declining self pay admissions could improve U S hospital revenue streams

A review of the data for the period of 2012-14 points to a continuing decline in self-pay admissions under the implementation of the Affordable Care Act (ACA), with the percentage of total admissions processed as self-pay dropping to only 3 percent as of 2014. This number represents a nearly 30 percent decline from the roughly 900,000 self-pay admissions seen during 2012. Given that charges for self-pay admissions averaged more than $34,000 in 2014, and there was a real possibility that many patients would not be able to pay, this decrease clearly had positive implications for hospitals’ revenue streams.

With the decline in self-pay admissions, Medicaid HMO plans saw a corresponding increase in new members, as the percentage of admissions to Medicaid HMOs compared with total admissions for the period increased 38 percent, from just over 1 million admissions in 2012 to nearly 1.5 million by 2014. As a percentage of total admissions, this increase in admissions under these state-sponsored plans was from less than 5 percent to greater than 7 percent, with charges trending toward $37,000, on average. The significance of this finding for hospitals becomes evident when one considers that charges for these admissions were more than $2,400 higher per admission than charges for self-insured admissions in 2014.

With almost 1.5 million annual admissions, the difference between charges for Medicaid HMO admission and charges for self-pay admissions can be estimated to exceed $3.6 billion. Because payments are based partly on charges, the impact on payments associated with the trends noted here can be significant.

To monitor the anticipated rise in revenues associated with this trend (setting aside, for the time being, considerations of potential consequences of a repeal of the ACA), hospitals will need to closely track admissions by payer type then carefully monitor their costs at a detailed, departmental level for Medicaid HMO beneficiaries. Failure to closely monitor these costs could erase any potential benefit from the anticipated continued increase in revenues as the number of self-funded patients decrease and switch to Medicaid and similar payment programs.

Footnotes

Note: Many states collect inpatient admission data from hospitals via a state agency, a hospital trade association, or an outside vendor and in turn, create and make available non-identifiable data sets for commercial and academic use. The states range from large to small and span the entire length and depth of the country, providing a comprehensive social, ethnic, and geographic base from which comparisons can be made. This analysis draws on the most current three years of data (2012-14) collected from those states in which 2014 data have been made available. These data were combined into a single archive of inpatient hospital data for analytic and benchmarking purposes representing more than 146 million potential lives and more than 20 million yearly admissions.

This research and analysis was prepared by Optum Payer Solutions Consulting. For more information, contact 
Jan Welsh at [email protected].