%   2.00% 5.00% 0.50% 0.00% -2.20%
Professional Services -3.20%   0.70% 0.70% -1.00% 0.00% 0.00%
SNF 3.00%   4.20% 0.00% 3.10% 3.80% 0.00%
Overall All Request 2.80%   2.20% 4.20% 0.20% 1.20% -0.30%
               
UVMMC
Hospital Inpatient 5.00%   3.80% 5.00% 0.80% 0.00% 1.50%
Hospital Outpatient 5.00%   1.80% 5.00% 0.60% 0.00% -2.20%
Professional Services -3.90%   -0.30% 0.00% -1.30% 0.00% 0.00%
SNF 0.00%   0.00% 0.00% 0.00% 0.00% 0.00%
Overall All Request 3.00%   2.00% 4.00% 0.20% 0.00% -0.40%
               
CVMC
Hospital Inpatient 3.00%   2.10% 5.90% 0.00% 0.00% 1.10%
Hospital Outpatient 3.00%   3.00% 5.90% -0.20% 0.00% -3.60%
Professional Services 3.00%   9.20% 5.90% 2.50% 0.00% 0.00%
SNF 3.00%   4.20% 5.90% 3.10% 3.80% 0.00%
Overall All Request 3.00%   3.90% 5.90% 0.70% 1.20% -0.40%
               
PH
Hospital Inpatient 0.00%   0.10% 0.10% 0.00% 0.00% 0.00%
Hospital Outpatient 0.00%   2.30% 4.10% 0.00% 0.00% 0.00%
Professional Services 0.00%   0.00% 0.00% 0.00% 0.00% 0.00%
SNF 0.00%   0.00% 0.00% 0.00% 0.00% 0.00%
Overall All Request 0.00%   1.50% 2.60% 0.00% 0.00% 0.00%
               
NOTES:               
Inpatient Rate increase based on date of renewal (Com - Jan, MCR-Oct, MCD -Jan)    
Outpatient Rate increase based on date of renewal (Com - Jan, MCR-Jan, MCD -Jan)    
Professional Rate increase based on date of renewal (Com - Jan, MCR-Jan, MCD -Jan)    

Brattleboro Memorial Hospital

(NPR, Net Patient Revenue)

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 4.4% 2.3%   5.8% 0.0% 0.0%
Hospital Outpatient 3.6% 2.9%   2.5% 0.0% 0.0%
Professional Services 0.0% 0.0%   0.0% 0.0% 0.0%
   Primary Care            
   Specialty Care            
Skilled Nursing Facility            
Other (specify)            
Overall Change in Charge Across All Categories 3.4% 2.3   2.5 0.0% 0.0%

Copley Hospital

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 9.80% 1,052,096 1,045,175 6,921 0 0
Hospital Outpatient 9.80% 2,282,893 2,237,410 45,483 0 0
Professional Services         0 0
   Primary Care n/a n/a n/a n/a n/a n/a
   Specialty Care 9.80% 0 0 0 0 0
Skilled Nursing Facility 9.80% 839 663 176 0 0
Other (specify)         0 0
Overall Change in Charge Across All Categories 9.80% 3,335,828 3,283,248 52,580 0 0
             
NOTE: Amounts reported above include the impact of changes in average gross charges on bad debt and charity care for commercial/other beneficiaries.

Gifford Medical Center

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 5.0% 3.9% 3.9%   0.0% 4.8%
Hospital Outpatient 5.0% 3.9% 3.9%   0.0% 4.8%
Professional Services            
   Primary Care            
   Specialty Care 5.0% 3.7% 3.8%   0.0% 4.7%
Skilled Nursing Facility            
Hospital Swing 5.0% 4.7% 3.9%   0.0% 4.8%
Overall Change in Charge Across All Categories 5.0% 3.9% 3.9%   0.0% 4.8%

Grace Cottage Hospital

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 3.2%                      (170,039)                      (126,215)                                    -                          (33,132)                        (10,692)
Hospital Outpatient 3.2%                        412,232                          46,698                        (17,798)                        152,354                        230,978
Professional Services            
   Primary Care 3.2%                        818,321                        262,133                                296                          91,896                        463,996
   Specialty Care            
Skilled Nursing Facility            
Other (specify) - Swing 3.2%                        613,574                          81,901                          10,765                        (21,390)                        542,298
Overall Change in Charge Across All Categories 3.2%                    1,674,088                        264,517                          (6,737)                        189,728                    1,226,580

Mt Ascutney Hospital & Health Center

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 4.0% 1.0% 3.80% 0.00% 0.00% 0%
Hospital Outpatient 4.0% 1.9% 3.40% 0.00% 0.00% 0%
Professional Services 3.0% 1.4% 3.00% 0.00% 0.00% 0%
   Primary Care 3.0% 1.4% 3.00% 0.00% 0.00% 0%
   Specialty Care 3.0% 1.4% 3.00% 0.00% 0.00% 0%
Skilled Nursing Facility       0.00% 0.00% 0%
Other (Rehab) 4.0% 1.8% 3.90% 0.00%    
Other (Swing) 1.6% 0.3% 3.00% 0.00% 0.00% 0%
Overall Change in Charge Across All Categories 3.2% 1.6% 3.1% 0.00% 0.00% 0%

North Country Hospital

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient            
Hospital Outpatient            
Professional Services            
   Primary Care            
   Specialty Care            
Skilled Nursing Facility            
Other (specify)            
Overall Change in Charge Across All Categories 4.25 4.25 4.25 4.25 4.25 4.25

Northeastern Vermont Regional Hospital

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 3.8% 1.70% 3.80% 3.80% 0% 0%
Hospital Outpatient 3.8% 1.90% 3.80% 3.80% 0% 0%
Professional Services 0% 0% 0% 0% 0% 0%
   Primary Care 0% 0% 0% 0% 0% 0%
   Specialty Care 0% 0% 0% 0% 0% 0%
Skilled Nursing Facility 0% 0% 0% 0% 0% 0%
Other (specify) 0% 0% 0% 0% 0% 0%
Overall Change in Charge Across All Categories 3.5% 1.5% 3.2% 3.2% 0% 0%

Northwestern Medical Center

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 7.63%                        527,545                        569,915                        (42,370)                                      -                                      -
Hospital Outpatient 7.63%                    2,869,436                    3,040,812                      (171,376)                                      -                                      -
Professional Services 0.00%                                      -                                      -                                      -                                      -                                      -
   Primary Care            
   Specialty Care            
Skilled Nursing Facility            
Bad Debt & Charity Care            
Overall Change in Charge Across All Categories 5.90%                    3,396,981                    3,610,727                      (213,746)                                      -                                      -
             
*Note that Projected Change in Self-Pay/Other NPR includes increase in Bad Debt and Charity Care associated with increasing prices. 

Rutland Regional Medical Center

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 1.11%          
Hospital Outpatient 1.42%          
Professional Services 0.11%          
   Primary Care            
   Specialty Care            
Skilled Nursing Facility            
Other (specify)            
Overall Change in Charge Across All Categories 2.64% 3.50% 4.22% 0.15% -0.68% -0.19%
NOTE: RRMC does not have NPSR or NPSR by payer at the service level of detail.      

Southwestern Vermont Medical Center

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient 4.70%                        708,500                        492,000                        (60,000)                          57,000                        219,500
Hospital Outpatient 4.70%                    2,254,500                    2,284,000                      (140,000)                          81,000                          29,500
Professional Services 0%                      (762,000)                                    -                                      -                          (762,000)
   Primary Care 0%                                    -                                      -                                      -                                      -                                      -  
   Specialty Care 0%                                    -                                      -                                      -                                      -                                      -  
Skilled Nursing Facility            
Other (specify) DSH                              (183,000)  
Overall Change in Charge Across All Categories 2.80%                    2,018,000                    2,776,000                      (200,000)                        (45,000)                      (513,000)

Springfield Hospital

Category of Service Requested Change in Charge from FY19B to FY20B, in % Projected Change in Total NPR Projected Change in Commercial Payer NPR Projected Change in Self-Pay/Other NPR Projected Change in Medicaid NPR Projected Change in Medicare NPR
             
Hospital Inpatient -41.06%                  (1,875,848)                      (655,386)                          30,295                      (416,743)                      (834,014)
Hospital Outpatient -16.50%                  (8,837,317)                  (3,087,594)                        142,723                  (1,963,319)                  (3,929,127)
Professional Services -19.86%                      (809,168)                      (282,708)                          13,068                      (179,767)                      (359,761)
   Primary Care            
   Specialty Care            
Skilled Nursing Facility            
Other (specify)            
Overall Change in Charge Across All Categories -22.02%                (11,522,334)        
  Gross Revenues          
FY19 Budget                     137,063,487          
FY20 Budget                    106,879,863          
Change                    (30,183,624)          
 % Change -22.02%          
             
  FY19 FY20 Change  % Change  % Mix  
Hospital Inpatient                      29,521,257                  17,400,155                (12,121,102) -41.06% 16.3%  
Hospital Outpatient                      98,175,879                  81,973,956                (16,201,923) -16.50% 76.7%  
Professional Services 9,366,351                    7,505,752                  (1,860,599) -19.86% 7.0%  
Totals                    137,063,487                106,879,863                (30,183,624) -22.02% 100.0%  

Source: GMCB 9.12.2019