Philadelphia Medicaid assessment program could expand to children’s and cancer hospitals

A Philadelphia hospital assessment program used to increase the amount of federal Medicaid money provided to city hospitals will be expanded to include the Children’s Hospital of Philadelphia, St. Christopher’s Hospital for Children, and the hospital at Fox Chase Cancer Center under a City Council bill introduced last week.

The assessment is part of a web of arcane supplemental payment programs managed in Harrisburg that are designed to help Philadelphia hospitals pay for the care of low-income people who don’t have private insurance or Medicare. More than a third of the city’s population received health coverage through Medicaid or the equivalent Children’s Health Insurance Program in March, according to state data.

The payments that hospitals receive from Medicaid, however, are typically below the cost of providing care.

Additional money from Medicaid could be particularly helpful at St. Chris, where more than 80% of patients are covered by Medicaid. “This support is vital to the future of St. Chris,” the nonprofit said. St. Chris is a 50-50 joint venture of Drexel University and Tower Health.

CHOP said it favors the expansion because patients covered by Medicaid now account for half the population it serves.

If the bill passes, along with companion state legislation in Harrisburg, CHOP and St. Chris would pay 2% of their fiscal 2022 net patient revenue, excluding Medicare, into the program. They would get more than that back, because the federal government matches state Medicaid expenditures.

“CHOP is committed to children covered by Medicaid, from the most medically complex to those seeking primary care in the community, and we are making more investments in programs, services, and facilities in Philadelphia to enable access to the full continuum of care that every child deserves,” the University City nonprofit said in a statement.

The Philadelphia Hospital Assessment was started in 2009. It covered only general acute care hospitals for adults at the time. Under the current version, hospitals pay 3.8% of their net patient revenue as of fiscal 2017. Certain hospitals with a high volume of Medicaid patients pay 3.6%.

Those percentages are expected to generate $220.9 million in the year ending June 30, according to the Pennsylvania Department of Human Services. The city and the state keep parts of it, but the remainder generates a net benefit of more than $90 million that is redistributed to hospitals.

The current assessment expires June 30, and must be reauthorized by July 1, which requires both City Council and the Pennsylvania General Assembly to approve legislation. The human services department, which administers Medicaid in the state, said in a fiscal 2025 budget document that it expects the assessment to be renewed.

The bill has strong support from hospitals, according to a statement from Mayor Cherelle L. Parker’s office: “All of the assessed hospitals will provide letters to City Council supporting the program and urging passage of the ordinance.”

The bill before City Council calls for acute care hospitals to increase their payments to 3.9% of net patient revenue starting in fiscal 2025. That increase, and the addition of the children’s hospitals and Fox Chase’s hospital, will generate more federal money for Philadelphia facilities.

Fox Chase, part of Temple University Health System, would be glad to start participating in the assessment, according to a statement: “The reimbursements generated will strengthen the ability of Fox Chase Cancer Center to provide access to the comprehensive cancer care upon which its community relies.”