A recently-released study conducted by Georgetown University highlights the impact of Medicaid expansion – or lack thereof – on hospitals that provide a significant level of care to low-income and uninsured patients. Representatives of three area hospitals discussed the study with the Quill, affirming its findings that Missouri’s non-expansion status is leaving hospitals in difficult financial straits.

When the Affordable Care Act was passed and signed into law in 2010, it mandated states to provide Medicaid coverage for all adults with incomes up to effectively 138 percent of the federal poverty level, regardless of age, family status, or health.

In a later U.S. Supreme Court decision, it was ruled that state participation in Medicaid expansion — also referred to as “closing the gap” — is voluntary.

Accordingly, some states, including Missouri, chose not to participate, and adults in Missouri and other non-expansion states with incomes below 100 percent of the federal poverty level and who don’t qualify for Medicaid otherwise are left without coverage.

Their incomes are too high to qualify for state Medicaid coverage, but too low to save on a Health Insurance Marketplace plan.

The study

The study, conducted by Adam Searing with Georgetown University Center for Children and Families and Jack Hoadley with the university’s Health Policy Institute, was released earlier this month, and focused on looking beyond reducing the number of patient cases without compensation, or payment, to the financial impact expansion has on safety net hospitals.

From Dec. 2015 to March 2016, telephone interviews were conducted with 11 leaders of medical institutions, on condition of anonymity, in seven states. Three of those states — Missouri, Utah, and Tennessee — had not opted to close the Medicaid gap.

Several key findings were made by Searing and Hoadley, who concluded that expansion states have a lower uninsured population and lower-income residents have better access to care.

Additionally, closing the gap has had a positive effect not just for hospitals, but also for state budgets. But the most concrete impact they observed was on the individual care facilities, whose executives reported dramatic declines in the number of uninsured patients served.

The resulting financial improvement has boosted providers’ ability to expand service and improve quality of care.

However, they noted, the same observations were not made in non-expansion states where financial pressures are still an obstacle to be overcome. “Medicaid expansion has not solved all problems for these providers, as they continue to have difficulty in finding specialists who will accept Medicaid,” they report.

Decline in uninsured patients

Searing and Hodley noticed during the course of their interviews that safety net providers are seeing fewer uninsured patients in states that have expanded Medicaid coverage, with officials in different medical facilities reporting drops of 15 to 34 percent in total numbers of patients without insurance seeking care. Conversely, an official in a non-expansion state said the number of uninsured patients had risen by 11 percent.

“As a rural hospital, we have a higher percentage of people who can’t pay,” said Joleen Durham, public relations spokeswoman for Texas County Memorial Hospital in a phone interview with the Quill. She added that 15 percent of patients’ bills are written off due to their inability to pay. Last year, she said, the hospital performed $5.5 million worth of uncompensated care, much of which was racked up in the form of expensive emergency room visits.

Gay Stover, Executive Director of Marketing and Public Relations at Ozarks Medical Center, agreed that expansion is crucial. “OMC has participated in numerous activities over the last three years to lobby for Medicaid expansion, due to the fact that there are so many residents in our service are affected,” she said.

“Expansion would mean that they could access the care they need, visit the doctor for office visits and screenings instead of putting off care until their health is bad enough to go to the emergency department.”

“The ER is the only way [some patients] have to go and get care,” said Durham, noting that many patients, due to limited transportation in a rural area, finances, or lack of insurance, struggle to see a primary care physician and resort to hospital emergency departments for non-emergency care.

“Our hospitals in rural Missouri, especially in south-central Missouri, we are all experiencing the most pain,” said Durham. “There are state studies to show that we have the highest need.”

In fact, said David Steinmann, administrator for Mercy St. Francis Hospital in Mountain View, there are 200,000 more Missourians yet who could have better access to healthcare – particularly preventative care – if the gap is closed.

Better for the bottom line

Searing and Hoadley noted that hospitals serving a significant number low-income and vulnerable patients are seeing more financial security in expansion states, while hospitals in states like Missouri still struggle.

“For example,” they report, “one federally-qualified health center went from a $2.5 million end-of-year loss prior to expansion to a $2.5 million surplus the year after,” a $5 million reversal in just one year.

Executives with facilities in expansion states reported using the increase in finances resulting from reimbursements to hire new staff, open new centers, buy new equipment, and improve existing facilities. In non-expansion states, however, executives reported little to no change in their institution’s economical status.

Steinmann, who also serves as administrator for Mercy Hospital in Lebanon, pointed out that 90 percent of expansion costs are paid for with federal funds.

“We’re not seeing those funds right now,” he said. “But some of the states that are, are doing good.”

Durham explained that that since changes were made to the hospital’s federal funding – changes made with the expectation that Missouri would be expanding coverage – the facility has missed millions of dollars that had once been expected.

This is particularly hard-hitting for TCMH in light of improvements completed at the hospital in 2014, improvements that had been planned and put into action well before the Affordable Care Act was even voted on.

“We’ve had to tighten our belts,” she said. At TCMH, fewer people are being hired, and administrators are having to perform more tasks that, in the past, were spread out over multiple roles, she explained.

Responding to some state legislators who have expressed concern that the federal funding may not be reliable, Steinmann said, “We can always adjust down the way.”

Community benefits

“Not only does expansion positively impact the hospital’s bottom line, it positively impacts the health of the public,” Durham told the Quill.

Indeed, the study indicates that the positive economic impact of expansion leaches out from the health care system and into the community, in part by providing job security.

In states that opted out of closing the insurance gap, some executives blamed lack of expansion for layoffs and facility closures. One official said quality staff has been leaving to find work elsewhere.

Additionally, however, non-expansion states are also seeing an increase in charity care policy use to compensate for medical care for those who cannot afford it unassisted, creating another financial hurdle. A concern relevant to many on a local level expressed by one facility director cited in the study drives the point home: “One of the concerns is [whether] new business and employers want to come to a state that does not have an expanded Medicaid system …. We are an unhealthy state, so you are going to be hiring a lot of unhealthy people.”

Durham agreed. “We’re a big economic driver for our community,” she said.

Steinmann said the risk in delaying expansion is greatest for small rural hospitals. “The longer we delay, the worse it will be,” he said, citing a potential $187 million dollars in community benefits lost to lack of expansion.

Better care

The study also revealed that providers in states that have closed the gap are taking steps to integrate care and facilitate better care for patients through communication with other providers. One official said, “It is like night and day on our ability to deliver care. I talk to my colleages in other states that have not expanded and they simply cannot deliver care like we can.”

“The cuts that we have experienced have drastically impacted the care we can give,” Durham said.

Searing and Hoadley also reported that access to specialty care is improved in states that have expanded coverage, but room for further improvement exists. Officials in expansion states report that they are able to address this need for improvement by collaborating, hiring new staff, and creating new initiatives aimed at increasing access to specialists.

“We have absolutely got to come together and make a working solution that works,” Steinmann said. “We need to expand Medicaid. We need to come together as a nation.”

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