SENATE COMMITTEE ON HEALTH POLICY

 

 

February 23, 2005†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Hearing Room B

1:00 P.M.†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Tapes† 22 - 23

Corrected 9/29/2005

MEMBERS PRESENT:†††††††† Sen. Laurie Monnes Anderson, Chair

Sen. Jeff Kruse, Vice-Chair

Sen. Peter Courtney

Sen. Gary George

Sen. Bill Morrisette

 

STAFF PRESENT:†††††††††††††††† Rick Berkobien, Committee Administrator

Brittany Kenison, Committee Assistant

 

MEASURES/ISSUES HEARD:

Healthcare Financing Issues for Hospitals Ė Informational Meeting

Oregonís Acute Care Hospitals: Capacity, Utilization and Financial Trends Ė Informational Meeting

Behind Oregonís Healthcare Crisis Ė Informational Meeting

 

These minutes are in compliance with Senate and House Rules.† Only text enclosed in quotation marks reports a speakerís exact words.† For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 22, A

003

Chair Monnes Anderson

Calls the meeting to order at 1:04 p.m.† Opens informational meeting on healthcare financing issues for hospitals.

HEALTHCARE FINANCING ISSUES FOR HOSPITALS - INFORMATIONAL MEETING

012

Ruth Bauman

Healthcare consultant.† Submits and presents written testimony (EXHIBIT A) and informational graphs on hospital charges (EXHIBIT B).

060

Bauman

Discusses how hospital charges are determined in EXHIBIT B, page 1.

105

Bauman

Discusses total charges in EXHIBIT B,page 2.

120

Chair Monnes Anderson

Asks how capital investments and buildings factor into hospital costs.

125

Bauman

Answers that those costs are factored in.† Adds that some hospitals combine total cost and allocate them.

143

Chair Monnes Anderson

Asks if Medicare or Medicaid reimburse for capital expenditures or for patients only.

148

Bauman

Answers how it can apply to both and limitations.

153

Chair Monnes Anderson

Asks what kinds of capital expenditures are allowed.

155

Bauman

Answers that equipment is allowed. Offers to return complete information to the committee.

157

Sen. Morrisette

Asks to differentiate between profit, not for profit hospitals.

160

Bauman

Explains the different accounting for the two types of hospitals.† Discusses how payers determine the amount allowed or priced.

185

Bauman†††††††††††††††

Continues discussing healthcare financing.† Explains Diagnostic Related Groups (DRG).

200

Chair Monnes Anderson

Asks if Medicaid uses DRG for reimbursement.

205

Bauman†††††††††††††††

Explains that Medicaid uses cost based reimbursement.† Elaborates.

225

Chair Monnes Anderson

Asks if cost-based is higher or lower than DRG.

230

Bauman†††††††††††††††

Answers that it varies.† Elaborates.

230

Chair Monnes Anderson

Asks who uses cost-based reimbursement.

235

Bauman†††††††††††††††

Answers type A and B hospitals.† Elaborates.

255

Chair Monnes Anderson

Asks to confirm that outpatient services are more expensive than inpatient services in hospitals.

256

Bauman†††††††††††††††

Affirms.† Provides examples.

260

Chair Monnes Anderson

Asks for data to support example provided.

265

Bauman†††††††††††††††

Answers yes.† Continues discussing how payers determine the amount allowed or priced.

285

Chair Monnes Anderson

Asks if self payers have a sliding pay scale related to their income.

295

Bauman

Responds yes and explains how the pay scale works.

302

Chair Monnes Anderson

Asks if the pay scale is public knowledge.

304

Bauman

Answers not typically.

310

Bauman

Discusses how hospitals break-even if they are paid less than charges.

335

Sen. Kruse

Asks if the chart recognizes profit for Medicare.

340

Bauman

Answers no.

342

Sen. Kruse

Clarifies question

345

Bauman†††††††††††††††

Answers clarification.

360

Bauman

Discusses the difference in hospital financial statements.

382

Sen. Kruse

Asks if hospitals can write off all or almost all capital expenditures.

387

Bauman†††††††††††††††

Answers that she would not know that information.

388

Sen. Kruse

Comments on possible rules for regulation.

390

Chair Monnes Anderson

Asks if hospitals have the same criteria for reporting charity care.

398

Bauman†††††††††††††††

Answers yes and explains how.

400

Chair Monnes Anderson

Clarifies that it includes all hospitals.

402

Bauman†††††††††††††††

Affirms.

405

Sen. Kruse

Comments on Baumanís testimony about profit from Medicaid and Medicare, but no profit from charity care. Asks how they negotiate charity care.

415

Bauman†††††††††††††††

Answers.

420

Sen. Kruse

Clarifies that what they donít receive in self-pay is considered charity care.

422

Bauman

Affirms.† Elaborates.

425

Chair Monnes Anderson

Closes informational meeting on health care financing issues for hospitals and opens an informational meeting on Oregonís acute care hospitals: capacity, utilization and financial trends.

TAPE 23, A

OREGONíS ACUTE CARE HOSPITALS: CAPACITY, UTILIZATION AND FINANCIAL TRENDS Ė INFORMATIONAL MEETING

005

Bruce Goldberg

Director, Health Policy Research Office.† Introduces himself.

015

Tina Edlund

Manager, Research and Data Manager, Oregon Health Policy and Research Office.† Submits and presents slide presentation on Oregonís acute care hospitals: capacity, utilization and financial trends (EXHIBIT C).

040

Edlund

Begins discussing background of Oregonís Acute Care Hospitals.

085

Chair Monnes Anderson

Asks what most type A and B hospitals receive.

087

Edlund

Clarifies that most Type A and some Type B hospitals are considered critical access facilities and receive 100 percent of reasonable cost from Medicaid and 101 percent reasonable cost from Medicare.

090

Sen. George

Asks if there is a relation between reasonable cost and rational cost.

095

Edlund

Understands that it is just based on there cost report and varies.

097

Goldberg

Adds that that they are Medicare cost reports submitted to federal government.

098

George

Confirms that it is on individual hospital basis.

100

Goldberg

Affirms with standards.

102

Edlund

Discusses hospitals as part of the healthcare delivery system. †Discusses hospitals cost account for 30 percent of the overall Medicaid budget.

113

Chair Monnes Anderson

Asks if the 30 percent has been consistent.

115

Edlund

Affirms.† Adds since 1995 it has been consistent.

118

Edlund

Reviews chart of capacity: Licensed beds per 1,000, Oregon versus Region and U.S. (2003).

130

Edlund

Reviews chart of occupancy trends, 1995-2003 and Oregon vs. region and U.S.

153

Chair Monnes Anderson

Clarifies that with HMOís advent, hospitals become more efficient and caused the decrease in the number of beds available.

155

Edlund

Answers that length of stay declined.

159

Goldberg

Clarifies the report chart dates and discusses managed care.

165

Edlund

Reviews workforce chart.

175

Sen. Kruse

Asks if chart is broken down geographically

178

Edlund

Answer no and offers to return information to the committee.

180

Goldberg

Adds that report is broken down by hospitals types.

183

Edlund

Discusses utilization of hospitals services: top ten DRGís, Oregon, 2003.

190

Chair Monnes Anderson

Comments that many services on list involve females and delivery.† Comments on more women using hospitals in the child bearing age and women above.

210

Edlund

States that she cannot confirm data.† Points out that utilization of hospital services chart are numbers and not dollars.

211

Kruse

Clarifies that normal newborns includes well baby.

212

Edlund

Affirms and confirms only initial services in hospital is included.

215

Goldberg

Adds why normal newborn is number one on list.

220

Edlund

Reviews chart for admissions per 1,000 population and average length of stay (in the hospital).

230

Chair

Asks if the health safety commission created in the 2003 session is researching relapses.

235

Goldberg

Answers that he is unaware.

238

Sen. Kruse

Comments on continuum of care outside of hospitals in Oregon versus other states. †Asks for data on continuum care that is performed outside of hospitals in Oregon, versus other states that perform the care in the hospitals.

242

Edlund

States that the office does not have data.† Understands though, that there are not as many end-of-life care in hospitals in Oregon.

250

Sen. Kruse

Comments on short stay in hospitals and cost.

255

Chair Monnes Anderson

Comments on elderly care in hospitals.

258

Edlund

Reviews chart for impatient days per 1,000 population.

267

Edlund

Discusses measuring financial health.

280

Chair Monnes Anderson

Asks if hospitals can invest their profit.

285

Edlund

Answers that she is not aware of specific regulations for not for profit hospitals, assumes that they can.

290

Sen. Kruse

Confirms the for profit hospitals can.

292

Edlund

Affirms.† Explains difference.

296

Chair Monnes Anderson

Comments on raising money for hospital in her district and adds that money is invested.† Asks if that money is taken into account.

305

Edlund

Affirms.† Explains that it is taken in under the total margin.† Discusses what is covered under total margin.

310

Edlund

Continues discussing hospital finances

320

Chair

Clarifies that the statistics on page 16 of the testimony is for all hospitals.

322

Edlund

Affirms.

323

Chair Monnes Anderson

Clarifies that some hospitals have a profit and others do not.

328

Goldberg

Adds that in the report, individual hospital statistics are available.

333

Edlund

Reviews chart for median operating and total margins.

342

Chair Monnes Anderson

Comments on high profits in the mid 1990ís. Asks if the high profit is significant.

353

Goldberg

Answers that significance varies by who is looking at the data.

355

Sen. Kruse

Comments on ratio of expenses to profits.

360

Edlund

Continues discussing median operating and total margins of DRG hospitals.

370

Sen. Kruse

Clarifies what is included in the total margins.

373

Edlund

Answers clarification.

375

Chair Monnes Anderson

Clarifies earlier comment that normal business receives three (3) to five (5) percent profit.† Asks if the comment referred to business in general or just for hospitals.

380

Edlund

Answer that it is specific to hospitals.† Comments that some DRG hospitals are better than other DRG hospitals.

390

Edlund

Continues discussing median operating and total margins for Type A hospitals.

403

Chair Monnes Anderson

Asks how Type A hospitals are subsidized.

405

Edlund

Answers question.† Explains how most Type A hospitals have communities that have formed health districts, 13 in all, that support and assist hospitals.

410

Chair Monnes Anderson

Confirms that all of the Type A hospitals have formed health districts.

412

Edlund

Answers no, not all.

414

Chair

Asks how many Type A hospitals are in those 13 districts.

416

Edlund

Answers that she does not have the information.

420

Sen. Kruse

States that the taxing authority is very marginal because of the districts.

TAPE 22, B

010

Edlund

Continues discussing median operating and total margins.

012

Chair Monnes Anderson

Confirms that Type B can be with in 30 miles within another acute inpatient hospital.

013

Edlund

Affirms.

014

Chair Monnes Anderson

Comments that they do better than Type A hospitals.

015

Goldberg

Clarifies that the statistics are averages.

016

Edlund

Discusses chart of payer mix in 2003.

022

Edlund

Discusses uncompensated care.

035

Chair Monnes Anderson

Asks what the process is for hospitals with patients for billing.

040

Edlund

Answers how it depends on each hospital.

042

Chair Monnes Anderson

Provides example of young male who incurred $5,000 in hospital charges and asks what the process it for the hospital.

043

Edlund

Explains the general process.† Adds that it varies per person and if the person is aware of charity care.

047

Chair Monnes Anderson

Asks that not all hospitals have charity care.

050

Edlund

Assumes that every hospital has charity care.† Continues to explain process.

055

Edlund

Continues discussing uncompensated care.

060

Goldberg

Adds that everyone pays for uncompensated care in way or the other.

065

Chair Monnes Anderson

Closes informational meeting on Oregonís acute care hospitals: capacity, utilization and financial trends.† Opens informational meeting on behind Oregonís healthcare crisis.

BEHIND OREGONíS HEALTHCARE CRISIS Ė INFORMATIONAL MEETING

085

Liz Stevenson

Senior Analyst, Service Employees International Union (SEIU).† Submits and presents samples of hospital bills (EXHIBIT D) and a report on ďBehind Oregonís Health Care CrisisĒ (EXHIBIT E).

130

Sen. Kruse

Comments on shift of access to services.

140

Stevenson

Agrees.† Continues discussing concerns with health care costs.

160

Stevenson

Begins slide presentation. Reviews chart on annual percentage expenditure increase in hospital care (1980-1988).

175

Stevenson

Reviews chart on Oregon hospital expenditures with all payers

183

Chair Monnes Anderson

Asks if she is has comparisons to other states.

185

Stevenson

Answers no, but adds that it is comparing to national average.

190

Chair Monnes Anderson

Clarifies that in 2002 we were below the national average and in 2003 we were above the national average.

192

Stevenson

Affirms. Continues to review chart.

195

Sen. Kruse

Asks if length of stay has been factored.

199

Stevenson

Answer no, but agrees that it is a factor.

215

Stevenson

Reviews chart for per capital hospital expenditures projection from 2005-2025.

227

Sen. Kruse

Asks if the population growth of the state was a factor.

235

Stevenson

Answers no. Explains the conservative estimate.

275

Stevenson

Reviews chart of average charge per Refined Diagnostic Related Groups (RDRG) in the tri county hospitals with the five most common procedures.

290

Sen. Kruse

States that he is interested in factoring in demographics.

300

Stevenson

States how they used the RDRGís uses some demographics.

305

Stevenson

Refers to EXHIBIT D, page one.† Comments on discounts available.

360

Stevenson

Discusses concerns with system hospitals.

385

Chair Monnes Anderson

Asks which are considered system hospitals and independent in Portland.

390

Stevenson

Provides list of hospitals under each category.

392

Sen. Kruse

Asks if some of the administrative overhead be due to the economy scale.

394

Stevenson

States that they considered that and how the ďlinesĒ are used.

404

Sen. Kruse

Comments on education districts and how in larger districts, more administration is necessary, hence larger costs involved.

415

Stevenson

Emphasizes that the home office is not included.

TAPE 23, B

005

Stevenson

Reviews chart of median operating margins of hospitals (1997-2002).

030

Sen. Kruse

Notes that Stevensonís report does not show updated information.

035

Stevenson

Clarifies that the report covers non-critical access hospitals.

045

Stevenson

Reviews chart for change in hospital ownership and consolidation over time, acute patient days market share in tri county hospitals.

055

Stevenson

Reviews coming reports on charity care construction.

063

Sen. Morrisette

Comments on two new hospitals in Springfield and importance of data.

070

Sen. Kruse

Points out that there were issues with Eugeneís zoning

080

Stevenson

Comments another matrix report that will be in future report.

085

Stevenson

Comments on quality in hospitals report.

095

Sen. Morrisette

Comments on restrained of trade in a Eugene hospital. Speculates outcome.

115

Stevenson

Comments on McKenzie Willamette hospital in Springfield.

125

Chair Monnes Anderson

Asks Stevenson if she has shared report with Dr. Bruce Goldberg.

128

Stevenson

Answers yes.

130

Sen. Kruse

Asks for next report to show data sources and what factors were used.

160

Chair Monnes Anderson

Comments that hospitals are becoming more aware of cost issue and are looking at ways in becoming more transparent.

170

Sen. Morrisette

Comments on difference in data sources and personal backgrounds.

177

Stevenson

Comments on statistics.

185

Sen. Kruse

Comments on statistics and how people can use them to their advantage.

190

Chair Monnes Anderson

Comments on agenda for February 25th, 2005.† Closes informational meeting on behind Oregonís healthcare crisis and adjourns meeting at 2:45 p.m.

 

 

 

 

EXHIBIT SUMMARY

 

A.     Healthcare Financing Issues for Hospitals, written testimony, Ruth Bauman, 5 pp

B.     Healthcare Financing Issues for Hospitals, informational graphs, Ruth Bauman, 2 pp

C.     Oregonís Acute Care Hospitals, PowerPoint presentation, Tina Edlund, 23 pp

D.    Behind Oregonís Healthcare Crisis, Hospital bills, Elizabeth Stevenson, 2 pp

E.     Behind Oregonís Healthcare Crisis, report, Elizabeth Stevenson, 19 pp