The debate over Medicaid expansion in Missouri began in earnest in the summer of 2012.
Hospitals, chambers of commerce and others lined up to urge the General Assembly to accept expansion while Republican legislators made it clear Missouri would join other states in turning the program aside.
Medicaid expansion became a political football putting the future health care of more than 300,000 Missourians who would have qualified for help at risk.
The Affordable Care Act - widely referred to as Obamacare - uses federal tax dollars to fund Medicaid expansion to cover adult Medicaid eligibility to 138 percent of the poverty level. That means that individuals earning $15,850 a year and families of four with an annual income of $32,500 would be covered by the program.
Missouri joins at least 20 other states in pushing the issue past the federal funding deadline.
In the meantime, the Missouri Hospital Association and local health care providers said the failure of general assembly to approve the expansion will have a significant impact on hospitals, especially those in rural communities and will ultimately cost the state much-needed jobs.
Currently parents with children are eligible for Medicaid if their income levels qualify. Adults with no children are not eligible. Expansion would provide health care coverage to more than 300,000 currently uninsured Missourians, including some adults with no children.
The federal program fully funds the cost of expansion through 2016. States would pick up 5 percent of those costs on 2017 and 10 percent by 2020.
An important part of the funding package includes disproportionate share hospital (DSH) payments. The DSH payments have long been critical to hospitals, compensating for care provided to low-income patients who cannot pay and are not covered by insurance or other programs.
The U.S. Supreme Court has ruled that states are not required to accept Medicaid expansion but made no exception protecting states from new funding mechanisms. Two of those are reduced payments to Medicare in the state and a reduction in DSH payments. Thus hundreds of millions of dollars worth of unpaid for care will not be reimbursed to Missouri hospitals, putting them at risk of drowning in red ink.
Despite the urging of organizations across Missouri and Gov. Jay Nixon to expand Medicaid and keep funding mechanisms in place, the General Assembly did not include expansion in the 2013 budget. Instead, a committee of legislators was formed to tour the state this summer and allow Missourians to have input on the matter.
Medicaid expansion will not be considered by the legislature until the 2014 legislative session. With federal funding of expansion scheduled to begin on Jan. 1, 2014, the state will lose money no matter how quickly the legislature acts.
The Missouri Hospital Association will move quickly in the new year to support legislative acceptance of expansion. An association poll taken in the spring of 2013 indicates that 56 percent of Missourians favor expansion.
Page 2 of 3 - According to the association, the high rate of the uninsured, and expanded use of hospital services by the uninsured, has led to a significant increase in hospital uncompensated care costs.
In 2011, hospitals provided $1.3 billion in uncompensated care statewide.
Without additional coverage, hospital uncompensated care is expected to increase
to $3.5 billion annually by the end of the decade, according to the association.
Hospitals receive some funding through Medicaid and Medicare to offset the costs of providing uncompensated care, but much of the remaining cost of caring for the uninsured is shifted to commercial insurance carriers increasing the cost of premiums paid by employers and/or individuals.
How hospitals are affected
At Phelps County Regional Medical Center, administrators have indicated their disappointment in the failure of Medicaid expansion because it indirectly affects the DSH payments.
PCRMC is one of those disproportionate share hospitals that takes care of uninsured people, and the DSH payments help take some of the edge off the money the hospital loses each year by giving the charitable care, or writing off the care that it cannot get payment for.
For PCRMC, DSH payments have covered $4 million of the $32 million a year that the hospital writes off.
With the Affordable Care Act, those payments will go away because the act counts on the expansion of Medicaid, an expansion the Missouri Legislature has decided against.
Perhaps even more troublesome for PCRMC have been the RAC payments. RAC stands for recovery audit contractor, and these contractors are hired by the federal government to take a look as far back as three years at Medicare billing.
The RAC program, which started in 2010, took full effect in 2012 and resulted in $4.5 million in take-backs form the hospital on an annual basis.
For up to three years after a patient is discharged, these auditors review claims and billing information and can decide that patients should not have been admitted.
The hospital board has adopted a two-year strategic plan, part of which was devoted to ways to handle the federal changes that require hospitals to provide so-called “value added” care and “evidence-based practices.” The financial strategies call for tactics to assure financial sustainability of the hospital.
Among the steps to be taken are changes to reduce the Medicare RAC “take-backs.”
Chief Financial Officer Ed Clayton recently told the board that the hospital is coping with the changes in federal reimbursement although Medicare payments have been cut, as well as other federal and state payments.
The hospital has cut expenses and, fortunately, its non-operating revenue has been good.
But regarding the changes in federal financing of healthcare, Clayton said, “If you look at all the cuts, it’s taken us from respectable income to where we struggle to break even.”
Page 3 of 3 - Despite that, the hospital remains in solid financial shape, and much of the credit goes to hospital employees.
A big help to the bottom line this year has been the delaying of raises for hospital employees. Had those raises been put into effect, the cost would have been about $250,000 per month.
“Our bottom line would be gone,” Clayton said.
Despite these challenges, the hospital’s financial books have stayed in the “black” through the first five months of 2013.
Lake Regional Health System recently published “Currents: A Report to the Community.” The annual report covers fiscal year 2013, which began May 2012 and ended April 2013.
According to Lake Regional Health System's annual report, Lake Regional contributed more than $31.1 million to the community, including uncompensated care, free medical services and health professionals’ education. The total also includes $16.2 million for the unpaid cost of treating Medicare patients.
Lake Regional Health Systems spokesperson Jennifer Bethurem said another downside is those who could have been included in the Medicaid expansion would have been able to take part in a managed health plan with an emphasis on preventive care. Without that, many of those uninsured will continue to use emergency room care instead of developing a health care routine.
"That's the most expensive care there is," she said.
According to Rep. Noel Torpey, the Independence Republican who chairs the Citizens and Legislators Working Group on Medicaid Eligibility and Reform, it appears that "many if not most Missourians want Medicaid expanded."
Those who attended six scheduled public hearings throughout the state came down on both sides of the issue but supporters seemed to hold the field.
Torpey said his working group will file a report with the Missouri House speaker with recommendations on how Missouri lawmakers should handle the expansion during the 2014 session.