Uncompensated Care Costs to Rise


Uncompensated Care Costs to Rise | Medicaid, Medicare, Disproportionate Share Hospital Payments, Upper Payment Limit, Affordable Care Act, National Association of Public Hospitals and Health Systems, Louisiana Hospital Association, uncompensated care, Louisiana Hospitals
Hospitals in Louisiana and other states that don’t expand their Medicaid programs could take a much bigger budget hit on uncompensated care than originally expected under the Affordable Care Act.

Nationwide, hospitals may face an additional $53.3 billion in uncompensated care costs by 2019, according to a report by the National Association of Public Hospitals and Health Systems. The Congressional Budget Office estimates there could be 29 million people without insurance in 2019, 6 million to 10 million more people than projected when the Affordable Care Act passed two years ago.

That’s because the Supreme Court ruling allows states to opt out of expanding Medicaid. Louisiana is among the states that have chosen that option.

“This unexpected new level of cost to hospitals and health systems dramatically amplifies the impact of Medicaid DSH (disproportionate share hospital payment) cuts, which will total $14.1 billion over the same period,” the report says.

The analysis didn’t look at the impact on individual states because that information was not available. The NAPH based its estimates on data from the Congressional Budget Office, the U.S. Census Bureau, and the American Hospital Association’s annual survey.

John Matessino, president and chief executive officer of the Louisiana Hospital Association, said the state, fresh off a fiscal cliff accelerated by this summer’s federal transportation bill, now faces another “perfect storm.”

Louisiana isn’t going to expand Medicaid, which means uncompensated care costs will continue rising, he said.  At the same time, the Medicaid DSH funds, the money hospitals have used to take care of some uninsured people, are scheduled for cuts.

U.S. hospitals had already sacrificed 10 years of Medicare increases, $155 billion, to help pay for the Affordable Care Act, Matessino said. Hospitals and lawmakers made that deal thinking that the cuts in hospital payments would be offset by big increases in the number of insured patients. But now?

“I don’t have any good answers right now. I don’t think anybody does,” Matessino said.

Still, the state and hospitals face a huge challenge in 2014 if the federal government starts ratcheting back on DSH dollars, Matessino said.

“Louisiana’s got a target on its back on that, too,” he said.

Only Texas, New York and California receive more DSH money than Louisiana, he said. Other states similar to Louisiana don’t get anywhere near the same amount of money.

Although the Supreme Court ruled that the federal government can’t force states to expand Medicaid, the court didn’t say anything about Disproportionate Share Hospital Payments, Matessino said.

“They can’t punish a state if it doesn’t choose to participate in Medicaid, but I think that’s kind of a ‘wink, wink’ situation,” Matessino said. “They’re going to try to do everything they can to coerce states into expanding their Medicaid program.”

It’s unclear how the cuts will be distributed.

Beth Feldpush, NAPH vice president of policy and advocacy, said U.S. Health and Human Services Secretary Kathleen Sebelius hasn’t come out with the regulation describing how the cuts will be made.

In May, the association recommended the money go to hospitals with the greatest need. States with the lowest percentages of uninsured people, and those that do a poor job of sending DSH dollars to high-need hospitals should receive the largest cuts.

However, the NAPH is now asking Congress to restore the Medicaid DSH funding in light of expected increases in the number of uninsured.

“We know there’s a lot of discussion up in Congress right now, and we expect a busy lame duck session because there’s a lot of really big-ticket, big-dollar items Congress is working on,” Feldpush said. “And we realize that this is one small piece of that puzzle…. But we just want to keep this on policymakers’ minds as they go into the next session.”

Meanwhile, Louisiana still has to figure out how to secure a good income stream to pay for healthcare, Matessino said.

The hospital association hasn’t been part of the discussions between Gov. Bobby Jindal’s administration and individual providers to set up the public-private partnerships to handle charitable care, Matessino said. But it’s been suggested that Medicare Upper Payment Limit funds could be used for that purpose, but it’s unclear how long that program will be around.

Rural hospitals now rely heavily on the UPL money, Matessino said. But indications from Washington, D.C., are that the UPL program could be “pretty temporary.”

Other federal programs that help providers may also be cut to fund the ACA and the expansion of Medicaid, he said.

Some states have already turned to provider taxes and fees to cover funding shortfalls, he said.

“I’m not suggesting that we pass one, but that’s the way a lot of states are dealing with it,” he said.