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Ted Shaw Blog
13

Understanding Hospital Financing

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A predictable, stable and fair system of health care financing has long been a challenge for Texas hospitals.

Texas hospitals are reimbursed for just 58 percent of the costs for inpatient hospital care and about 70 percent of the costs for outpatient services. With new policies required by the Medicaid 1115 Waiver, the way hospitals calculate and subsequently are reimbursed for uncompensated care is changing. Funding for the Waiver’s Delivery System Reform Incentive Payment program ends in 2021, and some state lawmakers want to cap the amount of revenue local jurisdictions can generate, which could impede hospitals’ abilities to provide the non-federal share of Medicaid supplemental payments.

All these challenges, their potential impact and possible solutions need to be communicated to the Texas Legislature when it convenes for the 2019 legislative session in January. First, however, Texas hospitals and stakeholders must understand the intricate system of financing in order to be effective advocates.

The Texas Hospital Association developed an educational series on hospital financing that explains the complex ways in which Texas hospitals are paid by public and private payers. The series uses whitepapers to help clarify distinct facets of hospital financing for lawmakers, Texas hospitals and the public.

The series features:

  • Medicaid’s Role in Hospital Financing: Covers Medicaid’s role in reimbursement and supplemental payments.
  • Local Provider Participation Funds in Texas: Explains how LPPFs support Medicaid payments, where they currently exist and the state legislation that authorizes them.
  • Value-Based Payment: Discusses the challenges and opportunities Texas hospitals experience in navigating state and federal requirements for specific value-based payment models.
  • (New!) Rural Hospital Financing: Describes the special financing arrangements in Medicaid and Medicare that target the unique needs and vulnerabilities of rural hospitals.
  • Hospital Payment Sources – coming soon.
  • The Role of Property Tax Revenue – coming soon.
  • Financing Graduate Medical Education – coming soon.

Texas hospitals are encouraged to use the series to better understand and explain the unique funding arrangements under which hospitals are paid. THA’s educational hospital finance series is available at www.tha.org/hospitalfinance.

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