The Impact of the ACA's Medicaid Expansion on Hospitals' Uncompensated Care Burden and the Potential Effects of Repeal

ISSUE: By increasing health insurance coverage, the Affordable Care Act's Medicaid eligibility expansion was also expected to lessen the uncompensated care burden on hospitals. The expansion currently faces an uncertain future. GOAL: To compare the change in hospitals' uncompensated care burden in the 31 states (plus the District of Columbia) that chose to expand Medicaid to the changes in states that did not, and to estimate how these expenses would be affected by repeal or further expansion. METHODS: Analysis of uncompensated care data from Medicare Hospital Cost Reports from 2011 to 2015. FINDINGS AND CONCLUSIONS: Uncompensated care burdens fell sharply in expansion states between 2013 and 2015, from 3.9 percent to 2.3 percent of operating costs. Estimated savings across all hospitals in Medicaid expansion states totaled $6.2 billion. The largest reductions in uncompensated care were found for hospitals in expansion states that care for the highest proportion of low-income and uninsured patients. Legislation that scales back or eliminates Medicaid expansion is likely to expose these safety-net hospitals to large cost increases. Conversely, if the 19 states that chose not to expand Medicaid were to adopt expansion, their uncompensated care costs also would decrease by an estimated $6.2 billion.

Changes in Hospital Performance after Ownership Conversions

This paper examines the effects of ownership conversions on hospital performance between 1987 and 1998 in areas of financial performance, staffing, capacity, and unprofitable care. Conversions to government and for-profit ownership both increased the profit margin: the former due to rising revenue, and the latter due to reduced operating costs and rising revenue. Hospitals that converted to for-profit ownership had the greatest reduction in staffing relative to other converted hospitals. There was little change in bed capacity after conversion to for-profit status, but some reductions in bed capacity after conversion to government or nonprofit status. No conversion of any kind led to a reduced amount of unprofitable care, but conversion to private ownership (nonprofit and for-profit) increased the probability of trauma center closures.

Association Between the 2014 Medicaid Expansion and US Hospital Finances

IMPORTANCE

The Affordable Care Act expanded Medicaid eligibility for millions of low-income adults. The choice for states to expand Medicaid could affect the financial health of hospitals by decreasing the proportion of patient volume and unreimbursed expenses attributable to uninsured patients while increasing revenue from newly covered patients.

OBJECTIVE

To estimate the association between the Medicaid expansion in 2014 and hospital finances by assessing differences between hospitals in states that expanded Medicaid and in those states that did not expand Medicaid.

DESIGN AND SETTING

Observational study with analysis of data for nonfederal general medical or surgical hospitals in fiscal years 2011 through 2014, using data from the American Hospital Association Annual Survey and the Health Care Cost Report Information System from the US Centers for Medicare & Medicaid Services. Multivariable difference-in-difference regression analyses were used to compare states with Medicaid expansion with states without Medicaid expansion. Hospitals in states that expanded Medicaid eligibility before January 2014 were excluded.

EXPOSURES

Medicaid expansion in 2014, accounting for variation in fiscal year start dates.

MAIN OUTCOMES AND MEASURES

Hospital-reported information on uncompensated care, uncompensated care as a percentage of total hospital expenses, Medicaid revenue, Medicaid as a percentage of total revenue, operating margins, and excess margins.

RESULTS

The sample included between 1200 and 1400 hospitals per fiscal year in 19 states with Medicaid expansion and between 2200 and 2400 hospitals per fiscal year in 25 states without Medicaid expansion (with sample size varying depending on the outcome measured). Expansion of Medicaid was associated with a decline of $2.8 million (95% CI, -$4.1 to -$1.6 million; P < .001) in mean annual uncompensated care costs per hospital. Hospitals in states with Medicaid expansion experienced a $3.2 million increase (95% CI, $0.9 to $5.6 million; P = .008) in mean annual Medicaid revenue per hospital, relative to hospitals in states without Medicaid expansion. Medicaid expansion was also significantly associated with improved excess margins (1.1 percentage points [95% CI, 0.1 to 2.0 percentage points]; P = .04), but not improved operating margins (1.1 percentage points [95% CI, -0.1 to 2.3 percentage points]; P = .06).

CONCLUSIONS AND RELEVANCE

The hospitals located in the 19 states that implemented the Medicaid expansion had significantly increased Medicaid revenue, decreased uncompensated care costs, and improvements in profit margins compared with hospitals located in the 25 states that did not expand Medicaid. Further study is needed to assess longer-term implications of this policy change on hospitals' overall finances.

Funding, coverage, and access under Thailand's universal health insurance program: an update after ten years

BACKGROUND

In 2001, Thailand implemented a universal coverage program by expanding government-funded health coverage to uninsured citizens and limited their out-of-pocket payments to 30 Baht per encounter and, in 2006, eliminated out-of-pocket payments entirely. Prior research covering the early years of the program showed that the program effectively expanded coverage while a more recent paper of the early effects of the program found that improved access from the program led to a reduction in infant mortality.

OBJECTIVE

We expand and update previous analyses of the effects of the 30 Baht program on access and out-of-pocket payments.

DATA AND METHODS

We analyze national survey and governmental budgeting data through 2011 to examine trends in health care financing, coverage and access, including out-of-pocket payments.

RESULTS

By 2011, only 1.64 % of the population remained uninsured in Thailand (down from 2.61 % in 2009). While government funding increased 75 % between 2005 and 2010, budgetary requests by health care providers exceeded approved amounts in many years. The 30 Baht program beneficiaries paid zero out-of-pocket payments for both outpatient and inpatient care. Inpatient and outpatient contact rates across all insurance categories fell slightly over time.

CONCLUSIONS

Overall, the statistical results suggest that the program is continuing to achieve its goals after 10 years of operation. Insurance coverage is now virtually universal, access has been more or less maintained, government funding has continued to grow, though at rates below requested levels and 30 Baht patients are still guaranteed access to care with limited or no out-of-pocket costs. Important issues going forward are the ability of the government to sustain continued funding increases while minimizing cost sharing.

Free heart failure clinic aims to cut readmissions

Mountain State Health Alliance opened a free heart failure clinic after determining that patients' inability to get a timely follow-up appointment and financial issues were the cause of many readmissions. The clinic is in a convenient location, across the street from the hospital. The nurse practitioner who runs the program sees many of the patients while they are still in the hospital to inform them about the clinic. Interventions include help signing up for medication assistance, education for patients and family members, and ongoing support.

Not-for-profit hospitals' provision of community benefit: is there a trade-off between charity care and other benefits provided to the community?

BACKGROUND

For decades, not-for-profit hospitals have been required to provide community benefit in exchange for tax exemption. To fulfill this requirement, hospitals engage in a variety of activities ranging from free and reduced cost care provided to individual patients to services aimed at improving the health of the community at large. Limited financial resources may restrict hospitals' ability to provide the full range of community benefits and force them to engage in trade-offs.

OBJECTIVES

We analyzed the composition of not-for-profit hospitals' community benefit expenditures and explored whether hospitals traded off between charity care and spending on other community benefit activities.

METHODS

Data for this study came from Maryland hospitals' state-level community benefit reports for 2006-2010. Bivariate Spearman's rho correlation analysis was used to examine the relationships among various components of hospitals' community benefit activities.

RESULTS

We found no evidence of trade-offs between charity care and activities targeted at the health and well-being of the community at large. Consistently, hospitals that provided more charity care did not offset these expenditures by reducing their spending on other community benefit activities, including mission-driven health services, community health services, and health professions education.

CONCLUSIONS

Hospitals' decisions about how to allocate community benefit dollars are made in the context of broader community health needs and resources. Concerns that hospitals serving a disproportionate number of charity patients might provide fewer benefits to the community at large appear to be unfounded.

The right patient

This article offers professional opinions and advice on how physicians should prepare in order to protect themselves and their practices during this turbulent time in healthcare reform. This article presents real-life scenarios to help physicians understand what they may face and what actions they should take in anticipation of the future in healthcare. The article focuses on the concept of "the right patient," defining the characteristics of patients that benefit the financial aspect of a practice and those who do not. Its purpose is not to encourage physicians to deny care to patients who are poorly insured or uninsured, but to guide in the establishment of a smart and safe balance between the two. Strategies are discussed on how to attract the right patient and what these patients mean to the practice. The importance of practice marketing is also highlighted, along with an emphasis on the necessity of change in order to survive in the future healthcare environment.

Do hospital chief executive officers extract rents from Certificate of Need laws?

Prior research suggests that Certificate of Need (CON) laws reduce competition in the hospital services industry. As a result, this study empirically investigates if not-for-profit hospital chief executive officers (CEOs) are able to extract rents from CON laws in the form of higher compensation. A sample of 256 not-for-profit hospital CEOs in states with and without CON laws and data for 2007 are used in the empirical analysis. The study considers the endogenous nature of a CON law and allows such a law to indirectly affect CEO compensation through its impact on the number of hospitals and beds. The multiple regression results indicate that special and public interests both motivate the decision of a state to maintain a CON law. CON laws are shown to reduce the number of beds at the typical hospital by 12 percent, on average, and the number of hospitals per 100,000 persons by 48 percent. These reductions ultimately lead urban hospital CEOs in states with CON laws to extract economic rents of $91,000 annually.

The economic recession: early impacts on health care safety net providers

While the recession increased demands on the health care safety net as Americans lost jobs and health insurance, the impact on safety net providers has been mixed and less severe--at least initially--than expected in some cases, according to a new study of five metropolitan communities by the Center for Studying Health System Change (HSC). Even before the recession, many safety net providers reported treating more uninsured patients and facing tighter state and local funding. Federal expansion grants for community health centers during the past decade, however, have increased capacity at many health centers. And, programs to help direct people to primary care providers may have helped stem the expected surge in emergency department use by the uninsured during the downturn. Federal stimulus funding--the 2009 American Recovery and Reinvestment Act--has assisted hospitals and health centers in weathering the economic storm, helping to offset reductions in state, local and private funding. And, the economic downturn has generated some potential benefits, including lower rents and broader employee applicant pools. While safety net providers have adopted strategies to stay financially viable, many believe they have not yet felt the full impact of the deepest recession since the Great Depression.

It's all downhill from here. What started as a year of optimism has turned into what some describe as a supertough economic situation despite contrary reports

2007 is being seen as the financial high point for U.S. hospitals, with 2008 bringing a gloomy outlook. After record profits in 2007, this year is bringing layoffs and dwindling investment returns. "This is just the beginning. I think it's going to get worse before it gets better," says Leo Brideau, left, of the Columbia St. Mary's system in Milwaukee.

National trends in uncompensated care and profitability

The nation's short-term acute care hospitals (STACHs) have reported nearly $124 billon in uncompensated care costs since federal fiscal year 2003. Although Medicare requires acute care hospitals to report uncompensated care costs, more than 20 percent of Medicare cost reports submitted by STACHs over the past five years have not complied fully with that requirement. Although increased costs of uncompensated care have affected different types of hospitals in different ways, virtually all STACHs have been challenged by these costs.

Effects of changes in incomes and practice circumstances on physicians' decisions to treat charity and Medicaid patients

CONTEXT

The decline over the past decade in the percentage of physicians providing care to charity and Medicaid patients has been attributed to both financial pressure and the changing practice environment. Policymakers should be concerned about these trends, since private physicians are a major source of medical care for low-income persons. This study examines how changes in physicians' practice income, ownership, and size affect their decisions to stop or start treating charity care and Medicaid patients.

METHODS

This study uses panel data from four rounds of the Community Tracking Study Physician Survey. The dependent variables are the likelihood of physicians' (1) dropping charity care, (2) starting to provide charity care, (3) no longer accepting new Medicaid patients, and (4) starting to accept new Medicaid patients. The primary independent variables are changes in physicians' practice income, ownership, and practice type/size. Multivariate analysis controls for the effects of other physician practice characteristics, health policies, and health care market factors.

FINDINGS

A decline in physicians' income increased the likelihood that a physician would stop accepting new Medicaid patients but had no effect on his or her decision to provide charity care. Those physicians who switched from being owners to employees or from small to larger practices were more likely to drop charity care and to start accepting Medicaid patients, and physicians who made the opposite practice changes did the reverse.

CONCLUSIONS

Changes in their income and practice arrangements make physicians less willing to accept Medicaid and uninsured patients. Moreover, physicians moving into different practice arrangements treat charity and Medicaid patients as substitutes rather than as similar types of patients. To reverse these trends, policymakers should consider raising Medicaid reimbursement rates and subsidizing organizations that encourage private physicians to provide charity care.

Caring for the New Uninsured: Hospital Charity Care for Older People without Coverage

Despite near-universal coverage through Medicare, a number of elderly residents in the United States do not have health insurance coverage. To the author's knowledge, this study is the first to document trends in the use of hospital charity care by uninsured older people. Data from the New Jersey Charity Care Program, which subsidizes hospitals for services provided to low-income uninsured people, were used to analyze trends in charity care utilization by older people from 1999 to 2004. Charity care charges are standardized to uniform Medicaid reimbursement rates and inflation adjusted using the Medical Care Consumer Price Index. From 1999 to 2004, use of charity care by older people grew much faster than it did for younger patients. As a result, older people now account for a greater share of hospital charity care in New Jersey than children. Elderly users of charity care generated higher costs per patient than their younger counterparts. Cost differences were especially salient at the upper end of the distribution, where high-cost elderly patients used significantly more resources than high-cost patients in other age groups. These results highlight an emerging source of strain on the healthcare safety net and point to a growing population of uninsured residents who have costly and complex medical needs. Similar experiences are likely to be found in other states, especially those that have growing populations of elderly immigrants who are likely to lack health insurance.

Straight talk new approaches in healthcare. Rebuilding healthcare in Louisiana--a blueprint for the nation. Roundtable discussion

When Hurricane Katrina struck Louisiana last August, it ravaged the healthcare system, which has since been struggling to cope with day-to-day challenges while also preparing for the future. The The Louisiana Recovery Authority (LRA) has been working to develop a blueprint for an equitable, affordable, high-quality healthcare system that's also equipped to respond to future disasters. In this installment of Straight Talk, representatives from Franciscan Missionaries Of Our Lady Health System, Baton Rouge, and Ochsner Health System, New Orleans, discuss the present and future state of healthcare in Louisiana. Modern Healthcare and PricewaterhouseCoopers present Straight Talk. The session on rebuilding Louisiana was held on June 8, 2006 at Modern Healthcare's Chicago headquarters. Fawn Lopez, publisher of Modern Healthcare, was the moderator.

The community safety net and prescription drug access for low-income, uninsured people

While the new Medicare drug benefit has helped alleviate concerns about prescription drug access for elderly and disabled Americans, many low-income, uninsured people under age 65 continue to rely on community safety nets to get needed medications. As the number of uninsured Americans increases, safety net providers are stretching limited resources to meet growing prescription drug needs, according to findings from the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities. Despite redoubled efforts--centered on obtaining discounted drugs and donated medications--to make affordable drugs available to needy patients, safety net providers and community advocates report that many low-income, uninsured people continue to face major barriers to obtaining prescription drugs.

Medicaid in 2006: a trip down the yellow brick road

This issue brief explores the continuing evolution of the Medicaid program on several fronts. It discusses the benefits and cost-sharing flexibility that is included in the Deficit Reduction Act of 2005 (DRA) and examines the implications of these provisions for states, beneficiaries, and providers. The paper also explores recent trends in section 1115 waiver development and considers the use of waivers as a vehicle for restructuring Medicaid financing systems and for testing completely new approaches to health care delivery. The role of section 1115 waivers in the context of the DRA and as a mechanism for continued state innovation is also discussed.

A growing hole in the safety net: physician charity care declines again

Continuing a decade-long trend, the proportion of U.S. physicians providing charity care dropped to 68 percent in 2004-05 from 76 percent in 1996-97, according to a national study from the Center for Studying Health System Change (HSC). The ongoing decline in physician charity care is alarming given the increase in the number of uninsured people, particularly during the first half of the decade. Declines in charity care were observed across most major specialties, practice types, practice income levels and geographic regions. Increasing financial pressures and changes in practice arrangements may account in part for the continuing decrease in physician charity care.

Health care providers and facilities: health facilities--2005. End of Year Issue Brief

The mission of every hospital in America is to serve the health care needs of individuals in their communities, 24 hours a day, seven days a week. Their task, and the task of their medical staff, is to continually care for and to cure their patients. American health facilities are said to provide the best, most sophisticated, and most beneficial health care in the world. However, a hospital's ability to care for each patient who walks through their doors is continuously challenged on numerous fronts--the shortage of key hospital personnel, the increased cost of caring for the uninsured, the continued problem of medical errors, and the growth of niche and specialty hospitals. As of 2002, there were 5,794 registered hospitals in the United States, according to the most recent data available from the American Hospital Association (AHA). The AHA also states that there are 4,927 community hospitals, which includes nongovernmental, non-profit hospitals, investor-owned (for-profit) hospitals, and hospitals owned by state and local governments. The AHA defines community hospitals as all non-federal, short-term general and other specialty hospitals. Specialty hospitals include obstetrics and gynecology, rehabilitation, orthopedic and other individually described specialty services. Statistics provided by the AHA indicate that the number of rural and urban community hospitals is approximately equal--2,178 rural hospitals compared to 2,749 urban hospitals.

Rising pressure: hospital emergency departments as barometers of the health care system

Pressures--ranging from persuading specialists to provide on-call coverage to dealing with growing numbers of patients with serious mental illness--are building in already-crowded hospital emergency departments (EDs) across the country, according to findings from the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities. As the number of ED visits rises significantly faster than population growth, many hospitals are expanding emergency department capacity. At the same time, hospitals face an ongoing nursing shortage, contributing to tight inpatient capacity that in turn hinders admitting ED patients. In their role as hospitals' "front door" for attracting insured inpatient admissions, emergency departments also increasingly are expected to help hospitals compete for insured patients while still meeting obligations to provide emergency care to all-comers under federal law. Failure to address these growing pressures may compromise access to emergency care for patients and spur already rapidly rising health care costs.

Balancing margin and mission: hospitals alter billing and collection practices for uninsured patients

A barrage of publicity about aggressive hospital billing and collection practices and a spate of lawsuits alleging hospitals overcharged uninsured patients have put hospitals in a harsh national spotlight. In the wake of a campaign by hospital associations to encourage hospitals to create formal policies for billing uninsured patients, many hospitals have modified billing and collection practices for low-income, uninsured patients, according to the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities. Almost all of the hospitals interviewed that had adopted more generous charity care policies indicated expenses previously classified as bad debt have shifted to charity care write-offs. To date, these changes have had little impact on hospital bottom lines, and the impact on access to care for uninsured people remains unclear.

Uncompensated Care Provided by Emergency Physicians in Florida Emergency Departments

Uncompensated emergency department (ED) visits can negatively affect patients, clinicians, and hospitals, particularly as overcrowding occurs. Florida provides a unique market to analyze uncompensated ED care due to the high percent of for-profit hospitals, which typically provide significantly less uncompensated care, coupled with the older population that is more likely to be insured through Medicare. A survey of 188 Florida hospital emergency physician groups was conducted to estimate the level of uncompensated care provided by each ED physician group in 1998. The response rate was 44 percent (eighty-three ED physician groups). All ED physician groups provided substantial uncompensated care regardless of hospital ownership type. Uncompensated care averaged 46.8 percent and ranged from 25.8 to 79.4 percent. A model was developed to predict the amount of uncompensated care using ED volume and payer mix. A rise in the percent of self-pay patients causes a disproportionate increase in uncompensated care, such that EDs with high levels of self-pay visits have markedly higher uncompensated care rates. The results suggest the need for a uniform reporting method of ED physician uncompensated care cost.

Survival strategies for Michigan's health care safety net providers

OBJECTIVE

To understand key adaptive strategies considered by health care safety net organizations serving uninsured and underinsured populations in Michigan.

DATA SOURCES/STUDY SETTING

Primary data collected through interviews at community-based free clinics, family planning clinics, local public health departments, and Federally Qualified Health Centers from 2002 to 2003.

RESEARCH DESIGN

In each of six service areas in Michigan, we conducted a multiple-site case study of the four organizations noted above. We conducted interviews with the administrator, the medical or clinical director, the financial or marketing director, and a member of the board of directors. We interviewed 74 respondents at 20 organizations.

PRINCIPAL FINDINGS

Organizations perceive that unmet need is expanding faster than organizational capacity; organizations are unable to keep up with demand. Other threats to survival include a sicker patient population and difficulty in retaining staff (particularly nurses). Most clinics are adopting explicit business strategies to survive. To maintain financial viability, clinics are: considering or implementing fees; recruiting insured patients; expanding fundraising activities; reducing services; or turning away patients. Collaborative strategies, such as partnerships with hospitals, have been difficult to implement. Clinics are struggling with how to define their mission given the environment and threats to survival.

CONCLUSIONS

Adaptive strategies remain a work in progress, but will not be sufficient to respond to increasing service demands. Increased federal funding, or, ideally, a national health insurance program, may be the only viable option for expanding organizational capacity.

Initial findings from HSC's 2005 site visits: stage set for growing health care cost and access problems

Many developments in local health care markets appear to be setting the stage for additional health care cost increases and access-to-care problems, according to initial findings from the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities. Hospitals and physicians are competing more broadly and intensely for profitable specialty services, making costly investments to expand capacity and offer the latest medical technologies, especially in more affluent areas with well-insured populations. Employers and health plans have launched few initiatives to control rising costs beyond increasing patient cost sharing. As rapidly rising costs continue to push private health insurance out of reach for more people, state and local governments are struggling to meet the needs of low-income people and an increasing number of uninsured people.