ENSURING CHILDREN HAVE ACCESS TO CARE THROUGH TRANSPARENT, STABLE FUNDING AND DELIVERY SYSTEMS

While many public policies impact children’s health care — including federal and state reforms — Medicaid is the single public policy with the most dramatic impact on access to quality health care for Ohio’s children. Ohio’s children’s hospitals are an essential part of the health care safety net for Ohio’s children, providing care to all Ohio children, regardless of their ability to pay.

In Ohio, children's health care is a good investment:

• Best care in the nation: Ohio has the strongest network of children’s hospitals in the nation – leading the country in quality of care and development of groundbreaking research and technology that create jobs and save children’s lives.
• Ohio’s Medicaid costs for children are at or below the national average: Ohio’s spending for the state’s Covered Families and Children population is ranked 20th nationwide in per capita Medicaid spending. Covered Families and Children spending accounts for about 78 percent of Medicaid enrollees, but only 30 percent of Ohio’s Medicaid cost. 
• Ohio’s children’s hospitals have a proven record of cost-savings resulting from quality improvement: Ohio’s children’s hospitals have proven that they can save thousands of lives and save millions of dollars through their quality improvement efforts

Ohio Children’s Hospitals Have a Disproportionately High Share of Medicaid Patients

When compared to general hospitals (which average 12 percent Medicaid caseload), Ohio’s children’s hospitals have a disproportionately high share of Medicaid patients, and the caseload continues to grow.

Consider that in 2007, 43 percent of children’s hospital patients were reliant on Medicaid, growing to more than 50 percent in 2009. This shift contributed to an additional $64.84 million – a 40.6 percent increase – in annual children’s hospital Medicaid losses, which totaled $224.84 million in 2009.Combined with uncompensated care losses ($18.74 million), children’s hospitals lost $243.58 million in 2009. This loss occurred even after accounting for beneficial funding programs such as the children’s hospital line item and the Hospital Care Assurance Program (see below).

Every one percent shift in patient caseload from commercial insurance to Medicaid represents an additional $2 million to $7 million annual lossfor a children’s hospital in Ohio, depending on hospital caseload.  Without stable public sector funding, Medicaid payment shortfalls will make it impossible to continue to provide high quality and cost effective health care to all Ohio children.

There are three critical Medicaid funding mechanisms for children’s hospitals in Ohio: Medicaid reimbursement rates, children's hospital line item payments for outlier cases and the Hospital Care Assurance Program. The cost to children’s hospitals of providing care to Ohio’s Medicaid-reliant children was $1.06059 billion in 2009, but the current funding mechanisms reimburse children’s hospitals only $835.75 million for this care (approximately 21 percent below cost).

• Medicaid reimbursement rates:These are the rates at which the state reimburses providers for the services they provide. Generally, these rates remain well below the actual cost of providing care in Ohio, and are on average 40 percent less than Medicare reimbursement rates. ($776.32 million – 2009)
• Children’s hospital line item payments:Recognizing the unique role Ohio’s children’s hospitals play in providing critical care for Ohio’s children, the state’s legislative and executive bodies have provided annual line item funding since 2005. This funding helps to defray some of the higher costs associated with devastating illnesses (such as childhood cancer, premature birth, autism and cystic fibrosis) and is paid to hospitals based on caseload data. ($6 million GRF, drawing approximately $12.52 million in matching federal dollars, for a total of $18.52 million per year - 2009)
• Hospital Care Assurance Program (HCAP):HCAP funding, which is Ohio’s Disproportionate Share funding mechanism, provides partial relief for the significant Medicaid losses and uncompensated care incurred for service to this vulnerable population of children. ($40.91 million – 2009)