The Epidemiology and Magnitude of Charity Care Delivered by Iowa Hospitals

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1 The Epidemiology and Magnitude of Charity Care Delivered by Iowa Hospitals Gary E. Rosenthal, MD Professor of Internal Medicine and Health Management and Policy, University of Iowa Director, Center for Research in the Implementation of Innovative Strategies in Practice (CRIISP) November 14,

2 Background An important issue in assessing the economic impact of broadening health care coverage for Iowans is the amount and type of care currently being provided to patients without insurance Much of this care is written off by providers as charity care. This care is delivered by a wide spectrum of clinicians and in a wide spectrum of delivery settings However, a large proportion (and likely a majority) of this care is provided by hospitals through acute hospitalizations, ambulatory surgeries, and ER visits. 2

3 Project Goals Determine the amount and cost of care by hospitals to patients without health insurance in three settings: - Acute care inpatient settings - Emergency rooms - Hospital-based ambulatory surgery centers Characterize the patient population without insurance receiving hospital-based care Rationale for focusing on hospitals - Large proportion of all charity care - Availability of data on hospital care in a standardized format from a centralized distributor - Lack of readily available data for care in other settings (e.g., doctors offices, clinics, CHCs, rural clinics) 3

4 Determination of Costs Determined for each inpatient, ER, and ambulatory surgery encounter Based on data on total charges in the Iowa Hospital Association databases used in the analysis and on cost/charge ratios submitted by hospitals to CMS Costs = [ Charges ] X [ Hospital Cost to Charge Ratio ] 4

5 Percent of Hospital Admissions by Uninsured Patients during % 8% 4.1% 4.0% 3.4% 3.5% 3.5% 3.9% 6% 4% 2% % 5

6 Percentage of Uninsured Hospital Admissions by State (2003 data) 12% 9.8% 9% 7.0% 2.1% 2.7% 2.7% 3.1% 3.4% 3.6% 4.3% 5.6% 5.7% 6% 3% MA AZ WA CA IA WI MD FL NC TX NJ 0% 6

7 Characteristics of Insured and Uninsured Hospital Admissions Uninsured Insured Mean Age (years) Female 50% 60% Male 50% 40% Race - White 73% 66% -Black 2% 5% - Other or Unknown 25% 29% Source of Admission -ER 42% 33% - MD Referral 45% 54% 7

8 Top 10 Counties by Number and Percent of Uninsured Hospital Admissions County # of Pts County % of Pts Polk 13,920 Page 15.8 Woodbury 4,237 Fremont 8.8 Scott 3,620 Allamakee 7.8 Black Hawk 2,930 Davis 7.2 Linn 2,640 Montgomery 7.0 Clinton 1,982 Mahaska 6.3 Des Moines 1,883 Cass 6.1 Dubuque 1,830 Cherokee 6.1 Pottawattamie 1,543 Woodbury 5.7 Johnson 1,477 Crawford 5.6 8

9 Most Common Major Diagnostic Categories of Uninsured Admissions 19.3% 20% 15% 11.7% 10.2% 9.4% 8.5% 10% 5.7% 4.6% 5% 0% Newborn Circulatory Pregnancy Digestive System Respiratory Musculoskeletal Nervous System 9

10 Total Costs of Hospital Admissions by Payer: (in Millions) $5,865 7,000 6,000 $3,662 5,000 4,000 3,000 $1,028 $213 $294 2,000 1,000 0 BC/Commercial Medicaid Medicare Other Govt Uninsured 10

11 Percent of ER Visits and Ambulatory Surgeries by Uninsured Patients ER Visits Ambulatory Surgery 13.0% 13.2% 20% 15% 10% 2.0% 1.7% % 0% 11

12 Total Costs (in Millions) of Admissions, ER Visits, and Ambulatory Surgeries without Insurance for 2005 and 2006 Admissions ER Visits Ambulatory Surgery $150 $120 $90 $60 $13.1 $47.0 $11.4 $53.0 $30 $0 $51.1 $

13 Caveats Self-pay variable includes a small number of wealthy patients who elect to pay for health care out of pocket Among the uninsured poor, hospitals likely receive partial payments from some patients Unknown how much of the care provided to patients without insurance is actually written off as charity care Determining costs using Medicare hospital cost reports is an approximation of costs actual hospital cost data is difficult to obtain and typically regarded as proprietary information 13

14 Take Home Points Uninsured patients accounted for 4% of all hospital admissions, 13% or ER visits, and 2% of ambulatory surgeries in Iowa. Costs associated with uninsured patients represented 3% of acute hospitalization costs, 11% of ER costs, and 2% of ambulatory surgery costs in Iowa. In aggregate, the costs incurred by Iowa hospitals in treating uninsured patients amounted to $111M in 2005 and $125M in

15 Total Costs (in Millions) of Charity Care for Different Collection Rates 5% Collection 10% Colleciton 25% Collection $150 $120 $90 $105 $100 $83 $119 $112 $94 $60 $30 $