The ranks of Medicaid keep growing, and at record levels. But while that's good news for hospital systems' uncompensated care budgets, there are still challenges.
More than 7.9 million people enrolled in Medicaid or the Children's Health Insurance Program between October 2013 and July 31 of this year, increasing total enrollment 13 percent, according to the Department of Health and Human Services.
Nationwide, 67 million Americans are now covered by Medicaid – the most ever in the program's 49 year history – while CHIP enrollment stands at 27 million.
While this is largely good news for many hospitals and health systems and physicians, providers in 23 states are still facing the challenge of uncompensated care because their governors and legislatures are not expanding Medicaid eligibility under the Affordable Care Act, leaving millions uninsured.
According to a report released by HHS yesterday, hospitals are on track to save $5.7 billion in uncompensated care costs this year because of the ACA. Hospitals in states that have expanded Medicaid will see almost 75 percent of that total savings nationally – about $4.2 billion, while those in states that haven't will collectively save just $1.5 billion.
[See also: ACA saving hospitals money.]
"Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care," said HHS Secretary Sylvia Mathews Burwell, in a media release.
The problems of bad debt and charity care related to uninsured patients have been on the decline over the past year in states that expanded Medicaid.
In a study released earlier this summer, the Colorado Hospital Association examined financial data from 465 hospitals in 30 states, half of them expanding Medicaid and half declining. Hospitals in the states expanding Medicaid saw the program grow to become a greater share of their revenue base, increasing on average from 15 percent of all revenue to almost 19 percent between 2013 and the first quarter of this year.
The average proportion of hospital charges for self-pay patients declined on average 25 percent in those same states, from 4.7 percent to 3.1 percent, the study found. Meanwhile, hospitals in states that are not expanding eligibility saw little variation in their share of Medicaid and self-pay patients.
In Colorado, one of 26 states that are opening Medicaid to childless, low-income adults under the ACA, hospitals' Medicaid revenue has grown faster than average. According to the study, it now represents on average 20 percent of their base – and in Colorado, along with a few other states, providers are embarking on an experiment to transform Medicaid financing and delivery.
Colorado's Medicaid accountable care program is a kind of hybridized medical home and accountable care model, using primary care providers for general and preventive care and regional care collaborative organizations for case management and coordination with hospitals, and a statewide data and analytics contractor measuring the performance of all involved.
The program now covers about half of the state's beneficiaries, and in its first full year saw a 15 percent reduction in hospital admissions and a 25 percent reduction in high-cost imaging. That led to $44 million in savings, with most going to providers as incentive bonuses and $6 million returning to state coffers.
Other states are pursuing reforms as well – including the large state of New York, which under a federal waiver is trying to reduce avoidable admissions by 25 percent. Empire State providers are now tasked with collaborating with each other and state regulators to craft "a single system of effective care management," to ensure that Medicaid beneficiaries can access integrated medical and behavioral health services across primary care practitioners, community-based organizations, home health visits, specialists and hospitals.
Elsewhere, in states relying heavily on Medicaid managed care, health systems are seeing some potential benefits in sponsoring their own Medicaid health plans.
As Karla Lord, the director of business operations for Gundersen Health System's health plan told Healthcare Finance News in August, a provider-sponsored Medicaid plan can help bring "easier collaboration and fewer barriers, because the provider and health plan are owned by the same parent company."