Medicare/Medicaid Financial Impact Study-Year Three In 1999, the Healthcare Association of Hawaii engaged Ernst & Young LLP to conduct a study to estimate the financial impact of the changes in Medicare and Medicaid reimbursement on the Association's hospital and nursing facility members. The Medicare reimbursement changes were based on the Balanced Budget Act of 1997 (BBA) and the Medicaid reimbursement changes were based on the changes proposed by the Medicaid program. The Association also engaged Ernst & Young to update the results of the Study in 2000 and 2001. Enclosed is the 2001 update of the Study. The results of the 1999 Study, 2000 update and 2001 update are consistent and highlight the following: The Medicare and Medicaid reimbursement changes will have a significant negative financial impact on the Association's hospital and nursing facility members. The hospitals and nursing facilities provide many benefits to our communities through medical education for the interns and residents and community health programs. These programs cost considerable amounts for which very little reimbursement or funding is received. The hospitals and nursing facilities provide care to individuals regardless of their insurance status and ability to pay. The result is a significant amount of bad debt and charity care. Hawaii's healthcare industry which includes all providers of care and insurers plays an important role in our economy in terms of revenues generated, individuals employed and salaries paid. Hawaii's hospitals and nursing facilities account for a major portion of the healthcare industry. Due to the declines in Medicare reimbursement, the increasing cost of community programs and increases in bad debt and charity care, many of Hawaii's hospitals and nursing facilities experienced declining financial results and financial losses. To address the issue, the facilities cut costs by laying off personnel, closing clinics and reducing services. As a result of these changes, the hospitals and nursing facilities have been able to continue operating and serving our communities. The struggle for Hawaii's hospitals and nursing facilities is ongoing. Reimbursements continue to decline or remain at current levels while the cost of healthcare increases. We as consumers expect Hawaii's facilities to have the latest medical equipment, our physicians to prescribe the latest drugs and to have access to quality care when needed. To be able to continue to provide access to quality care, our facilities need adequate reimbursement to at least cover the actual cost of care for the services provided. The Association is working with Hawaii's congressional delegation on issues related to Medicare reimbursement and Hawaii's legislature on issues related to Medicaid reimbursement. Any requests for additional reimbursement and funding will, of course, need to be balanced with the more immediate needs of the State and the people of Hawaii as we work toward maintaining and improving our economy. If you have any questions regarding this study, please call Richard Meiers, President and CEO or Joan White, Vice President. Both can be reached at (808) 521-8961. 2001 Report Summary Points 2000 Report 1999 Report (You must have Adobe Acrobat Reader, which is free to view these reports.) Working together for the health of Hawaii's people since 1939. Home | Acute Care | Long Term Care | Legislative Watch | Members | Emergency Management About HAH | Programs & Publications | News | Calendar | Patient Safety Contact us