The deal between the state and federal government and hospitals, announced last week, is for seven years.
SPRINGFIELD -- A Medicaid waiver announced last week means increased funding to local hospitals, including $28.05 million over five years in long-sought "safety net" money for Baystate Medical Center. That's money the hospital administration felt was wrongly withheld in the past.
The waiver, a $52.4 billion deal between the hospitals, the state and the federal government, has three distinct funding streams: the Health Safety Net, funding for new accountable care organizations meant to improve health and save money, and improved Medicaid reimbursement rates, according to hospital executives in the Pioneer Valley.
It also seeks to transform Medicaid, the federal-state program to provide basic health care for the needy, from a fee-for-service program to one based on accountable care organizations and population health, said Dr. Mark A. Keroack, president and CEO of Baystate Health. The idea is to save money in the long run by spending on prevention, not procedures and emergency room visits.
Under an ACO, a health care provider gets money to care for a population and, once quality standards are met, can keep a portion of the money that doesn't have to be spent on health care.
Mark A. Keroack
"Once you have population health you start spending money on funny things," Keroack said. "You start spending money on transportation to get people to doctor appointments. You start spending money making sure people have good housing that is warm and dry."
Hospitals don't know yet exactly how much they'll get in improved rates and for the accountable care organizations. The ACOs in particular have not yet been set up and funding will vary by the number of patients enrolled and the level of risk to the health care provider.
But Holyoke Medical Center estimates it will get about $8.3 million a year over five years for a total $41.5 million, said President and CEO Spiros Hatiras. That estimate includes $5.9 million a year in Health Safety Net funding for a total of $29.5 million over five years. The safety net dollar figure is a known amount at this point.
Hatiras thanked state and local officials for hammering out the deal and doing so under a tight deadline. It was unknown at the time, but a new Republican administration in Washington might change health care rules.
"With elections coming up, having that waiver approval in place is very important for us," he said.
Daniel Keenan
Mercy Medical Center in Springfield will get about $12 million a year over five years for a total of $60 million in Health Safety Net funding, said Daniel Keenan, senior vice president of government and community relations. That includes about $11 million a year in safety net funding for a total of $56.33 million.
Keenan said it's important that the new deal is a five-year deal, not three years as had been the case before. Hospitals need the stability, he said.
Keroack was unwilling this week to estimate the total dollar amount Baystate will receive. But the state has made public the Health Safety Net dollar figures -- the only ones known now for certain anyway. Keroack was eager to discuss those numbers.
Baystate Medical Center will get $5.61 a year for a total of $28.05 million over five years. Baystate Franklin Medical Center in Greenfield will get $470,000 a year for five years for a total of $2.35 million.
Neither of the hospitals were part of the Health Safety Net program before. Other Baystate hospitals, like Baystate Noble in Westfield and Baystate Wing in Palmer, were not included before and are not included now.
Also not on the list of participating hospitals, in any facet of the waiver programs, was Northampton's Cooley Dickinson.
Keroack said the payments are important to Baystate because Medicaid only pays 75 percent of the cost of care. Baystate loses 25 cents on the dollar for every Medicaid case it takes in.
"That's a $40 million hole," Keroack said.
Medicaid is one major reason Baystate has had to cut back. The region's largest health care provider, Baystate cited that strain as one reason executives cut 325 jobs at parent Baystate Health in October, mostly from the ranks of management, in order to cover a system-wide $75 million budget gap for the current year.
The reason Keroack cannot say yet how much money Baystate will get for running accountable care organizations is that he has yet to commit to how big or how ambitious Baystate's ACOs will be.
The highest risk-highest reward option the state offers would require Baystate to partner with an insurer. That's a natural because Baystate owns Health New England, which has an ACO now for Medicare, the federal program that provides health care to the aged.
That option would also require Baystate to admit 20,000 Medicare recipients to the program. That's doable, Keroack said, but it would be risk. The people in the ACO might need more care and Baystate could take a financial loss.
He knows the state would like Baystate to take this most expansive option.
"I know we are set up for it," he said.
There is a middle option and an option that would have Baystate merely dabbling with accountable care. The decision is due by Jan. 12.
Because Baystate already does accountable care for seniors on Medicare, Keroack said he'd like Baystate doctors to apply the principle across the board. He wants the health care system to work for prevention with all and not get used to treating patients differently if their method of payment is different.
Spiros Hatiras
Hatiras said the accountable care organizations will be innovative. A new trend in medicine, they replace the traditional fee-for-service model with the government or insurers paying health care providers to take care of a given population of patients.
The idea is to push prevention.
"Emergency department visits are expensive," he said. "But what if we can prevent them? What if I send a community health worker out to make sure people take their medication, change their diet and get exercise. Some of the models even look at housing and the social and economic causes of poor health outcomes. That can save money."
But the old system had no way to pay that health worker. It did have a way to pay for the emergency room.
"Now I can pay that health worker," Hatiras said.
Keenan there is money in the waiver to fight opioid abuse, an ongoing effort both at Mercy and at its related institution Sisters of Providence Behavioral Health in Holyoke.
"We can fund 24-hour medically necessary services," Keenan said.
"It also puts a lot of focus on the integration of behavioral health and community services," Keenan said. "It does provide an opportunity to continue some innovative work."
