Evaluation of the Low-Income Pool Program Using Milestone Data: SFY

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2 Evaluation of the Low-Income Pool Program Using Milestone Data: SFY Niccie McKay, PhD Prepared by the Department of Health Services Research, Management and Policy at the University of Florida under contract to the Agency for Health Care Administration Bureau of Quality Management. For more information, see

3 i TABLE OF CONTENTS EXECUTIVE SUMMARY... 1 KEY FINDINGS FOR SFY KEY FINDINGS COMPARING SFYS , , , AND INTRODUCTION... 3 LIP AND LIP-RELATED PROGRAMS: SFY LOW-INCOME POOL (LIP) PROGRAM IN SFY MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH) PROGRAM IN SFY HOSPITAL EXEMPTIONS TO MEDICAID REIMBURSEMENT CEILINGS PROGRAM... 5 DATA AND METHODS... 6 PAYMENTS... 6 MILESTONE DATA... 6 INDIVIDUALS SERVED... 7 SERVICES PROVIDED... 7 METHODS... 7 LIP AND LIP-RELATED PAYMENTS: SFY LOW-INCOME POOL (LIP) PROGRAM MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH) PROGRAM HOSPITAL EXEMPTIONS TO MEDICAID REIMBURSEMENT CEILINGS PROGRAM SUMMARY INDIVIDUALS SERVED: SFY HOSPITALS NON-HOSPITAL PROVIDERS SERVICES PROVIDED: SFY HOSPITALS NON-HOSPITAL PROVIDERS EVALUATION: SFY HOSPITALS NON-HOSPITAL PROVIDERS SELECTED PROJECTS FUNDED BY LIP COMPARISONS ACROSS YEARS PAYMENTS PAYMENTS ADJUSTED FOR INFLATION INDIVIDUALS SERVED AND SERVICES PROVIDED: HOSPITALS INDIVIDUALS SERVED AND SERVICES PROVIDED: NON-HOSPITAL PROVIDERS EVALUATION MEASURES: HOSPITALS EVALUATION MEASURES: NON-HOSPITAL PROVIDERS SUMMARY KEY FINDINGS FOR SFY KEY FINDINGS COMPARING SFYS , , , AND APPENDIX... 45

4 ii LIST OF TABLES TABLE 1: PAYMENTS: SUMMARY BY PROGRAM, SFY TABLE 2: NUMBER OF INDIVIDUALS SERVED BY HOSPITALS, SFY TABLE 3: NUMBER OF INDIVIDUALS SERVED BY NON-HOSPITAL PROVIDERS, SFY TABLE 5: SERVICES PROVIDED BY NON-HOSPITAL PROVIDERS, SFY TABLE 6: EVALUATION: SUMMARY, SFY TABLE 7: COMPARISON OF PAYMENTS SFYS , , , AND TABLE 9: COMPARISON OF AVERAGE NUMBER OF INDIVIDUALS SERVED AND SERVICES PROVIDED BY HOSPITALS, SFYS , , , AND TABLE 10: COMPARISON OF ESTIMATED TOTAL NUMBER OF INDIVIDUALS SERVED AND SERVICES PROVIDED BY HOSPITALS, SFYS , , , AND TABLE 11: COMPARISON OF AVERAGE NUMBER OF INDIVIDUALS SERVED AND SERVICES PROVIDED BY NON-HOSPITAL PROVIDERS, SFYS , , , AND TABLE 12: COMPARISON OF ESTIMATED TOTAL NUMBER OF INDIVIDUALS SERVED AND SERVICES PROVIDED BY NON-HOSPITAL PROVIDERS, SFYS , , , AND LIST OF APPENDIX TABLES APPENDIX TABLE A1: PAYMENTS: LOW-INCOME POOL (LIP) PROGRAM, BY PROVIDER, SFY APPENDIX TABLE A2: PAYMENTS: MEDICAID DISPROPORTIONATE SHARE (DSH) PROGRAM, BY PROVIDER, SFY APPENDIX TABLE A3: PAYMENTS: EXEMPTIONS TO CEILINGS (EXEMPT) PROGRAM, BY HOSPITAL, SFY APPENDIX TABLE A4: TOTAL PAYMENTS: SUMMARY BY PROGRAM, BY PROVIDER, SFY APPENDIX TABLE A5: INDIVIDUALS SERVED, BY HOSPITAL, SFY APPENDIX TABLE A6: INDIVIDUALS SERVED, BY NON-HOSPITAL PROVIDER, SFY APPENDIX TABLE A7: SERVICES PROVIDED, BY HOSPITAL, SFY APPENDIX TABLE A8: SERVICES PROVIDED, BY NON-HOSPITAL PROVIDER, SFY APPENDIX TABLE A9: EVALUATION, BY HOSPITAL, SFY APPENDIX TABLE A10: EVALUATION, BY NON-HOSPITAL PROVIDER, SFY

5 P a g e 1 EXECUTIVE SUMMARY The Low-Income Pool (LIP) program was implemented July 1, 2006, as part of a broad Reform demonstration program. The LIP consists of a capped annual allotment (the pool ), funded primarily by intergovernmental transfers from local governments matched by federal funds. The objective of the LIP is to ensure continued government support for the provision of healthcare services to, underinsured, and uninsured populations. This report provides a detailed examination of LIP and LIP-related payments and services provided to, uninsured, and underinsured individuals during Year 3 of Reform, state fiscal year (SFY) The report also compares summary measures for a four-year period: SFY (year immediately preceding Reform) and SFYs , , and (first three years of Reform). KEY FINDINGS FOR SFY A total of 221 Provider Access Systems (PAS) in Florida received LIP funding 162 hospitals and 59 non-hospital providers. Total LIP funding was approximately $876.3 million. Reporting hospitals receiving LIP payments served a total of approximately 3.4 million, uninsured, and underinsured individuals. Reporting non-hospital providers receiving LIP payments served a total of approximately 692,000, uninsured, and uninsured individuals. On average, hospitals received $167 in LIP payments for each, uninsured, and underinsured individual served. On average, non-hospital providers received $73 in LIP payments for each, uninsured, and underinsured individual served. LIP payments supported a variety of Florida Department of Health Emergency Room Alternative projects.

6 P a g e 2 KEY FINDINGS COMPARING SFYs , , , AND The number of hospitals receiving LIP funding increased in comparison to those receiving funding from the Special Payments (SMP) program: 87 hospitals received SMP funding in SFY , with 163, 160, and 162 hospitals receiving LIP funding in SFYs , , and , respectively. Non-hospital providers began receiving funding under the LIP program: 43 and 44 nonhospital providers received LIP payments in SFY and SFY , respectively, increasing to 59 non-hospital providers receiving LIP payments in SFY Total funding increased under the LIP program in comparison to the SMP program: total SMP payments were approximately $666.9 million in SFY , with total LIP payments being approximately $998.7 million in SFY , approximately $1.0 billion in SFY , and approximately $876.3 million in SFY When adjusted for inflation (2005 = 100), total SMP payments were approximately $666.9 million, with total LIP payments being approximately $967.2 million in SFY , approximately $941.7 million in SFY , and approximately $807.8 million in SFY Hospitals receiving LIP payments served an estimated total of approximately million, uninsured, and underinsured individuals each year in the first three years of Reform. Non-hospital providers receiving LIP payments served an estimated total of approximately 800,000 1 million, uninsured, and underinsured individuals each year in the first three years of reform. For hospitals, the average (SMP or) LIP payment received for each, uninsured, and underinsured individual served declined during Reform in comparison to the year prior to Reform: in nominal terms, $ per individual was $267 in SFY , $176 in SFY , $166 in SFY , and $167 in SFY ; adjusted for inflation (2005 = 100), $ per individual was $267 in SFY , $171 in SFY , $156 in SFY , and $154 in SFY For non-hospital providers, the average LIP payment for each, uninsured, and uninsured individual served declined between SFY (first year in which nonhospital providers received funding) and SFY : in nominal terms, $ per individual was $102 in SFY , $91 in SFY , and $73 in SFY ; adjusted for inflation (2005 = 100), $ per individual was $98 in SFY , $85 in SFY , and $67 in SFY Results based on individuals served must be used with caution given that they are based only on data for hospitals and non-hospital providers that reported milestone data in a given year. The percentage of providers receiving payments that reported milestone data varied across years from 84 96% for hospitals and from 63 89% for non-hospital providers. Particularly in years with a low reporting percentage, results might demonstrate a different pattern if all providers had reported milestone data.

7 P a g e 3 INTRODUCTION In July 2006, the State of Florida introduced broad-ranging reform of the Florida program, with the establishment of the Low-Income Pool (LIP) being one of the key components of reform. The LIP consists of a capped annual allotment of $1 billion (the pool ), with the funding coming primarily from intergovernmental transfers from local governments matched by federal funds. 1 The conditions of the LIP are discussed in the Special Terms and Conditions (STCs) of the Section 1115 Research and Demonstration Waiver, as approved by the federal Centers for Medicare and Services (CMS). 2 Distributions from the LIP are intended to ensure continued government support for the provision of health care services to, underinsured and uninsured populations. 3 The LIP thus supplies additional funding for providers having large numbers of patients who are low-income and/or with little or no insurance coverage. This report was prepared under a contract with the Florida Agency for Health Care Administration (AHCA) to evaluate the LIP program. The overall objective of the LIP evaluation is to examine the link between LIP and LIP-related payments and the provision of services to, underinsured, and uninsured populations. The fundamental question, therefore, is how many of the desired services are obtained from a given amount of LIP and LIP-related payments. The focus of the report is the LIP program in State Fiscal Year (SFY) (the third year of Reform), which has not yet been examined. In addition, the report includes crossyear comparisons using information from SFY (the year immediately preceding Reform) and SFYs and (the first and second years of Reform). In addition to the quantitative analysis, the report includes brief descriptions of selected special projects funded by the LIP program in SFY , in order to provide a more in-depth look at some examples of how LIP payments have been used. The report is organized as follows: (1) discussion of LIP and LIP-related programs in SFY ; (2) description of data and methods; (3) findings on LIP and LIP-related payments in SFY ; (4) findings on individuals served in SFY ; (5) findings on services provided in SFY ; (6) evaluation results in SFY ; (7) description of selected projects funded by LIP in SFY ; (8) comparisons across years (SFYs , , , and ); and (9) summary. 1 State of Florida, Agency for Health Care Administration ( accessed May 27, 2010). 2 CMS Special Terms and Conditions ( accessed May 27, 2010). 3 Ibid., p. 24.

8 P a g e 4 LIP AND LIP-RELATED PROGRAMS: SFY In addition to LIP funding, the evaluation includes funding from similar programs, the Disproportionate Share Hospital (DSH) program and the hospital exemptions to reimbursement ceilings program, to give a more complete picture of the link between LIP and LIP-related payments and the provision of services to, underinsured, and uninsured populations. Three criteria were used to identify governmental payments other than LIP payments to be included as LIP-related: (1) the payments used local tax funding, from local governments such as counties or hospital taxing districts, 4 or funding from the Florida Department of Health to obtain matching funds from the federal government, (2) the payments were directly related to the provision of services to, underinsured, and uninsured populations, and (3) the payments could be traced to a particular provider. Based on these criteria, the evaluation tracks payments from the LIP, DSH program, and the hospital exemptions to reimbursement ceilings program. These categories of payments encompass the LIP and LIPrelated programs. It is important to note that governmental payments for what are called Statewide Issues will not be tracked. These payments, which are used to increase the outpatient caps for payments to hospitals, do use local tax funds matched by funds from the federal government and relate to the provision of services to patients, but they cannot be traced to a particular provider, and thus will not be included. Another important point is that the LIP and LIP-related payments reported do not include the base per diem hospital payment for patients. Virtually all acute-care hospitals serve some patients, and all hospitals receive a base per diem payment for those individuals. The base per diem payment is limited to the lesser of allowable cost, the variable target, county ceiling, or variable county target. LIP and LIP-related payments are supplemental to this base payment, allowing qualifying hospitals to receive reimbursement up to cost. 4 Local tax funding is also referred to as intergovernmental transfers or local government transfers.

9 P a g e 5 LOW-INCOME POOL (LIP) PROGRAM IN SFY In SFY , the LIP program included the following categories: safety-net hospitals, hospitals that operate poison control programs, specialty pediatric hospitals, hospitals with designated trauma centers, rural hospitals-lip, LIP-hospitals, and LIP-other (Federally Qualified Health Centers [FQHCs], County Health Initiatives as performed by County Health Departments [CHDs], and Rural Health Networks). As shown in Table 1, LIP payments in SFY were distributed in total as follows: Safety-Net hospitals: $75,454,515; Hospitals that operate poison control centers: $3,172,805; Specialty pediatric hospitals: $1,582,952; Rural hospitals-lip: $7,864,503; Hospitals with designated trauma centers: $9,683,538; LIP-Hospitals: $757,048,077; and LIP-Other (includes FQHCs, CHDs, and Rural Health Networks): $21,502,552. MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH) PROGRAM IN SFY The objective of the DSH program is to increase compensation for hospitals that provide a disproportionate share of and/or charity care services. In SFY , the DSH program included the following sub-categories: Public Hospitals, Teaching-DSH, and Rural- DSH. As shown in Table 1, DSH payments in SFY were distributed in total as follows: Public Hospitals: $146,398,043; Teaching-DSH: $70,231,172; and Rural-DSH: $11,780,693. HOSPITAL EXEMPTIONS TO MEDICAID REIMBURSEMENT CEILINGS PROGRAM Hospital reimbursement is limited to the lesser of allowable cost, the variable target, variable county target, or county ceiling. Through the Upper Payment Limit (UPL) program, local governments (health care taxing districts and counties) provide additional funding as the state share to draw federal funds for qualified providers to be exempt from the aforementioned targets and ceilings. In summary, qualified providers receive reimbursement up to the provider s calculated allowable cost. As shown in Table 1, total exemptions payments were $621,262,003 in SFY

10 P a g e 6 DATA AND METHODS The unit of analysis for this report is a Provider Access System (PAS). According to the Agency s Low Income Pool Reimbursement and Funding Methodology : Entities such as hospitals, clinics, or other provider types and entities designated by Florida Statutes to improve health services access in rural communities, which incur uncompensated medical care costs in providing medical services to the uninsured and underinsured, and which receive a Low Income Pool (LIP) payment shall be known as Provider Access Systems. Provider Access Systems funded from the LIP shall provide services to recipients, the uninsured, and the underinsured. 5 For purposes of this report, data in most cases is reported separately for hospitals and for nonhospital providers. PAYMENTS AHCA provided data on total payments from SFY for the LIP, DSH, and hospital exemptions to ceilings programs, by provider. Payments were classified by category (LIP, DSH, exemptions) and then by sub-category within the LIP and DSH categories, as discussed in the previous section and as shown in Table 1. MILESTONE DATA AHCA s Low Income Pool Reimbursement and Funding Methodology document requires that all PAS receiving LIP funding report data related to the number of individuals served and the types of services provided. 6 The document also includes forms outlining specific data reporting requirements, with separate forms for hospitals and non-hospital providers due to the differing nature of services provided. The data submitted are called milestone data because they stem from Demonstration Year 1 Milestone requirements in the CMS STCs. 7 AHCA provided data for all providers receiving LIP payments in SFY who had submitted milestone data as of March 1, This report is based on data for 142 hospitals reporting milestone data out of 168 hospitals receiving LIP and/or LIP-related payments (85%) and 37 non-hospital providers reporting milestone data out of 59 non-hospital providers receiving LIP payments (63%). 5 Agency for Health Care Administration, Low Income Pool Reimbursement and Funding Methodology (submitted to CMS June 26, 2009), p Ibid., p CMS Special Terms and Conditions, p. 26.

11 P a g e 7 INDIVIDUALS SERVED The most comprehensive measure of services is the number of individuals served. For the LIP milestone reporting, hospitals must provide an unduplicated count of individuals served in the following categories: (inpatient, outpatient, and total) and uninsured/underinsured (inpatient, outpatient, and total), where the total is also an unduplicated count. 8 In addition to including information separately for and uninsured/underinsured, this report will use the number of, uninsured, and underinsured individuals served as a summary measure. Because all their services are outpatient, non-hospital providers must provide only an unduplicated count of individuals served for and for uninsured/underinsured. Again, the number of, uninsured, and underinsured individuals served will be used as a summary measure. SERVICES PROVIDED Information about the type and amount of specific services is also important in understanding the link between LIP and LIP-related payments and the provision of health services to, underinsured, and uninsured patients. For hospitals, measures of services provided include hospital discharges, hospital inpatient days, emergency care encounters, outpatient encounters, and number of prescriptions filled. For each type of service, the amount provided is reported separately for and uninsured/underinsured, then aggregated to a summary measure of services provided to, uninsured, and underinsured individuals. The LIP milestone data include somewhat different measures of services provided for nonhospital providers. In particular, measures include primary care encounters, OB/GYN encounters, disease management encounters, mental health/substance abuse encounters, dental services encounters, number of prescriptions filled, laboratory services encounters, radiology services encounters, specialty encounters, and care coordination encounters. Once again, the amount of services provided is reported separately for and uninsured/underinsured, then aggregated to a summary measure of services provided to, uninsured, and underinsured individuals. METHODS The overall objective of the LIP evaluation is to examine the link between LIP and LIP-related payments and the provision of services to, underinsured, and uninsured populations. Thus, the evaluation seeks to answer the fundamental question of how many of the desired services are obtained from a given amount of LIP and LIP-related payments. 8 That is, if the same beneficiary received both inpatient and outpatient services at a given hospital, the total count would report one individual served.

12 P a g e 8 Because services to, underinsured, and uninsured populations can be measured in various ways, there is no one answer to this question. In the LIP milestone data, the most comprehensive measure of services is the number of individuals served. Consequently, the evaluation will examine Number of, Uninsured, and Underinsured Individuals Served Total Payments in $1,000 or the number of, underinsured, and uninsured individuals served for every $1,000 in total payments received. It is important to note that this summary measure does not capture information about the types of services provided. For example, suppose that two hospitals report the same total number of, uninsured, and underinsured individuals served, but for one hospital all the individuals served received inpatient services, while the other hospital provided only outpatient services. In the evaluation, both hospitals would show the same amount of services provided. Although this is a disadvantage of this evaluation approach, this report also includes information on inpatient versus outpatient services provided, which can be viewed side by side with the summary information to yield a more complete picture of both amount and type of services provided. Another important point is that the evaluation does not distinguish between services provided to versus uninsured/underinsured individuals. Even though the LIP milestone data do separate these categories, there is no way to know how many of the LIP and LIP-related payments were for individuals served and how many were for uninsured/underinsured individuals. By aggregating the two categories of individuals served, the assumption is that the payments are used in proportion to the number of individuals in each category. In the CMS STC for Demonstration Year 2 (SFY ), Milestone #102 states: "The State will conduct a study to evaluate the cost-effectiveness of various provider access systems." 9 Costeffectiveness analysis is a type of economic evaluation, in which both program costs and program outcomes are considered. 10 In particular, a cost-effectiveness study measures the dollar cost per unit of program outcome (Cost-Effectiveness = Program Cost/Program Outcome), with program outcome representing the difference between outcomes with and without the program. 11 Cost-effectiveness analysis often is used to assess screening programs or other types of health interventions. For example, a study of the cost-effectiveness of mammography screening 9 CMS Special Terms and Conditions, p See, for example, Milton C. Weinsten, Joanne E. Siegel, Marthe R. Gold, Mark S. Kamlet, Louise B. Russell, for the Panel on Cost-Effectiveness in Health and Medicine, Recommendations of the Panel on Cost-Effectiveness Analysis in Health and Medicine, Journal of the American Medical Association Vol. 276, No. 15 (October 16, 1996): Michael F. Drummond, Bernie O Brien, Greg L. Stoddart, and George W. Torrance, Methods for the Economic Evaluation of Health Care Programmes, 2 nd Ed. (Oxford University Press, 1997).

13 P a g e 9 compared various screening strategies in terms of marginal cost per year of life saved. 12 This study estimated deaths with and without screening and then calculated the program outcome as the number of years of life saved. In the case of the LIP program, it is not possible to perform a true cost-effectiveness analysis because data are not available to compare program outcomes with and without the program. That is, the outcome of the LIP relates to the number of, underinsured, and uninsured individuals served. But many of those individuals would still be served in the absence of the LIP. Because the LIP provides supplemental support for existing services, it is not possible to compare program outcomes with and without the LIP. The LIP evaluation could be considered a quasi cost-effectiveness analysis, though, given that the analysis does measure the number of, underinsured, and uninsured individuals served for every $1,000 in payments received. 12 K.K. Lindfors and C.J. Rosenquist, The Cost-Effectiveness of Mammorgraphic Screening Strategies, Journal of the American Medical Association Vol. 274, No. 11 (September 20, 1995):

14 P a g e 10 LIP AND LIP-RELATED PAYMENTS: SFY This section reports on LIP and LIP-related payments made during SFY , based on the summary presented in Table 1 and tables in the Appendix, which list payments by provider and by program category. For example, Table 1 shows that, in SFY , 19 safety-net hospitals received a total of $75,454,515 from the LIP safety-net hospital category; Appendix Table A1 then lists the specific amount of LIP funds received by each of the 19 hospitals. Note that some providers received payment from more than one of the programs; for example, some of the hospitals receiving safety-net hospital LIP funds also received public hospital DSH funding. However, the total count, both by program and overall, indicates the number of separate Provider Access Systems receiving payment. For example, 221 providers received at least one type of LIP payment. LOW-INCOME POOL (LIP) PROGRAM Payments from the LIP program for SFY are shown, by provider and by program category, in Appendix Table A1. Overall, 221 providers received approximately $876.3 million in LIP payments during this period; the minimum total LIP payment was approximately $13,000 and the maximum total LIP payment was approximately $285.6 million. Safety-Net Hospitals. A total of $75,454,515 went to 19 hospitals, with the average payment being $3,971,290. The amount of payment varied considerably across hospitals, however. The minimum payment was approximately $16,000 and the maximum payment was approximately $32.8 million. Hospitals with Poison Control Centers. Total payments of approximately $3.2 million were distributed to two qualifying hospitals. Specialty Pediatric Hospitals. A total of $1,582,952 went to two qualifying hospitals, each received payment of $791,476. Rural Hospitals. Total payments of approximately $7.9 million were distributed to 24 hospitals. The minimum payment was approximately $9,000, while the maximum payment was approximately $3.1 million. Hospitals with Designated Trauma Centers. Total payments of approximately $9.7 million were distributed among 20 hospitals. Payment per hospital was $386,173, $492,568, or $605,387, depending on the type of trauma center. LIP-Hospitals. Total payments of approximately $757 million went to 161 hospitals. The minimum payment was approximately $19,000, while the maximum payment was approximately $282.6 million.

15 P a g e 11 LIP-Other. Payments in this category went to non-hospital providers, including qualifying FQHCs, county health initiatives emphasizing the expansion of primary care services provided by county health departments (CHDs), and a rural health network. Total payments of approximately $21.5 million went to 59 non-hospital providers. The minimum payment under the LIP-Other category was approximately $13,000 and the maximum was approximately $1.6 million. A later section describes some of the special projects funded under this category. MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH) PROGRAM Payments from the DSH program for SFY are shown, by provider and by program category, in Appendix Table A2. Overall, 62 hospitals received approximately $228.4 million in DSH payments during this period; the minimum total DSH payment was approximately $4,000 and the maximum total DSH payment was approximately $81.3 million. Public DSH - Total payments of approximately $146.4 million were distributed to 40 public hospitals. The minimum payment was approximately $1,000, while the maximum payment was approximately $66.7 million. Teaching DSH - In SFY , 14 teaching hospitals shared total payments of approximately $70.2 million. Payments ranged from approximately $1.5 million to approximately $14.6 million. Rural DSH - Total payments of approximately $11.8 million went to 26 rural hospitals. The minimum payment was approximately $38,000, while the maximum payment was approximately $1.3 million. HOSPITAL EXEMPTIONS TO MEDICAID REIMBURSEMENT CEILINGS PROGRAM Payments from the hospital exemptions to ceilings program for SFY are shown, by provider, in Appendix Table A3. Overall, 56 hospitals received approximately $621.3 million in exemptions payments during this period; the minimum exemptions payment was approximately $5,000 and the maximum exemptions payment was approximately $123 million.

16 P a g e 12 SUMMARY Total LIP and LIP-related payments for SFY are shown, by provider and by program, in Appendix Table A4. Overall, 227 providers received approximately $1.7 billion in total payments. Of the total, approximately $876.3 million came from the LIP program, approximately $228.4 million from the DSH program, and approximately $621.3 million from the hospital exemptions to ceilings program.

17 P a g e 13 INDIVIDUALS SERVED: SFY This section reports on the number of, uninsured, and underinsured individuals served by reporting providers receiving LIP and LIP-related payments. The discussion is based on the summaries presented in Tables 2 and 3. Additional information is provided in Appendix Tables A5 and A6, which list the number of individuals served by provider and by type of individual and type of service. Because the number of individuals is an unduplicated count, the sum of inpatient and outpatient individuals served does not add up to the total number of individuals served. That is, individuals receiving both inpatient and outpatient services are counted only once in the total category. It is important to note that this analysis does not include all, underinsured, and uninsured individuals served in the State of Florida. First, virtually all providers serve some, uninsured, and underinsured individuals. But the number of those individuals served is excluded from this analysis unless the provider received some type of LIP payment in SFY Second, only providers that submitted milestone data as of March 1, 2010, are included; this report is based on data for 142 hospitals reporting milestone data out of 168 hospitals receiving LIP and/or LIP-related payments (85%) and 37 non-hospital providers reporting milestone data out of 59 non-hospital providers receiving LIP payments (63%). HOSPITALS Table 2 summarizes the number of individuals served by reporting hospitals, with Appendix Table A5 reporting the number of individuals served by hospital.. Table 2 shows that reporting hospitals receiving payments provided inpatient services to a total of approximately 374,900 individuals, with the average number of inpatient services to individuals being approximately 2,700 per reporting hospital. For outpatient services, reporting hospitals receiving payments served a total of approximately 1.54 million individuals (average per reporting hospital: approximately 10,900 individuals). For both inpatient and outpatient services, reporting hospitals receiving payments served a total of approximately 1.59 million individuals, with the average per reporting hospital being approximately 11,200 individuals. Uninsured and Underinsured. Reporting hospitals receiving payments provided inpatient services to a total of approximately 270,000 uninsured and underinsured individuals, with the average number of inpatient services to uninsured and underinsured individuals being approximately 1,900 per reporting hospital (see Table 2). For outpatient services, reporting hospitals receiving payments served a total of approximately 1.57 million uninsured and underinsured individuals (average per reporting hospital: approximately 11,100 uninsured and underinsured individuals). For both inpatient and outpatient services, reporting hospitals receiving payments served a total of approximately 1.76 million uninsured and underinsured

18 P a g e 14 individuals, with the average per reporting hospital being approximately 12,400 uninsured and underinsured individuals., Uninsured, and Underinsured. Reporting hospitals receiving payments provided inpatient services to a total of approximately 645,000, uninsured, and underinsured individuals, with the average number of inpatient services being approximately 4,500 per reporting hospital (see Table 2). For outpatient services, reporting hospitals receiving payments served a total of approximately 3.11 million, uninsured, and underinsured individuals (average per reporting hospital: approximately 22,100). For both inpatient and outpatient services, reporting hospitals receiving payments served a total of approximately 3.35 million, uninsured, and underinsured individuals, with the average per reporting hospital being approximately 23,600 uninsured and underinsured individuals. NON-HOSPITAL PROVIDERS Table 3 summarizes the number of individuals served by reporting non-hospital providers, with Appendix Table A6 reporting the number of individuals served, by non-hospital provider. As shown in Table 3, reporting non-hospital providers receiving LIP payments provided services to a total of approximately 246,700 individuals, with the average number of individuals served being approximately 6,700 per reporting non-hospital provider. For uninsured and underinsured individuals, reporting non-hospital providers served a total of approximately 444,800 individuals, with the average being approximately 11,700 per reporting non-hospital provider. Finally, a total of approximately 691,600, uninsured, and underinsured individuals were served by reporting non-hospital providers receiving LIP payments (average of approximately 18,200 per reporting non-hospital provider).

19 P a g e 15 SERVICES PROVIDED: SFY This section describes services provided to, uninsured, and underinsured individuals by reporting providers receiving LIP and LIP-related payments. The discussion is based on the summaries presented in Tables 4 and 5. Additional information is provided in Appendix Tables A7 and A8, which list the number of services by provider and by type of individual and type of service. As was the case for individuals served, this analysis does not include all services provided to, underinsured, and uninsured individuals in the State of Florida. First, virtually all providers provide some services to, uninsured, and underinsured individuals. But those services are excluded from this analysis unless the provider received some type of LIP payment in SFY Second, only providers that submitted milestone data as of March 1, 2010, are included; this report is based on data for 142 hospitals reporting milestone data out of 168 hospitals receiving LIP and/or LIP-related payments (85%) and 37 non-hospital providers reporting milestone data out of 59 non-hospital providers receiving LIP payments (63%). HOSPITALS Table 4 summarizes the services provided by reporting hospitals, with Appendix Table A7 reporting the services provided, by hospital. As shown in Table 4, reporting hospitals receiving payments provided a total of approximately 896,200 discharges to, uninsured, and underinsured individuals, with the average per reporting hospital being approximately 6,300. When measured in terms of inpatient days, reporting hospitals provided approximately 3.5 million days in total to, uninsured, and underinsured individuals; on average, reporting hospitals provided approximately 24,500 discharges. Reporting hospitals receiving payments provided a total of approximately 2.9 million emergency room (ER) encounters to, uninsured, and underinsured individuals, with the average per reporting hospital being approximately 21,400 ER encounters. For outpatient services, reporting hospitals provided approximately 2.6 million encounters in total to, uninsured, and underinsured individuals; on average, reporting hospitals provided approximately 19,100 outpatient encounters. Finally, reporting hospitals provided a total of approximately 2.4 million filled prescriptions to, uninsured, and underinsured individuals; on average, reporting hospitals provided approximately 120,700 filled prescriptions.

20 P a g e 16 NON-HOSPITAL PROVIDERS Table 5 summarizes the services provided by reporting non-hospital providers, with Appendix Table A8 reporting the services provided, by non-hospital provider. As shown in Table 5, reporting non-hospital providers receiving LIP payments provided a total of approximately 1.2 million primary care encounters, 341,500 OB/GYN encounters, and 88,100 disease management encounters to, uninsured, and underinsured individuals. For mental health and dental services, a total of approximately 144,400 encounters and 301,300 encounters, respectively, were provided to, uninsured, and underinsured individuals. Reporting non-hospital providers also provided a total of approximately 780,200 filled prescriptions, 281,500 lab services encounters, and 23,000 radiology services encounters to, uninsured, and underinsured individuals. Finally, a total of approximately 30,800 specialty care encounters and approximately 81,100 care coordination encounters were provided to, uninsured, and underinsured individuals by reporting non-hospital providers receiving LIP payments. It is interesting to note in Table 5 that, except for mental health and dental health services, the amount of services provided to uninsured and underinsured individuals exceeded that provided to individuals. This finding highlights the important role of non-hospital providers in caring for those without insurance.

21 P a g e 17 EVALUATION: SFY In evaluating the LIP, the overall objective is to examine the link between LIP and LIP-related payments and the provision of services to, underinsured, and uninsured populations. The fundamental question, therefore, is how many of the desired services are obtained for a given amount of LIP and LIP-related payments. This section describes the evaluation results. As discussed previously, the evaluation will examine Number of, Uninsured and Underinsured Individuals Served Total Payments in $1,000 or the number of, underinsured, and uninsured individuals served for every $1,000 in total payments received. The discussion is based on the summary presented in Table 6. Additional information is provided in Appendix Tables A9 and A10, which present information by provider. Several points are important to keep in mind in reviewing these results. First, calculations are based only on providers that both received payments and reported milestone data (142 of 168 hospitals for total payments; 140 of 162 hospitals for LIP payments; 37 of 59 non-hospital providers). The summary statistics therefore must be used with caution. The results would be somewhat different if all providers receiving payments had reported milestone data by the required submission date. Another important point is that, although virtually all providers provide some services to, underinsured, and uninsured individuals, individuals served are included in this report only if the provider received some type of LIP or LIP-related payment in SFY Moreover, the summary measure used in the evaluation and the number of individuals served does not capture information about the type of services provided. A final important point is that the evaluation measure does not distinguish between individuals served versus uninsured/underinsured individuals served. HOSPITALS Table 6 summarizes the evaluation results for reporting hospitals, with Appendix Table A9 presenting evaluation results, by reporting hospital. In SFY , for the 142 reporting hospitals, the average number of, uninsured, and underinsured individuals served for every $1,000 in total payments received was Measured only for LIP, the reporting hospitals served an average of 31.1, uninsured,

22 P a g e 18 and underinsured individuals for every $1,000 in LIP payments received. Note that the number of individuals is the same in both sets of calculations, what differs is the amount of payments received LIP only or total (LIP, DSH, and exemptions). The evaluation measures exhibited substantial variation across hospitals. For example, the number of, uninsured, and underinsured individuals served for every $1,000 in total payments received ranged from 0.2 to The extent of variation is likely due to differences among hospitals in terms of size, location, number of, uninsured, and underinsured individuals in the local area, and other factors. Table 6 also reports the amount of funding received for each, uninsured, and underinsured individual served, in order to provide another perspective on the evaluation of LIP and LIP-related programs. As shown in the table, on average, reporting hospitals received total payments of $323 and LIP payments of $167, respectively, for each, uninsured, and underinsured individual served. NON-HOSPITAL PROVIDERS Table 6 also summarizes the evaluation results for non-hospital providers, with Appendix Table A10 reporting, by non-hospital provider, the number of, uninsured, and underinsured individuals served for every $1,000 in funding received. In SFY , for the 37 reporting non-hospital providers, the average number of, uninsured, and underinsured individuals served for every $1,000 in LIP payments received was Table 6 also shows that the average amount of funding received for each, uninsured, and underinsured individual served was $73 in SFY Note that because non-hospital providers receive only LIP payments, there is no difference between total and LIP payments. The evaluation measures exhibited substantial variation across reporting non-hospital providers. For example, the number of, uninsured, and underinsured individuals served for every $1,000 in total payments received ranged from 0.6 to One source of the variation is the fact that non-hospital providers include Federally Qualified Health Centers (FQHCs), county health initiatives, and a rural health network; the differing objectives across provider types would be expected to result in variation for this overall, general evaluation measure. In addition, the extent of variation is likely to reflect differences among non-hospital providers in terms of size, location, and number of, uninsured, and underinsured individuals in the local area. Another consideration is that some of the non-hospital providers have been in operation a relatively short period of time, and the start-up period typically is not a good indicator of ongoing performance.

23 P a g e 19 SELECTED PROJECTS FUNDED BY LIP In SFY , the LIP-Other category totaled $21,502,552. Funding from this category went to 59 non-hospital providers, including FQHCs, to support the provision of primary care services to, underinsured, and uninsured populations. Funds also supported special projects sponsored by the Florida Department of Health. This section describes some of these special projects. Florida Department of Health Emergency Room Alternative Projects. 13 In , LIP funding supported 11 projects sponsored by the Florida Department of Health with the goals of redirecting persons with low-acuity health problems away from hospital ERs to primary care clinics, providing a primary care medical home to the low-income uninsured, providing disease management services to low-income persons with ambulatory care sensitive conditions, and linking uninsured persons to third party coverage where possible. Sites included Citrus, Dixie, Duval, Jefferson, Lake, Madison, Okaloosa, Orange, Pinellas, Polk, and Sarasota counties and the St. Johns River Rural Health Network. The remainder of this section provides additional information for projects in Duval and Sarasota counties and the St. Johns River Rural Health Network. Hospital Emergency Room Alternative Program (HERAP), Duval County Health Department. 14 HERAP is a locally developed initiative with the mission of improving health outcomes for uninsured, underinsured, and low income residents of the community through connection with preventive health services, medical homes, and evidence-based chronic disease management services, especially for those at risk of over-using ERs. Components of HERAP include outreach for financial and clinical assessment, coordination of hospital ER and inpatient referrals, primary care medical homes, medical condition management centers, outreach into community living rooms, medication assistance program, expanded medical clinic hours, chronic disease self management program, and regional health information exchange. Selected accomplishments include serving 2,697 clients from hospital and community referrals, connecting 70% of hospital-referred patients with medical homes, reducing ER utilization of HERAP-enrolled clients by 10%, and reducing hospitalization of HERAP-enrolled clients by 25%. Sarasota County Health Department. 15 Sarasota Health Care Access is an integrated system of care for the uninsured and medically underserved populations in Sarasota County. Key objectives of the program are to reduce unnecessary utilization of hospital inpatient and emergency room services and to improve access to primary care, specialty care, and oral health services. Partners include Sarasota County Health Department, Community Medical Clinic, pdf (accessed June 3, 2010) (accessed June 3, 2010) (accessed June 3, 2010).

24 P a g e 20 Community Pharmacy, Comprehensive Care Center, Genesis Health, North County Clinic, Senior Friendship Center, South County Clinic, and hospital in-patient facilities. A before-after within patient group comparison estimated that the referral program had resulted in a decrease of approximately 240 ER visits per year for estimated savings of approximately $293,000 and a decrease of approximately 400 in-patient admissions for estimated savings of approximately $5 million. St. Johns River Rural Health Network. 16 The mission of this rural health network is to recognize, encourage, and support partnerships that improve the health of the rural communities of Baker, Clay, Flagler, St. Johns, Putnam, and Volusia counties. Network partners include five county health departments, four rural hospitals, independent eye and foot specialists, behavioral health service providers, Nassau County government, Winn-Dixie pharmacies, and the Florida Academy of Family Physicians. Covered services include primary medical care, related diagnostic and lab tests, diabetes management education, service coordination and follow-up, annual eye and foot exams, diabetic medications and supplies, and immunizations (influenza and pneumococcal) (accessed June 3, 2010).

25 P a g e 21 COMPARISONS ACROSS YEARS Any provider receiving LIP funds in SFY , the first year of Reform, was required to submit milestone data for that year and for SFY , the year preceding Reform, even if no payments were received in that year. In addition, any provider receiving LIP funds in SFY or SFY , the second and third years of Reform, was required to submit milestone data for that year. This section provides summary comparisons across four years SFYs , , , and Previous evaluation reports provide more detailed information for SFYs , , and PAYMENTS Table 7 compares payments received in SFYs , , , and SMP and LIP Programs Prior to Reform, funds from the Special Payments (SMP) program were distributed to qualified hospitals under the hospital inpatient Upper Payment Limit (UPL) program. Under Reform, the LIP program was substituted for the SMP program. Consequently, payments are reported for the SMP program in SFY and for the LIP program in SFYs , , and The UPL program provided the opportunity for certain providers to receive increased matching funds from the federal government. 18 The upper payment limit for this additional funding was calculated by the amount that would have been paid under Medicare payment principles less the payments actually made by. 19 The SMP program was one component of the UPL program in the pre-lip period. In SFY , the SMP program included the following sub-categories: safety-net hospitals, hospitals providing low-income services, hospitals with poison control centers, pediatric hospitals, family practice hospitals, teaching hospitals SMP, primary care hospitals SMP, rural hospitals SMP, hospitals with designated trauma centers, and hospitals working with FQHCs. Specific legislative criteria determined the distributions to hospitals under the SMP program. 20 In SFY , the LIP, which replaced the SMP, included distributions to many of the same sub-categories. The SMP and LIP programs are similar in that both address the issue of Regulations governing these programs: 42 CFR part Report on Local Funding Revenue Maximization and Local Funding for Inpatient Reimbursement, AHCA Report to the Florida Legislature, SFY , p Ibid., p. 8.

26 P a g e 22 providing health care services to, underinsured, and uninsured populations, and both provide the opportunity for certain providers to receive increased matching funds from the federal government. However, the LIP and SMP programs differ in two important ways. First, the LIP is capped at an annual allotment of $1 billion (the pool ), whereas the SMP, calculated annually, was capped by the UPL amount. Second, while SMPs went exclusively to hospitals, LIP payments were made to Provider Access Systems, which included both hospitals and non-hospital entities, such as CHDs. AHCA defined a Provider Access System as Entities such as hospitals, clinics, or other provider types and entities designated by Florida Statute to improve health services access in rural communities, which incur uncompensated medical care costs in providing medical services to the uninsured and underinsured, and which receive a Low Income Pool (LIP) payment 21 As shown in Table 7, some program categories appear under both the SMP and LIP programs, while others do not. For example, family practice and teaching hospitals received SMP Payments in SFY , but did not receive payments under the LIP. However, as discussed further subsequently, the DSH program added a category for teaching hospitals in SFYs , , and In moving from the SMP program to the LIP program, five of the categories were designated transition programs and had payments that were the same or almost the same in SFY as in SFY The transition program payments include safety-net, pediatric, primary care, rural, and designated trauma centers. According to the Low Income Pool Reimbursement and Funding Methodology document, the hospitals that receive these distributions are considered some of Florida s core safety-net providers serving a significant portion of Florida s, uninsured, and underinsured population. 22 Note, however, that payments to safetynet, pediatric, and designated trauma centers declined over the period SFY to SFY and the primary care category was eliminated altogether in SFY In total, 87 providers received SMP payments in SFY , with 206, 208, and 221 providers receiving LIP payments in SFYs , , and respectively. It is important to note, however, that all providers receiving SMP payments were hospitals, whereas under the LIP, 163 of the providers receiving payment in SFY were hospitals and 43 were nonhospital providers. In SFYs and , 160 hospitals and 44 non-hospital providers received LIP payments and 162 hospitals and 59 non-hospital providers received LIP payments, respectively. Total payments increased substantially in the first year of the LIP, from approximately $667 million from the SMP program in SFY to approximately $999 million from the LIP program in SFY Total LIP payments increased only slightly between SFYs and 21 Ibid., p Agency for Health Care Administration, Low Income Pool Reimbursement and Funding Methodology (submitted to CMS May 29, 2007), p. 6.