Pediatric Hospitals May Lose the Most From ACA Rules

Marcia Frellick

December 31, 2015

Children's hospitals may take the brunt of increased financial risk from the Affordable Care Act (ACA), according to a research letter published online December 28 in JAMA Pediatrics.

Jeffrey D. Colvin, MD, JD, from the Department of Pediatrics, Children's Mercy Hospitals and Clinics, University of Missouri–Kansas City School of Medicine, and colleagues found that although children's hospitals represented 3.4% (n = 75) of all hospitals studied, they accounted for 32.4% of the lowest-household-income patients, 33.8% of Medicaid recipients, and 42.5% of patients with the highest severity of health conditions. Children's hospitals also cared for the most patients with complex chronic conditions (52.8%; n = 152,872).

Reductions in the federal disproportionate share hospitals (DSH) payments, which go to institutions with large numbers of uninsured and Medicaid populations, will also hit children's hospitals hard. Under the ACA, the government is cutting back on the payments because it assumes there will be fewer uninsured patients.

However, there will not be large decreases in the number of uninsured children because only a small percentage of children are uninsured to start with, say the study authors. In contrast, a large percentage of children are covered by Medicaid.

"The loss of DSH payments may not be matched by reductions in financial losses from decreases in the number of uninsured patients," Dr Colvin and colleagues write.

The ACA also penalizes hospitals for high readmission rates, and these penalties may disproportionately affect children's hospitals because they have high percentages of severe illness and complex disease discharges.

Researchers analyzed 1,174,540 discharges of patients younger than 18 years from 2207 hospitals in the 26 states providing hospital identifiers to the 2009 Kids Inpatient Database (Agency for Healthcare Research and Quality) over the course of 2 years.

The authors were looking for which hospitals with pediatric patients may be at highest financial risk from decreases in DSH payments and readmission penalties by identifying hospitals with a disproportionate per hospital number of discharges of pediatric Medicaid patients, and those with a disproportionate per hospital number of discharges of low-income patients or those who have severe health conditions, respectively. They categorized hospital types by teaching status and by children's hospital status.

Patient mix within hospital type saw similar distributions in payor type: There was a range of 46% to 47% for Medicaid recipients and 2% to 4% for the uninsured among the hospital types. The range for lowest household income was 24% to 29%. In contrast, 172,230 (43.0%) of the children's hospital discharges were of children in the highest illness severity category compared with 94,119 (24.5%) discharges of these children from nonteaching hospitals.

"Similarly, 78 408 (41.0%) children discharged from a freestanding children's hospital had a complex chronic condition compared with 46 520 (12.1%) children discharged from nonteaching hospitals," the authors write.

"Children’s hospitals may face disproportionate financial risk from the ACA," the researchers conclude.

The research was supported by internal funds from Children's Mercy Hospitals and Clinics. Dr Colvin and a coauthor conducted the research as a part of the Academic Pediatrics Association Research Scholars Program. The authors have disclosed no relevant financial relationships.

JAMA Pediatrics. Published online December 28, 2015. Extract

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