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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session


Posted: June 9, 2021 04:01 PM
From: Senator Sharif Street and Sen. Christine M. Tartaglione
To: All Senate members
Subject: High Medicaid Public Payor Dependent Hospital Assistance
In the near future, we plan to introduce legislation appropriating $175 million of the Commonwealth’s allocation from the State Fiscal Relief Fund authorized through the American Rescue Plan (ARP) to hospitals across the Commonwealth which are highly dependent on public payor (Medicaid and Medicare) payments as a percent of their overall net patient revenue.

The public payor dependent hospitals serve some of our poorest and most vulnerable communities. They are located in high density areas like North Philadelphia, distressed towns outside of Pittsburgh, and rural communities across the Commonwealth. They have been, and continue to be, on the front lines of the fight against COVID-19 and often are the major economic engines and largest employers in their communities. Even before this unprecedented health crisis, these institutions faced shared challenges regardless of their size and location. They provide critical services for some of the most medically and socially complex patients in the Commonwealth while also struggling with financial instability due to payment levels set by both Medicaid and Medicare which generally are below the cost of rendering the services.  For example, Medical Assistance in the Commonwealth only pays approximately $0.81 cents for each dollar of care.  Unlike other hospitals which offset public payor underpayment with higher paying commercial patients, public payor dependent hospitals with little or no private patients struggle to make ends meet.  This struggle has been documented by PHC4 financial conditions reports year after year.
It is imperative that we provide supplemental assistance to this class of public payor dependent hospitals to continue to provide vital care to those in need and help to stabilize these institutions as we continue to work through the myriad of health, economic and social dislocations caused by COVID-19. This legislation would provide one-time only transition assistance to 47 general acute care hospitals where Medicaid comprises 25% or more of net patient revenue or where Medicaid and Medicare comprise 62% or more of their net patient revenue. The bill provides similar supplemental assistance to the Commonwealth’s public payor dependent psychiatric hospitals which have not received targeted federal assistance and face unprecedented behavioral health challenges stemming from COVID-19. Finally the bill provides assistance to public payor dependent children’s hospitals.

Although we will need to take additional future action to address the root causes of the financial instability of public payor dependent hospitals, this will help ensure for the next year that they can continue to serve the people of our Commonwealth during this unprecedented health care challenge.

I encourage members to join me in co-sponsoring this important legislation. If you have any questions, please contact Micah Mahjoubian at micah@pasenate.com.