PA Hospitals: State Budget Deal Good for Patients and Providers

Thursday, July 01, 2010

The Hospital & Healthsystem Association of Pennsylvania (HAP) welcomed this week’s 2010–2011 state budget deal between legislative leaders and the Governor.

“This budget is a ‘win-win-win’ for our patients, our hospitals, and the Commonwealth,” said HAP President and CEO Carolyn F. Scanlan. “Better and more stable Medical Assistance funding for hospitals will help to preserve and enhance patient access to care, provide hospitals with additional funding needed to improve quality and safety for all patients, and contribute approximately $246 million in revenue to the state over the next three years.”

The budget agreement includes a modernized Medical Assistance (MA) payment system that will improve and stabilize reimbursements to hospitals while simultaneously providing a stable source of funds to the Commonwealth.

“Pennsylvania’s hospitals have operated under a reimbursement system that dates back to the 1980s,” Scanlan said. “Under this antiquated system, MA reimbursements today average just 80 cents for every dollar of hospital costs. This has made it extremely challenging for hospitals to meet the health care needs of Pennsylvania’s families.”

In an effort to solve the problem of chronic underfunding of hospitals and help the state address its budget shortfall, HAP and Pennsylvania’s hospitals came forward with a proposal for a new system that improves MA payments to hospitals and preserves hospital supplemental payments (burn, trauma, OB, inpatient/outpatient disproportionate share, medical/health professional education, community access fund, critical access hospitals), while generating revenue through an assessment on hospitals that will leverage federal matching funds.

The MA modernization plan covers general acute-care hospitals, children’s hospitals, and medical rehabilitation hospitals.

“The MA modernization agreement reached between HAP, the Rendell administration, and lawmakers is a prudent one,” Scanlan said. “It helps the state as well as supports hospitals that serve the state’s most vulnerable citizens—children, pregnant women, persons with disabilities, and the elderly.”