Medicaid expansion rejection could cost Mississippi hospitals $152 million in annual losses
Under the soon-to-be-enacted Affordable Health Care Act, Mississippi hospitals lose $152 million annually in federal money to help cover the cost of treating uninsured patients.
The hundreds of millions of new federal dollars Mississippi would get through an expansion of Medicaid to a quarter-million uninsured adults had been seen as the way to offset the $152 million loss. But it’s not clear that Gov. Phil Bryant and the Legislature are willing to accept the expansion and could join states such as Texas, Louisiana, Florida, South Carolina, Iowa and Wisconsin in deciding to turn down the federal money and face the consequences of losing the federal dollars that now help hospitals pay for treating the uninsured.
Without the Medicaid expansion dollars and the phase out of the federal money now used to help pay for uninsured care, hospitals would face several unappealing options: reduce services or even shut down, raise treatment fees on people with insurance or seek state tax dollars.
Bruce Siegel, director of the National Association of Public Hospitals & Health Systems, says the loss of the federal revenue “is a disaster” in waiting for the nation’s hospitals. “A train wreck” is ahead, he predicted in an interview last Tuesday night on Current TV.
Outwardly, it appears Gov. Bryant wants no part of the Medicaid expansion or anything else relating to the Affordable Care Act. He calls the Obama administration measure “an assault on the liberty of American citizens.”
So his impulse might be to join the handful of fellow Republican governors in rejecting the Affordable Care Act’s Medicaid expansion. The governors say they worry the expansions could break the bank for their states once they have to begin picking up a 10 percent share of the Medicaid expansions in 2020.
In his only public statement on the issue, Bryant pledged to resist state participation in Medicaid expansion that “could result in significant tax increases or dramatic cuts to education, public safety and job creation.”
On the other hand, Bryant may find that avoiding dramatic cuts in federal health care funding would justify adding significantly to a Medicaid program that now serves about 800,000 poor children, pregnant women, disabled people and the elderly.
So far the first-term governor has not given the expansion an official thumbs down. This could be a result of urging by state officials such as Insurance Commissioner Mike Chaney that he study the issue thoroughly before deciding a course.
“We have asked the governor to refrain from committing to anything for the time being,” Chaney said in an early July interview.
The Center for Mississippi Health Policy hopes to have economic studies in hand by the end of September. The studies are to address the fiscal implications of initiating the Medicaid expansion.
As the Affordable Care Act recently upheld by the U.S. Supreme Court goes into effect, Mississippi will begin to see a phase out of the annual federal funding it now receives to help hospitals cover the cost of treating uninsured patients.
The loss of the $152 million that makes up the state’s Disproportionate Share Hospital, or DSH, payments is only one layer of the fiscal challenge ahead.
While the DSH money may go away, no one has reason to expect the “Provider Tax” the state levies on public and private hospitals will disappear, as well.
The tax includes $92 million a year to plug a hole in the state’s approximate $100 million share of Medicaid funding, said Gwen Combs, the Mississippi Hospital Association’s vice president for policy.
It also requires the state’s 95 hospitals to contribute the $53 million that represents the state’s share of DSH payments, Combs added. She noted with the federal contribution and the state match, DSH payments to hospitals totaled $206 million in fiscal 2012.
“We don’t know what would go away.”
Nor does the association fully know the fiscal damage the state’s hospitals, including its 32 critical access hospitals, would sustain from the loss of the $152 million yearly funding. Also unknown is whether adding more than a quarter of a million people to Medicare would result in lower reimbursement payments to hospitals.
“I think that is a concern,” Combs said of the prospect for reimbursement rates to drop under a Medicaid expansion. “One of the ways you balance your budget is to lower payments to the provider.”
Either way — a loss of the $152 million in DSH money or reduced Medicaid reimbursements — Mississippi’s hospitals expect to come up short, Combs added.
Projections are the state could get $9 billion in additional Medicaid funding from 2014 through 2020. “But with more people getting coverage, we’re not yet sure how that is going to balance out” in terms of reimbursements for care, Combs said.
At stake for University of Mississippi Medical Center in Jackson is around $70 million annually in DSH money. The Medical Center took in $68.7 million in DSH payments for treating the uninsured during the first 11 months of fiscal 2012, according to spokesman Jack Mazurak.
Uninsured care accounted for 13.9 percent of the Medical Center’s total charges for the initial 11 months of the current fiscal year, Mazurak said.
Mississippi’s rural hospitals, many of which are among the 45 hospitals with fewer than 50 beds, could be especially vulnerable, said Mendal Kemp, director of the Hospital Association’s Center for Rural Health.
Today, Medicaid reimbursements pay only 70 percent to 75 percent of a hospital’s cost of treating a covered patient. “If you expand it, it will worsen,” Kemp said of reimbursement levels.
Equally troublesome, though, is the soon-to-phase-out federal reimbursement for treating the uninsured, Kemp added. “A lot of hospitals depend on that adjustment.”
Another concern: “With expanding coverage and greater demand, where are the physicians” to treat the new Medicaid patients? Kemp asked.
The president of the Mississippi Medical Association does not have the answer. “That’s such a big question,” said Dr. Steve Demetropoulos, a veteran emergency room physician at Pascagoula’s Singing River Hospital who took over this year as association president.
“Do we have providers? We don’t know that,” Demetropoulos added. “Right now, we’re kind of at a capacity in terms of primary care.”
As the Mississippi Hospital Association’s Combs sees it, the Medicaid expansion issue is “a math problem with a very big human element.”
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