Hospitals boosted by Medicaid expansion
Indiana hospitals have seen significantly less uncompensated care, since Indiana expanded Medicaid eligibility last year.
WASHINGTON — The biggest obstacle a Richmond, Ind., hospital has had in signing up low-income Hoosiers for Indiana’s expanded Medicaid program is convincing them it’s real.
“These are people who have never had this type of coverage before,” said Chris Knight, the chief financial officer and vice president of Reid Health. “We have had very touching stories where people just break down and cry when they’re given this coverage.”
As Indiana enters its second year of expanded Medicaid coverage created by the Affordable Care Act, hospitals around the state report it has helped patients gain needed coverage.
But it’s helping hospitals, too.
The amount of unpaid bills Reid Health can’t collect from patients has dropped about 40 percent.
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The Health and Hospital Corporation of Marion County, which runs the hospital that has had the largest amount of uncompensated care costs in the state, has seen the share of patients without insurance drop from about 35 percent to 25 percent at Eskenazi Health. That translates into about a $15 million boost for the hospital’s bottom line.
“To see that kind of a conversion in a given year, that’s a big number,” said Dan Sellers, the corporation’s chief financial officer and treasurer.
The Indiana Hospital Association is waiting for fourth-quarter figures before conducting an in-depth survey of the financial impact across the state. But association president Doug Leonard said Wednesday that hospitals have seen a significant reduction in the amount of uncompensated care.
Preliminary data of a survey the state has commissioned found that 55 percent of 270 health-care providers reported a decline in the number of uninsured patients, and almost 40 percent have seen a decline in the request for charity care.
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Kosali Simon, a health policy scholar at Indiana University’s School of Public and Environmental Affairs who has been studying the ACA, said it’s still too early to draw conclusions on many aspects, such as how Medicaid expansion has improved health. But one of the clearest pictures emerging is how the expansion has helped hospital finances.
“There have been several presentations at economic conferences over the last couple of months where people have used different data sets to look at Medicaid expansion states,” Simon said. “The consistent picture they show is the percent of uninsured (patients) coming to hospitals going down, and the percent on Medicaid going up.”
A recent study published in the journal Health Affairs found a sharp decrease in hospital stays from uninsured patients in the first six months of 2014, when the expanded program first became available in participating states.
Indiana did not open its Medicaid program to people earning up to 138 percent of the federal poverty line until 2015, after receiving permission from the federal government to run an alternative program.
As a result, the study found the share of non-Medicare adults without insurance discharged from Indiana hospitals in the first half of 2014 fell only about 2 percentage points, compared with a more than 13 percentage-point drop in Kentucky, which expanded Medicaid in 2014.
The most recent federal statistics show Indiana’s Medicaid enrollment increased about 27 percent as of October, compared with about 31 percent in all states expanding Medicaid. State officials project HIP 2.0 enrollment could grow from more than 300,000 last year to more than 550,000 by 2018.
Before the expansion, Indiana had one of the most restrictive Medicaid programs in the country. Other than pregnant women, parents generally could only earn up to 24 percent of the poverty line to qualify for coverage. And childless adults without a disability were not eligible at all, except if they could get into a pilot version of the Healthy Indiana Plan (HIP), which had been available for a limited number of Hoosiers since 2008.
Hospitals were among the biggest advocates for expanding Medicaid into the program known as HIP 2.0. That’s in part because the Affordable Care Act cut payments to hospitals in anticipation of more people having coverage through either private insurance purchased on the health exchanges created by the law, or through Medicaid. But a 2012 Supreme Court ruling made Medicaid expansion optional for states.
Meanwhile, the cuts in federal payments hospitals receive to help offset uncompensated care will start soon.
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Ezkenazi Health has been the largest Indiana recipient of those federal payments. The boost, though, was never enough to cover the costs. Getting reimbursed through Medicaid will be better, Sellers said.
“It continues to be very powerful for the patient, and it’s very important for us too,” Sellers said of the expansion.
Indiana University Health, whose 17 hospitals include IU Health Ball Memorial in Muncie and IU Health Arnett in Lafayette, has seen about a 3 percentage-point drop in the share of patients without insurance.
“It’s meaningful,” said Ryan Kitchell, chief administration officer. “We obviously see a lot of patients, so 3 percentage points is a lot of Hoosiers.”
Kitchell said that while the uptick from Hoosiers getting private insurance through the health exchange has been less than expected, Medicaid enrollment has been stronger than anticipated.
It’s too early, he said, for a full accounting of how much the expansion has helped the bottom line, after accounting for various federal program payment cuts. But the benefits to the patients are clear. For example, this week IU Health was able to immediately enroll a patient who needed expensive reconstructive surgery after cancer.
“We can get them screened and covered in a day,” said Vice President Jennifer Alvey.
Reid Health, in Richmond, was used to collecting 2 cents on the dollar on bills sent to patients who lacked insurance. The community has done extensive outreach to get qualified residents enrolled in Medicaid, including spreading the word in churches, food pantries and laundromats.
The resulting 40 percent drop in uncollectable bills has saved the hospital about $8 million, which is about 2 percent of costs.
“No other program that has been implemented.” Knight said, “has had this drastic of an impact.”
Contact Maureen Groppe at mgroppe@gannett.com or @mgroppe on Twitter.