2009 Annual Report Health Safety Net December 2009

1. 2009 Annual Report Health Safety Net December 2009 Deval L. Patrick, GovernorCommonwealth of Massachusetts Timothy P. MurrayLieutenant Governor JudyAnn Bigby, M.D., SecretaryExecutive Office of Health and Human Services Stephen McCabe, Interim CommissionerDivision of Health Care Finance and Policy

2. Table of Contents Health Safety Net 2009 Annual Report Introduction……………………………………………………………………………………………………………………………………….……..…………………2 Volume and Payments..……………………………………………………………………………………………………………………………………………….4 Service Patterns………..……………..………………………………………………………………………………………………………………………………..11 User Demographics……………………………………………………………………………………………………………………………………………………..17 Financing………………….………………………………………………………………….………………………………………………………………………………21

3. Introduction About the Health Safety Net HSN Overview The Division of Health Care Finance and Policy (DHCFP) is responsible for administering the Health Safety Net (HSN), created by Chapter 58. The HSN makes payments to hospitals and community health centers for health care services provided to low-income Massachusetts residents who are otherwise ineligible for health insurance programs. HSN Eligibility Massachusetts residents who are uninsured or underinsured and have income up to 200% of the Federal Poverty Level (FPL) are eligible for full HSN primary or HSN secondary coverage. If residents have income between 201% and 400% of the FPL and do not have access to affordable health insurance, they are eligible for partial HSN or partial HSN secondary coverage, which includes a sliding scale deductible. Residents who are eligible for affordable employer-sponsored insurance, MassHealth, or Commonwealth Care insurance coverage are not eligible for the HSN. Individuals who are enrolled in programs may be eligible for HSN secondary coverage for certain services not covered by their primary insurance. In order to support enrollment in Commonwealth Care, individuals are eligible for the HSN during the Commonwealth Care enrollment process. Individuals who have been determined eligible for Commonwealth Care but do not complete the enrollment process lose their HSN eligibility. HSN Payments As mandated by Chapter 58, the Health Safety Net pays hospitals based on adjudicated claims after verifying the patient is eligible and the services are covered. HSN payment rates are based on Medicare payment principles. Inpatient services are paid using hospital-specific rates, adjusted for variations in patient acuity, teaching status, and percent of low-income patients. Outpatient services are paid using a per-visit rate, developed by estimating the amount Medicare would have paid for comparable services. Additional outpatient adjustments are made for disproportionate share and community hospitals. HSN payments cannot exceed available funding for a given year. If a projected shortfall in payments is anticipated, hospital payments are subject to reduction using the greater proportional need method of shortfall distribution. Community health centers (CHCs) are paid by the HSN using the federally qualified health center (FQHC) medical visit rate. Ancillary services provided by CHCs are paid at MassHealth payment rates including all applicable rate enhancements. Outpatient prescription drugs for eligible providers are priced using the pharmacy online payment system (POPS) employed by the MassHealth program.

4. Introduction Report Highlights • This report reflects Health Safety Net (HSN) utilization and payments for twelve months (October 1, 2008 through September 30, 2009) of Health Safety Net fiscal year 2009 (HSN09). • In HSN09, data are reported using a new methodology. Previously, hospital payments were based on the date of service on the claim, rather than the month in which the claim was submitted to the HSN. In the new model, the HSN averaged payments and volume under these two payment methodologies from October through January of HSN09. Beginning in February of HSN09, payments and volume were reported solely by the month in which the claim was submitted to the HSN. • The new methodology enables more timely utilization reporting and allows payments to be reported in a manner that better aligns with service volume. • The major findings in this report include: • Volume and payments in HSN09 have stabilized as expected after the implementation of major reform changes that occurred during the transition to the HSN. • HSN community health center (CHC) volume and payments have increased in HSN09 when compared to the same period in the prior year. The fact that CHC payments have increased more than CHC volume within HSN09 may be attributable to more ancillary services being provided to patients within each visit. Additionally, the increase in CHC dental and medical visit rates, as well as increased pharmacy payments resulting from the availability of new HSN pharmacies may also have contributed to the payment increase. • Hospital users have declined by 2% in HSN09 compared to the prior year. Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. HSN08 is Health Safety Net fiscal year 2008. HSN09 is Health Safety Net fiscal year 2009.

5. Health Safety Net (HSN) payments for hospitals and community health centers increased by 1% in Health Safety Net fiscal year 2009 (HSN09) compared to the prior year. Volume and Payments HSN Total Payment Trends -38% +1% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Hospital and community health center payments are reported in the month in which payment was made. Hospital and community health center payments include pharmacy payments. HSN08 and HSN09 Hospital payments include a reserve for remediated claims. Numbers are rounded to the nearest million and may not sum due to rounding; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

6. Volume and Payments Hospital Volume CHC Volume 1,526 K 342 K 987 K 986 K 272 K 280 K 1,184 K 715 K 706 K PFY07 HSN08 HSN09 HSN Total Service Volume Trends Health Safety Net (HSN) total volume for hospitals and community health centers declined by 0.1% in Health Safety Net fiscal year 2009 (HSN09) compared to the prior year. -35% -0.1% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Community health center volume is the sum of visits for which payments were made to community health center providers in the months shown. Hospital and community health center volume excludes pharmacy claims. Numbers are rounded to the nearest thousand and may not sum due to rounding; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

7. Hospital payments declined by 0.1% in Health Safety Net fiscal year 2009 (HSN09) compared to the prior year. Volume and Payments HSN Hospital Payment Trends -40% -0.1% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Other HSN Payments includes payment adjustments that are not attributable to a service category. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. HSN08 and HSN09 Hospital payments include a reserve for remediated claims, which is distributed proportionally by service type. Numbers are rounded to the nearest million and may not sum due to rounding; percent changes are calculated prior to rounding. Due to block-grant payment methodology used in PFY07, payment information is not available by service type. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

8. Volume and Payments Outpatient Visits Outpatient ERBD Inpatient Discharges Inpatient ERBD 1,184 K 4 K 33 K 131 K 715 K 706 K 2 K 1 K 22 K 22 K 77 K 70 K 1,016 K 615 K 614 K PFY07 HSN08 HSN09 HSN Hospital Service Volume Trends Hospital volume declined by 1% in Health Safety Net fiscal year 2009 (HSN09) compared to the prior year. During HSN09, the volume of outpatient hospital visits and inpatient discharges (including emergency room bad debt) both declined. (Inpatient ERBD) -40% (Inpatient ERBD) (Inpatient ERBD) -1% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Numbers are rounded to the nearest thousand and may not sum due to rounding; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

9. Community health center (CHC) payments increased by 13% in Health Safety Net 2009 (HSN09) compared to the prior year. A portion of the 13% increase in payments may be attributable to increases in dental and medical visit rates, as well as increased pharmacy payments resulting from the availability of new HSN pharmacies. Volume and Payments $42 M $41 M $37 M PFY07 HSN08 HSN09 HSN Community Health CenterPayment Trends -9% +13% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Community health center payments are reported in the month in which payment was made. Community health center payments include pharmacy payments. Numbers are rounded to the nearest million and may not sum due to rounding; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 09/09/09.

10. Volume and Payments 342 K 280 K 272 K PFY07 HSN08 HSN09 HSN Community Health CenterService Volume Trends Community health center (CHC) volume increased 3% in Health Safety Net fiscal year 2009 (HSN09) compared to the prior year. CHC payments have increased more than volume within HSN09, which may be attributable to more ancillary services being provided to patients within each visit. -20% +3% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Community health center volume is the sum of visits for which payments were made to community health center providers in the months shown. Community health center volume excludes pharmacy claims. Numbers are rounded to the nearest thousand and may not sum due to rounding; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/08/09.

11. Volume and Payments 423 K 284 K 277 K PFY07 HSN08 HSN09 HSN Total Users Medical expenses for an estimated 277,000 individuals were billed to the Health Safety Net (HSN) in Health Safety Net fiscal year 2009 (HSN09). The number of users declined by 2% in HSN09 compared to the prior year. -33% -2% Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year.Users who receive a service in more than one setting (hospital, community health center or emergency room bad debt) are counted only once. PFY07 and HSN09 users are reported on claims for which payments were made to hospital and community health center providers in the months shown. HSN08 users are projected based on claims for which payments were made to hospital and community health center providers for the first ten months of HSN08 (October through July). Numbers are rounded to the nearest thousand; percent changes are calculated prior to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 09/28/09.

12. Service Patterns Hospital Utilization and Payments by Service Type and Age Seventy-three percent of inpatient payments were for services provided to adults ages 27 to 64. Inpatient volume for this same population accounted for 61% of discharges. Because the Health Safety Net (HSN) is a secondary payer for low-income Medicare patients, adults ages 65 and older accounted for 23% of inpatient discharges but only 7% of inpatient payments. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

13. Service Patterns Hospital Utilization and Payments by Eligibility Group 100% 100% Over half of both hospital volume and payments were for individuals who were only eligible for the Health Safety Net (HSN) and had no other coverage. Approximately one-third of utilization and associated payments were for those who were either eligible for HSN temporary or secondary coverage. HSN temporary coverage includes patients awaiting enrollment in Commonwealth Care, MassHealth Basic, and MassHealth Essential. Eligibility Not Reported Emergency Room Bad Debt HSN Secondary: CommCare Dental Temporary Coverage HSN Secondary: Other HSN Secondary: MassHealth HSN Partial (200.1% to 400% FPL) HSN Primary (0% to 200% FPL) Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. HSN Secondary: Other includes coverage for both Medicare and private insurance patients. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Numbers less than 1% are not displayed above. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

14. Service Patterns Hospital Inpatient Utilization and Paymentsby Admission Type Ninety-two percent of inpatient discharges and 90% of inpatient payments were for emergency and urgent care. Eight percent of inpatient discharges and 9% of inpatient payments were for scheduled or elective procedures. 100% 100% Scheduled Urgent Emergency Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital inpatient volume is inpatient discharges for which payments were made to hospital providers in the months shown.Hospital inpatient volume excludes pharmacy claims. Hospital inpatient payments are reported in the month in which payment was made. Hospital inpatient payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Numbers less than 1% are not displayed above. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

15. Service Patterns Top Ten InpatientMajor Diagnostic Categories The top ten diagnostic categories accounted for 75% of inpatient discharges and 73% of inpatient payments. Circulatory, digestive and mental diseases and disorders were the top three diagnostic categories among inpatient claims. These three diagnostic categories comprised 36% of inpatient discharges and 33% of inpatient payments. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Inpatient claims are grouped into major diagnostic categories (MDC) using versions 24, 25, or 26 of the MS-DRG grouper, depending on the date of service on the claim. Hospital inpatient volume is inpatient discharges for which payments were made to hospital providers in the months shown.Hospital inpatient volume excludes pharmacy claims. Hospital inpatient payments are reported in the month in which payment was made. Hospital inpatient payments include pharmacy payments. Numbers are rounded to the nearest percent. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

16. Service Patterns Top Ten Outpatient CCS Diagnosis Categories The top ten clinical classification diagnosis categories accounted for 84% of outpatient claims and 83% of outpatient payments. Symptoms, signs, and ill-defined conditions and factors influencing health status, injury and poisoning, and musculoskeletal system and connective tissue diseases were the top three CCS diagnosis categories among outpatient claims. These three CCS diagnosis categories comprised 33% of outpatient claims and 33% of outpatient payments. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Outpatient 837I claims are grouped using the Clinical Classification Software (CCS) from the Agency for Healthcare Research and Quality (AHRQ). Hospital outpatient claims are claims for which payments were made to hospital providers in the months shown.Hospital outpatient claims excludes UB92 and pharmacy claims. Hospital outpatient payments are reported in the month in which payment was made. Hospital outpatient payments include pharmacy payments. Numbers are rounded to the nearest percent. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

17. Service Patterns Case Mix of the Inpatient HSN Population The case mix index represents the relative complexity, severity of illness, and amount of resources required to treat a given patient population. The case mix index increased from Health Safety Net fiscal year 2008 (HSN08) to Health Safety Net fiscal year 2009 (HSN09). The average length of stay for HSN users has increased 0.297 days compared to the prior year. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year.Case mix data based on Medicare severity diagnostic related groups (MS-DRGs), version 25 for HSN08 and version 26 for HSN09. The analysis includes all primary inpatient claims paid during HSN08 and HSN09. Source: DHCFP Health Safety Net Data Warehouse as of 09/24/09.

18. User Demographics Hospital Utilization and Payments by Gender In Health Safety Net fiscal year 2009 (HSN09), men used fewer services than women, but payments for their care were higher, accounting for 44% of volume and 54% of payments. 100% 100% Female Male Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

19. User Demographics Hospital Utilization and Payments by Age The non-elderly adult population (ages 19 to 64) accounted for 84% of hospital volume and 89% of hospital payments. Because the Health Safety Net (HSN) is a secondary payer for low-income Medicare patients, adults ages 65 and older accounted for 13% of hospital volume but only 7% of hospital payments. 100% 100% Age Not Reported Ages 65 and Older Ages 45-64 Ages 27-44 Ages 19-26 Ages 0-18 Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

20. User Demographics Hospital Utilization and Paymentsby Family Income Users with no income received the most costly services, comprising 42% of service volume that generated 51% of payments. This represents a 12% increase in volume and a 10% increase in payments compared to the first nine months of Health Safety Net fiscal year 2009 (HSN09). Users with income between 100.1% and 200% of the federal poverty level (FPL) used the least costly service mix, accounting for 31% of volume and 23% of payments. Individuals eligible for Health Safety Net (HSN) primary, those with income less than 200% of the FPL, received services accounting for 83% of volume and 83% of payments. Income data are reported on the patient’s Medical Benefit Request (MBR) application. There is no MBR information for emergency room bad debt (ERBD) claims. 100% 100% Income Not Reported Emergency Room Bad Debt 200.1% to 400% FPL 100.1% to 200% FPL Up to 100% FPL No Income Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

21. User Demographics Hospital Utilization and Paymentsby Family Size Single adults accounted for 58% of hospital volume and 65% of hospital payments. Family size data are reported on the patient’s Medical Benefit Request (MBR) application. There is no MBR information for emergency room bad debt (ERBD) claims. 100% 100% Family Size Not Reported Emergency Room Bad Debt Family Size of 4 or More Family Size of 3 Family Size of 2 Family Size of 1 Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown.Hospital volume excludes pharmacy claims. Hospital payments are reported in the month in which payment was made. Hospital payments include pharmacy payments. Numbers are rounded to the nearest percent and may not sum to 100% due to rounding. Source: DHCFP Health Safety Net Data Warehouse as of 10/13/09.

22. Financing HSN09 Hospital Payment Rates As of Health Safety Net fiscal year 2009 (HSN09), payments are based on Medicare payment principles. Payment rates range according to the variation in case mix among hospitals. Hospitals that treat a greater number of more complex cases are paid higher rates reflective of this complexity. The table shows the median and mean payment rates for each payment category across all hospitals that provide services in each payment category. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year.Payment rates effective October 1, 2008 for Health Safety Net fiscal year 2009 (HSN09). Payment on Account factor is used for secondary claims and inpatient physician services provided by hospital-based physicians. Inpatient Medical and Inpatient Psychiatric rates are the median or mean payment amount for all claims paid in FY09. Rates for these cases vary by diagnosis. Dental services are paid according to the fees established in 114.3 CMR 14.00: Dental Services.

23. Financing Hospital Payment to Cost Ratios (Oct – Sep) Notes:Health Safety Net fiscal year 2009 (HSN09) measures payments made in the months of October 2008 through September 2009. Costs determined using a total cost-to-charge ratio derived from the fiscal year 2008 HCF-403 data. Blanks indicate the hospital did not have data for that category. Source:DHCFP Health Safety Net Data Warehouse as of 10/26/09.

24. Median Hospital Payment to Cost Ratios by Service Type Financing As of Health Safety Net fiscal year 2009 (HSN09), payments are based on Medicare payment principles. Medicare payment rates typically demonstrate higher inpatient rates and lower outpatient rates. The overall payment to cost ratio (PCR) has remained stable at 92% for HSN09 and HSN08. Notes: The Health Safety Net fiscal year (HSN) runs from October 1 through September 30 of the following year. Health Safety Net fiscal year 2008 (HSN08) measures payments for dates of service from October 2007 through March 2008 which formed the basis for twelve months of payment.Health Safety Net fiscal year 2009 (HSN09) measures payments made in the months of October 2008 through September 2009. Costs determined using a total cost-to-charge ratio derived from the fiscal year 2008 HCF-403 data.  Source: DHCFP Health Safety Net Data Warehouse as of 10/26/09.

25. Financing Sources and Uses The Health Safety Net (HSN) is primarily funded from three sources: an assessment on acute hospitals’ private sector charges; a surcharge on payments made to hospitals and ambulatory surgical centers by HMOs, insurers, and individuals; and an annual appropriation from the Commonwealth’s General Fund. Hospital Assessments The total amount paid by hospitals into the HSN is established by the legislature. The fiscal year 2009 (FY09) state budget established a total hospital assessment of $180.0 million, $20.0 million of which was transferred to the Commonwealth Care Trust Fund. Each hospital’s assessment is calculated by multiplying its private sector charges by the uniform percentage, which is calculated by dividing the total assessment ($180.0 million) by the total private sector charges from all hospitals statewide. Since each hospital’s liability is based on its private sector charges, hospitals that treat more private patients make larger payments to the HSN. Surcharge Collections The total amount collected through the surcharge is established by the Massachusetts legislature. The Division sets the surcharge percentage at a level to produce the total amount specified by the legislature. For Health Safety Net fiscal year 2009 (HSN09), that amount totaled $160.0 million. If more than $160.0 million is collected in one year, the Division reduces the surcharge percentage in the subsequent year. The surcharge percentage was 2.10% in PFY07, 2.10% HSN08, and 2.0% in HSN09. In HSN09, approximately 800 registered surcharge payers are currently making monthly payments to the HSN. The number of surcharge payers has declined since HSN08, when there were over 820 registered surcharge payers. The table on page 25 lists the top surcharge payers and their contributions. Both providers and payers file reports with the Division that are analyzed to ensure payment of appropriate surcharge amounts. General Fund The Commonwealth also makes a General Fund contribution to the HSN. In HSN09 the total General Fund contribution amount was originally $63.0 million. A supplemental budget decreased this amount to $48.0 million. Additional Funding for Uncompensated Care In HSN09, offset payments totaling $70.0 million will be paid from the Medical Assistance Trust Fund to Boston Medical Center ($20.0 million) and Cambridge Health Alliance ($50.0 million). These payments offset allowable HSN services.

26. Financing HSN09 Sources and Projected Uses Notes: Dollars in millions. Estimated hospital payments include allowance of $17.6 million for denied claims that may remediate and have been reduced by $10.3 million to reflect recoveries and income. The Governor's supplemental budget, Chapter 26 of the Acts of 2009, reduced the original HSN09 General Fund contribution of $63 million by $15 million, leaving the total contribution at $48 million.

27. Financing Surcharge Collections The total surcharge amount for Health Safety Net fiscal year 2009 (HSN09) was set by the Massachusetts legislature at $160 million. In order to produce the total amount specified by the legislature, DHCFP set the surcharge percentage at 2.0% for HSN09. Approximately 800 registered surcharge payers made payments in HSN09. The table lists the top ten surcharge payers and their contributions. Notes: Payment rates effective 10/1/08 for Health Safety Net fiscal year 2009. Totals may not add to 100% due to rounding.

28. Financing Hospital Assessments and Payments Notes: Payment amounts do not include offset payments from the Medical Assistance Trust Fund, or reserves for remediated claims of approximately $17.6 million. The annual hospital assessment is calculated by multiplying each hospital’s private sector charges (PSC) by the uniform assessment rate of 1.09%. Private sector charges are derived from the fiscal year 2007 RSC 403 Cost Reports filed by hospitals for the period from October 2006 through September 2007. Assessment amounts will be updated when fiscal year 2008 RSC 403 Cost Report data is available. All hospital reported data are unaudited and subject to change with future updates and calculations. Based on data as of 10/8/09. A correction was made to this slide on 12/17/09.

29. Financing Community Health Center Payments Notes: Health Safety Net fiscal year 2008 includes a final submission payment for PFY07 services distributed to CHCs in March 2008 totaling $658,223. Does not include September 2009 payment data for four Community Health Centers that have not yet submitted data as of 9/30/09.

30. Financing Demonstration Projects In July 1997, the Massachusetts legislature enacted legislation (M.G.L. c.118G s.18) authorizing Division of Health Care Finance and Policy to allocate Uncompensated Care Pool funding for demonstration projects designed to demonstrate alternative approaches to improve health care and reduce costs for the uninsured and underinsured on a cost-neutral basis. Additionally, Chapter 47 of the Acts of 1997 designated specific funds for the Massachusetts Fishermen’s Partnership, which continued to receive funding through Health Safety Net fiscal year 2009 (HSN09). Current legislation (M.G.L. c.118G s.36) requires that $6 million is expended annually on Health Safety Net (HSN) demonstration projects. Please refer to the table on page 29 for the HSN08 and HSN09 allocations to demonstration projects. Massachusetts Fishermen’s Partnership The Fishing Partnership Health Plan (FPHP) offers fishermen and their families the opportunity to purchase health insurance at a reduced rate, made possible through subsidized premiums provided by the HSN. The FPHP is a freestanding trust fund that operates separately from its primary sponsoring organization, the Massachusetts Fishermen’s Partnership. In state fiscal year 2002 (FY02), the legislature allocated increased funding from $2 million to $3 million a year effective state FY03 through state FY07. In state FY08, funding was increased to $4 million. The FPHP contracts with Harvard Pilgrim Health Care to offer fishermen and their families a comprehensive benefit package that includes access to Harvard Pilgrim’s network of providers, mental health services, and pharmacy coverage. All fishermen, regardless of health status or current insurance coverage, may enroll in the plan. FPHP offers four tiers of membership depending on the income of the fishermen; as of August 2009, 1,879 fishermen and their family members were enrolled. The Patient-Centered Medical Home Initiative In August 2008, the Legislature directed the Medicaid program (MassHealth) to carry out a medical home demonstration. Secretary JudyAnn Bigby, MD of the Executive Office of Health and Human Services (EHS) further directed the use of the Patient-Centered Medical Home (PCMH) model as the centerpiece in a statewide strategy to improve quality of care for chronically ill patients, reduce costs, and reform primary care. EHS has developed a preliminary PCMH design to test a new model to transform the quality of and payment for certain primary care practices in the Commonwealth. The design involves implementing a demonstration at 50-100 primary care practices across Massachusetts, with the intent to roll out the model more broadly in the future based on evaluation results. It is also EHS’ vision to engage other payers to support this initiative in order to maximize the potential for practice-wide change at the practices. In addition, this proposal reflects the shared responsibility of supporting and redesigning primary care practices in the Commonwealth with financial and infrastructure support provided by payers and commitment of resources and dedication to the guiding principles of the Initiative from primary care practices. As one of many payers participating in this initiative, the HSN has designated $2 million in HSN09 demonstration funding to support HSN eligible providers in this initiative. The HSN will actively participate in creating the evaluation criteria used for choosing demonstration sites as well as evaluation of demonstration goals and benchmarks. Preliminary evaluation data is expected at the end of the first demonstration year. Community Health Center Urgent Care Grant Program In Uncompensated Care Pool fiscal year 2007, Neighborhood Health Plan (NHP) was awarded $4 million in funding to manage a grant program that focuses on expanding urgent care services available at community health centers (CHCs) in order to reduce unnecessary emergency department use. CHCs that received these grants implemented strategies to expand both regular and urgent care hours of operation, increase capacity, and create multi-provider triage procedures. Over 21,000 additional medical visits have been provided as a direct result of this grant program, providing seed money for many of these services to continue in a self-sustaining manner. The funding also provided the opportunity to support increased communication and collaboration between participating centers and the emergency department located in their community. In November 2007, NHP sponsored a Best Practices forum, which brought together the participating CHCs to share experiences and lessons learned. In HSN08, NHP was awarded $2 million to continue the grant program. The health plan is currently in the process of selecting the sites that will receive grant funding.

31. Financing Demonstration Projects M.G.L. c.118G s.36 authorizes DHCFP to allocate up to $6 million per fiscal year for projects designed to demonstrate alternative approaches to improve health care and reduce costs for the uninsured and underinsured. Each project should demonstrate the potential to save the Health Safety Net at least $1 for every dollar received in funding. Notes: Fishing Partnership Health Plan demonstrations was statutorily required per Chapter 47 of the Acts of 1997. Funding for other demonstrations was awarded based on criteria determined by the Division. Based on data from 9/9/09.

32. Division of Health Care Finance and Policy Two Boylston Street Boston, MA 02116 Phone: (627) 988-3100 Fax: (617) 727-7662 Website: www.mass.gov/dhcfp Publication Number: 10-327-HCF-01