The Office of the State Auditor recently released a report with a special audit addressing health care for economically disadvantaged people treated at the University of New Mexico Hospital, UNM Sandoval Regional Medical Center and services rendered by the UNM Medical Group.
Indigent care is the collective term used to describe programs intentionally designed to provide health care to people who cannot afford it.
The main program, UNM Care, offers financial support to low-income individuals.
According to the audit, the cost of UNMH’s indigent care decreased by more than 50 percent over the last two years.
Despite this decrease, UNMH increased the amount of indigent care patients obtaining financial assistance by 34 percent, starting with more than 53,000 patients in 2014 to more than 70,000 patients in 2016.
Because of the contrast, UNMH’s total funding shortfall is over $60 million.
More indigent care is being provided than funds actually received specifically for indigent care.
UNMH credits this decrease to being a result of Medicaid expansion and the Affordable Care Act, and OSA said both have minimized the costs of providing care for some patients who have no other choice but to rely on UNM Care.
Patients who have coverage through Medicaid or an ACA plan may still use UNM Care as a secondary basis to supply financial assistance with copays and deductibles, and the amount of patients in this situation has steadily increased for the past two years.
These patients did qualify for full coverage under UNM Care but now have another form of coverage, resulting in a lower cost for UNMH.
The audit was conducted by Moss Adams LLP, an independent audit firm, in response to numerous requests by advocates and policymakers to provide clarity and accountability concerning revenue and expenses in the indigent care program.
OSA begins their report by summing up health care finance “in a nutshell.”
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Hospital costs are the direct costs — salaries for nurses and supplies — and the indirect costs — salaries for accounting staff — that a hospital incurs to provide care to patients.
Transversely, hospital charges are described by OSA as similar to a “list price” for medical services, but charges are not exactly the same as prices that most patients pay.
OSA said most patients pay a negotiated rate, which commercial insurers — including Medicaid and Medicare — have arranged terms with health care providers in the name of their members.
Hospitals generate a cost-to-charge ratio, since the hospital charges are specific to services but the costs are generalized for the whole enterprise.
The ratio is calculated by dividing total hospital charges by total hospital costs.
In order to calculate the cost of services to indigent patients, the Special Audit multiplied the charges for those patients by the cost-to-charge ratio.
The audit did not incorporate any costs considered “bad debt,” or the amount of money owed to UNMH by patients, who have not paid for a significant amount of time, no matter their income background.
Bad debt is also counted as uncompensated care.
OSA said some of this bad debt may originate from services provided for patients whose income may have qualified them for Medicaid or indigent status.
Some of these patients may have not been eligible because of immigration status, inclusion in a population deemed not covered by Emergency Medical Services for Aliens, or patients who had a higher level of income that would push them out of consideration for UNM Care or Medicaid.
OSA specified that bad debt is not always from people with low-incomes. The cost of uncompensated care is made up of these costs, the costs of indigent health care and bad debt.
According to UNM Hospital’s County Report, through September the most common primary reason for indigent resident visits was mental disorders, including alcohol abuse and/or post-traumatic stress disorder.
Factors influencing health status and contact with health services such as a simple routine exam, follow-up to a surgery and/or child and infant wellness routine check-ups, were the second top reason for indigent visits.
The third most common reason was diseases of musculoskeletal and connective tissues including joint and back pain, pain in limbs and arthritis.
Because UNMH is the state’s only level 1 trauma center, more and more patients are transferred there seeking specialized treatment.
UNMH’s non-discrimination policy states that the facility does not apply preferential treatment based on “grounds of race, color or national origin,” in addition to disability or age.
In a statement, UNM Health Sciences Center officials said that future changes cannot be speculated on due to the fluid nature of the Affordable Care Act.
“We are focused on providing the best care to our patients,” the statement reads.
Sarah Trujillo is a news reporter for the Daily Lobo. She can be reached at news@dailylobo.com or on Twitter @sarahtweets_abq.
