The Somervell County Hospital Authority Board last week approved an agreement between Glen Rose Medical Center and Baylor University Medical Center to join forces in covering the costs of uncompensated “indigent” care that hammer their bottom lines.

The “Indigent Care Affiliation Agreement” calls for GRMC and Baylor to work together to expand their so-called “upper payment limit,” or UPL. The UPL program has been around for years and is designed to bridge the gap between the cost of providing services for patients on Medicaid and the state's low rate of reimbursement.

The UPL program started in large Texas public hospitals. It's since expanded to small rural hospitals and to public-private partnerships, said Kevin Reed with the law firm of Davis & Wilkerson, P.C. He presented the program's details to the Somervell County Hospital Authority Board last week.

Medicare is all federally funded, while Medicaid is a matching state and federal program. For each dollar the state puts into Medicaid, the federal government matches it with $1.50.

GRMC doesn't provide a high level of Medicaid services (although its nursing home does). But considering that more than half of the births in Texas occur with patients who fall under Medicaid, large hospitals such as Baylor get hammered.

“If you're a hospital that does a lot of Medicaid, this gap is huge because you're providing a lot of Medicaid services,” Reed said. “Your (GRMC's) gap is probably not very big. But Baylor's is huge.”

A government entity, such as the county in this case, can put more money into the Medicaid program and get more matching money, Reed explained. That means that the Hospital Authority can enter into an indigent care affiliation agreement with a private partner such as Baylor and another governmental entity — the county — sends money to the state, the state puts it in the Medicaid account, the feds send matching money and that money is sent to Baylor, which then sends some of it back to Glen Rose.

If the county provided about $500,000 annually for the UPL program, Baylor would receive about $1.5 million during the first year at an average 1.96 federal match.

Baylor has indicated a desire — but is not obligated — to provide certain indigent care services in Somervell County. According to Reed, residents of Somervell County could realize about $1 million in services, or about $500,000 in excess of the UPL payments made by the county.

“If we approve it and Baylor approves it, Baylor will assume some of the (GRMC) expenses in July, August and September,” Hospital Authority Board Chairman Larry Shaw said. The county's part would not come until October or November after its new budget begins.

“You're ahead of the game,” board member Angie Robertson commented. “It's in arrears.”

GRMC will identify the Medicaid services it needs to provide and can tell Baylor what its needs are, Reed said.

HAB members said they hoped the UPL program could help the hospital stem its losses due in part to providing charity care to people who cannot pay their health care bills.

In May, for example, 324 people requested charity care, for a total of more than $747,000.

“The county unfortunately has had to bail us out for a couple of years,” Shaw said. “This will reduce the effort and we can see more benefit to the bottom line. It's going to be quite a benefit to the investment the county has made here.”