Charity Care Is The Challenge in FY2020 Budget for Cook County Health

Cook County Board of Commissioners- Finance Committee
Departmental Budget Hearing
Oct 29, 2019

Cook County Health (CCH)

• CCH proposes an austere FY2020 balanced budget of $2.8 billion, of which approx $1.8 billion is related to County Care (CCH's Medicaid Managed Care plan).  
  
• In Cook County FY2020 budget, the Cook County Tax Allocation given to CCH represents less than 5% of CCH's operating revenue. 
  
• The CCH FY 2020 budget anticipates $590 million in uncompensated care (charity care, unpaid patient bills, insurance companies not reimbursing claims) of which $409 million will be for charity care.
  
• The budget includes 6601 FTEs and no layoffs (750 vacant positions were taken out of the budget), expenses for expected increases for drugs, medical equipment, and for employees' wages/benefits. 
  
• The Cook County Budget allocation of $83 million to cover CCH health services provided to Cook County Jail, the Juvenile Temporary Detention Center and Public Health functions falls short of CCH's anticipated expenses. 
  
• $513 million patient fee revenue is projected for health care services from insured individuals (not County Care members) through their Medicare or other commercial insurance. 
  
• The FY2020 budget for Stroger Hospital is decreased by 8% and Provident Hospital budget increased by 5.4% due to planned increase in services
• County Care  receives approx $1.8 billion payments for its members from Medicaid administrator.  Of this amount CCH anticipates earning $173 million for providing health care services to County Care's members.  Other healthcare providers outside of/not associated with Cook County Health system receive $1.5 billion from County Care for providing health care services to its members.  
• Charity Care is the largest and most important/challenging  expense/issue in CCH's FY2020 Budget.  Charity care at CCH is anticipated to grow at 4% for a total of $409 million.  CCH in 2019 provides over 50% of charity care in Cook County.  DSH (Disproportionate Share) and BIPA (Benefits Improvement and Protection Act) are federal funds paid to CCH to offset charity care. In the FY2020 these payments are approximately $289 million.  In the current year, CCH will spend more than $377 million for charity care, a budget gap.  CCH spends $1 million/day for charity care and this means that in FY2020, CCH will run out of money before the end of the year to pay charity expenses. The ever increasing burden for CCH stems from more individuals being uninsured and underinsured.  Also another major reason for this charity burden on CCH is that other Cook County hospitals will treat uninsured patients for emergency conditions but discharge these patients with referral/instructions to seek follow-up care at CCH (these institutions decline to treat these patients for follow-up care).
• Plans are in place to improve the growth of CCH health system and revenue with new/expanded services such as chronic ambulatory dialysis at Provident campus, expansion of surgical services at Provident and Stroger hospitals.  CCH anticipates continued growth in extramural funding which brought in more than $25 million over the past three years.  CCH FY2020 budget anticipates County Care membership of 326,000 (as of today membership slightly over 320,000).  CCH will continue to seek additional Federal, State, and Cook County money and continue improvements to revenue cycle capture of money (clinical documentation, billing, coding, collections).
• The budget gap between DSH and BIPA federal funding and CCH's growing charity expense outlay is CCH's greatest  FY2020 Budget challenge.  CCH will always provide health care regardless of the ability of the patient to pay, but this budget challenge will force CCH to make necessary difficult choices in restricting/cutting back services/delay getting equipment.

Observed by: Michele Niccolai