Effects of the ACO Provisions on Gotham Hospital and the Currently uninsured and the Underinsured in the Bronx Community
As noted earlier, the payment reform that is linked to ACO mandates a different form of payment that has implications. The VBP and Bundled Payment are major policies in the ACO provision that can potentially affect Gotham hospital operating budget due to the change in reimbursement strategy by CMS for their services. Pre ACO, Gotham hospital was rewarded for simply reporting their performance in certain areas, however, in Post ACO, performance reporting is mandatory, with a percentage of Medicare reimbursement tied directly to achieving certain quality benchmarks (Anderson & Slaw, 2010). The implication of this is that Gotham hospital will be rewarded for keeping diabetes patient healthy as they will be paid based on performance. Gotham hospital’s operating budget can be negatively affected if most of the Medicaid/Medicare diabetes patients have high rate of readmissions and increased cost of managing associated comorbidities as unnecessary readmissions will not be reimbursed. This is a significant change from what was applicable pre ACO when Gotham hospital was reimbursed for the volume of services it rendered to Medicaid/Medicare patients with diabetes. Of the approximately 120,000 patients with diabetes in the Bronx, only 9,320 (Gotham.org, 2012) insured patients are enrolled in Gotham’s hospital diabetes program. It is worthy of note that these 120,000 diabetics are going to be newly insured with the full implementation of the ACA. The vast majority of the unattended diabetes patients can potentially develop complications requiring visit to the emergency unit. This implies that the hospital will have to off-set cost associated with the services given to these patients from their operating budget. An aggressive outreach program through the use of local coordinators can potentially increase the enrollment in Gotham hospital diabetes program in order to prevent this occurrence.
In measuring the specifics on how the ACO provision affects the hospital operating budget, it is a bit too early to measure any meaningful change because Gotham hospital’s ACO structure became fully operational January 2012. However, a comparative analysis of Gotham financial statement pre and post ACA reveals that Account receivable from estimated insurance claim decreased from US $77,189,000 in 2010 to US $73,115,000 in 2011 (Gotham.org, 2011) Furthermore, the account receivables from patient care decreased from US $163,594,000 in 2010 to US $161,779,000 in 2011(Gotham.org). [Is this really a measure of improvement? Perhaps it is better cash management? Better billing and collections?] Also, while the total operating revenue increased from US$2,887, 133,000 in 2010 to US $2,977,947,000 in 2011, there was a significant reduction in total income from operations from US $133,058,000 in 2010 to US $33,446,000 in 2011. This is due to associated increase in total operating expenses in 2011(Source of figure gotten from Gotham’s hospital consolidated statement of financial operation). The reduction in account receivable in Gotham financial is worthy of note. Most reduction in account receivable is from insurance claims. This means there was reduction in revenue generated from services rendered to patients in this time period. There was a significant increase in uncollectable account from $299,000 in 2010 to $323,100 at June 30, 2011, indicating the Hospital is not getting commensurate payment for services rendered to patients. A lot of factors can be responsible for this decline in account receivable such as the general decline in the economy due to the recession during this time period, difficulty getting reimbursement claims from third party payers as well as low reimbursement rate for services provided. Inability of enrolled patients to pay their co-pay, deductible or co-insurance could also be another factor.[these would increase receivables]
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From the above statistics, it can be inferred that post ACA, Gotham Hospital has not seen any significant improvement in its financial standing since the implementation of ACA [how do you know this?]