Hospital Mutual Assistance Program (Guard Rails)

February 8, 2018

MEMORANDUM

FROM: A.J. Wilhelmi, President & CEO

Hospital Mutual Assistance Program (“Guard Rails”)

On January 26, the IHA Board voted unanimously to continue the Hospital Mutual Assistance Program (“HMAP”), with changes in the program to address the adverse impacts that will result from the new hospital assessment and payment methodologies that will take effect on July 1.

This memorandum has two goals. First, I will explain why HMAP 2018 is absolutely essential to the ability of IHA and its members to shape and influence the Medicaid program in the best interest of all of our members and all the communities they serve. Second, I will explain how HMAP 2018 will operate in as much detail as possible.

In case you are unfamiliar with HMAP, here is the one-sentence version: Hospitals that benefit from the Medicaid assessment and payment model make voluntary contributions that are used to award grants to hospitals that are adversely affected by the assessment and payment model. HMAP has been in operation since 2006.

Why is HMAP Critical to All Illinois Hospitals?

For years, Illinois spending per Medicaid enrollee has been among the lowest – often the lowest – of any state in the nation. This chronic underfunding of the Medicaid program has resulted in diminished access to health care by our most vulnerable citizens, disparities in health outcomes between communities, and severe financial pressure on hospitals – especially those serving the most vulnerable communities.

Going back to the 1990s, IHA and its members have stepped up to address the lack of adequate funding. We have been instrumental in significantly increasing the amount of federal matching funds available to the Illinois Medicaid program by supporting a succession of hospital assessments. Those assessments and the increased federal funding they have made possible have vastly improved reimbursement for many hospitals – especially safety net hospitals serving vulnerable populations.

As you know, reaching membership consensus on these hospital assessment and payment models has always been extremely challenging. But consensus is absolutely essential to getting a model adopted by the General Assembly and approved by the Centers for Medicare and Medicaid Services.

Success requires nearly unanimous agreement among hospitals and government officials. If key stakeholders perceive that their hospitals, their communities, or their constituents are being harmed or treated unfairly, that critical consensus can unravel. And failure to agree on a new assessment and payment model will have unimaginable human consequences. Over the years, the possibility of disunity and failure has often seemed very real.

That is what gave birth to the Hospital Mutual Assistance Program. The recognition that if an assessment and payment model is important and beneficial to your hospital and your community, then it is essential that you help ensure that all hospitals and all communities are treated fairly and equitably.

Description of Hospital Mutual Assistance Program 2018

HMAP is operated by the Illinois Hospital Research and Educational Foundation (“IHREF”), which is a subsidiary of IHA that is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code. IHREF’s charitable purposes include (1) fostering and encouraging high standards of patient care by hospitals and (2) initiating and carrying on programs that contribute to improved care and treatment of hospital patients, for the benefit of the people of Illinois.

HMAP is a grant program. At its most basic, certain hospitals that benefit from the assessment and payment methodologies are asked to make voluntary contributions to HMAP. Those contributions are then used to award grants to hospitals that experience negative and disparate effects from the assessment and payment methodologies. The amount of requested contributions is determined based on the known level of need by adversely affected hospitals.

HMAP 2018 – as approved by the IHA Board – will run for state fiscal years 2019 and 2020, at which time the program will be examined for any needed modifications based on changes made to the assessment and payment methodologies for state fiscal year 2021 and beyond.

HMAP 2018 will operate as follows:

  • The purpose of the program is to mitigate reductions in net gains (reimbursement received less provider tax paid) experienced by eligible hospitals and systems in SFY 2019 and 2020, as compared to the net gains under the assessment, ACA access payment and rate reform transition payment reimbursement methodologies in place during SFY 2018.
  • Independent safety net hospitals and independent critical access hospitals are eligible to receive a grant under the program if they experience any reduction in net gain from SFY 2018.  Such hospitals are eligible for grants up to the amount needed to eliminate the projected reduction in net gain. The word “independent” means that the hospital is not part of a system.
  • All other hospitals and systems are eligible to receive a grant under the program if they experience a reduction in net gain of greater than 20 percent from the current assessment and reimbursement methodologies in effect in SFY 2018. Such hospitals or systems are eligible for grants up to the amount needed such that the reduction in their net gain equals no more than 20 percent from the assessment and reimbursement methodologies in effect in SFY 2018.
  • Hospitals that would otherwise be eligible for a grant under the above principles, but that are part of a system that, as a whole, does not experience a reduction in its net gain of more than 20 percent from the SFY 2018 assessment and reimbursement methodologies, are not eligible for a grant.
  • Contributions will be sought from hospitals and systems that have a projected increase in net gain from the SFY 2018 assessment and reimbursement methodologies of greater than 20 percent, with the amount of the contribution being determined proportionately based on the gains above the 20 percent threshold.
  • The ability to award grants depends entirely on the amount of contributions received. There is no right to a grant in the absence of adequate contributions to the program.
  • Should contributions be insufficient to satisfy all grant applications, priority in the awarding and funding of grants will be given to independent safety net hospitals and independent critical access hospitals.

In closing, let me reiterate that IHA is committed to the well-being of all of our member hospitals and the communities they serve. The unanimous decision of the IHA Board to continue HMAP speaks to that commitment.

If you have any questions, please contact Joe Holler, Vice President, Finance, 217-541-1189 or jholler@team-iha.org; or Jo Ann Spoor, Senior Director, Finance, 217-541-1187 or jspoor@team-iha.org.