Creative payment strategy helps ensure a future for teaching hospitals - Cover Story

Healthcare Financial Management, Nov, 1998 by Donald R. Vancil, A. Laurie W. Shroyer

The Medicare upper-payment limit and Medicaid payment averages are extracted from HCFA Region XIII reports. The maximum allowable allocation is stipulated each year in the state Long Appropriations Bill, with a line item designated specifically for this purpose. Thus, all components required for this calculation are based on data from publicly available records.

The combined effect of the MTH program on the two Denver facilities, the Colorado Medicaid program, and the state of Colorado has been extremely positive. MTH Medicaid payments received by the two qualifying hospitals since FY90-91 have increased by $5,342,709, from $15,067,816 to $20,410,525. A total of $131,751,104 in Medicaid MTH hospital payments have been received between FY90-91 and FY96-97. The funding ensures that Medicaid and medically indigent patients (within programmatic restrictions, such as experimental interventions) receive access to the highest quality and most up-to-date technological services, regardless of their ability to pay.

Historically, Medicaid payments have been directly related to the billing-and-claims-processing cycle. In contrast, MTH payments are made monthly independent of claims processing. Without the MTH payments, the administrators of the two facilities indicated their teaching programs might not have been sustained at their current levels.

EXHIBIT 1: UNIVERSITY HOSPITAL'S MEDICARE PROGRAM GRADUATE MEDICAL EDUCATION
PAYMENTS

               Direct Graduate   Indirect Graduate   Total Graduate
                   Medical           Medical            Medical
                 Education          Education          Education
                 Payments(*)         Payments           Payments

FY90-91(**)      $3,112,285         $6,862,503         $9,974,788
FY91-92(***)     $2,269,044         $6,848,888         $9,117,932
FY92-93(***)     $2,269,044         $6,848,888         $9,117,932
FY93-94          $2,949,642         $8,635,105        $11,584,747
FY94-95          $3,120,010        $10,451,428        $13,571,438
FY95-96          $2,885,127        $10,574,600        $13,459,727

Total           $16,605,152        $50,221,412        $66,826,564

* Direct medical education includes both Part A and Part B.

** Fiscal year is defined as July through June for each year range
listed.

*** Note: For University Hospital, audited data for FY91-92 and
FY92-93 were unavailable as the cost reports had been pulled by HCFA
for a separate project. Thus, the graduate education payments for
these years are conservatively estimated on the basis of the first
three months of the FY91-92 report received.

Source: Medicare payment information was obtained from the Medicare A office,
Denver Regional Audit Office.
EXHIBIT 2: DENVER HEALTH MEDICAL CENTER'S MEDICARE PROGRAM GRADUATE
MEDICAL EDUCATION PAYMENTS

            Direct Graduate    Indirect Graduate    Total Graduate
                Medical             Medical             Medical
               Education           Education           Education
              Payments(*)           Payments            Payments

FY91(**)        $695,085           $1,619,704          $2,314,789
FY92            $849,284           $2,260,774          $3,110,058
FY93          $1,093,582           $3,164,854          $4,258,436
FY94          $1,093,852           $3,226,296          $4,320,148
FY95          $1,064,423           $3,473,522          $4,537,945
FY96          $1,045,953           $3,188,745          $4,234,698

Total         $5,842,179          $16,933,895         $22,776,074

* Direct medical education includes both Part A and Part B.

** Fiscal year is defined as January, to December.

Source: Medicare payment information was obtained from the Medicare
A office, Denver Regional Audit Office.