Kansas hospitals worried about loss of dollars for charity care

Without Medicaid expansion they stand to lose millions, officials say

0 | Health Reform, Hospitals, Medicaid-CHIP

In the current fiscal year, Via Christi Health — which includes this hospital on St. Francis in Wichita — is expected to receive almost $13 million from the disproportionate share payments, the most of any health care provider in the state. Hospitals use the money, a mix of federal and state dollars, to offset some of the costs of caring for the uninsured. Under the Affordable Care Act, also known as Obamacare, those payments are to be significantly reduced in anticipation of more people being covered by Medicaid. However, the U.S. Supreme Court ruling gave states the option to not expand Medicaid — meaning if Kansas chooses not to expand its Medicaid program, the state's hospitals face the loss of significant funding and may have to cut staff or services, officials said.

In the current fiscal year, Via Christi Health — which includes this hospital on St. Francis in Wichita — is expected to receive almost $13 million from the disproportionate share payments, the most of any health care provider in the state. Hospitals use the money, a mix of federal and state dollars, to offset some of the costs of caring for the uninsured. Under the Affordable Care Act, also known as Obamacare, those payments are to be significantly reduced in anticipation of more people being covered by Medicaid. However, the U.S. Supreme Court ruling gave states the option to not expand Medicaid — meaning if Kansas chooses not to expand its Medicaid program, the state's hospitals face the loss of significant funding and may have to cut staff or services, officials said.

— Many Kansas hospital officials say they are worried that if state policymakers choose not to expand eligibility for the state’s Medicaid program, the hospitals will see a significant drop in the money they receive to help care for patients who can’t or won’t pay their medical bills.

Currently, 64 of the state’s 127 hospitals divide about $51.3 million a year in what are called Medicaid disproportionate share payments.

They use the money, a mix of federal and state dollars, to offset some of the costs of caring for the uninsured.

“It’s a significant amount of funding for us,” said Bruce Witt, director of governmental relations at Via Christi Health in Wichita.

In the current fiscal year, Via Christi Health is expected to receive almost $13 million from the disproportionate share payments, the most of any health care provider in the state.

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Photo courtesy Kansas Hospital Association

Tom Bell, president and CEO of the Kansas Hospital Association.

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Under the Affordable Care Act, also known as Obamacare, those payments are to be significantly reduced, starting in October.

“We’re being told that ‘disproportionate share’ won’t be completely phased out, but that roughly 50 percent will be going away,” said Tom Bell, chief executive of the Kansas Hospital Association. “It may end up being somewhere between 50 and 75 percent. We don’t know at this point.”

Though Via Christi could expect to lose the most dollars, the smaller, rural hospitals likely would be the hardest hit proportionately based on an analysis done for the KHI News Service by its parent organization, the Kansas Health Institute. The analysis calculated the likely revenue hit on each Kansas hospital based on recent payment histories, bed counts and inpatient stays.

State option on Medicaid

The law’s design, Bell said, preceded the U.S. Supreme Court’s June 28, 2012 ruling that gives states the option of choosing to not expand their Medicaid coverage to include non-disabled, childless adults whose incomes fall below 133 percent of the federal poverty level.

Since the ruling, governors in at least 10 states – Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, South Carolina, South Dakota, Oklahoma, and Texas - have said they will not expand Medicaid eligibility.

“Our lieutenant governor is saying he’s not sure that DSH (disproportionate share) is going away because the (U.S.) Supreme Court has said the federal government can’t penalize states for not going along with the Medicaid expansion,” said Shawn Rossi, a vice president with the Mississippi Hospital Association.

“We don’t know if that’s a correct assumption,” Rossi said, “but we are for sure telling our legislators that if DSH goes away, we’re definitely going to need something to take its place. We see a very large number of people who are uninsured.”

Brownback looking it over

Kansas’ Gov. Sam Brownback has been an outspoken opponent of the Affordable Care Act, has not yet decided whether to implement the Medicaid expansion.

“We do not have a timeline on the decision whether to expand Medicaid as proposed by the federal government,” said Sherriene Jones-Sontag, the governor’s chief spokesperson. “As you know, there are a number of factors to consider, including the fiscal impact an expansion would have on other state core responsibilities.”

Jones-Sontag said the dilemma facing hospitals was the result of a “misguided federal law.”

“While not eliminating DSH, the (Affordable Care Act) does significantly reduce it over time,” she said, “and the effects will vary by state based on a methodology the federal government has not yet released.”

Jones-Sontag said the state had “demonstrated its commitment” to hospitals that care for Medicaid and uninsured patients by creating a “safety net hospital pool in KanCare,” which is the new name of the state Medicaid program as administered by three managed care companies.

Last month, Mark Dugan, chief of staff for Lt. Gov. Jeff Colyer, told members of the Joint Committee on Health Policy Oversight that the administration was developing its own estimate of how much expanding Medicaid might cost the state.

“We’re continuing to study the issue,” he said. “We would like to come to you with our own numbers.”

Competing estimates

Currently, there are a few competing estimates. The latest, released by the Kansas Health Institute, indicated that approximately 240,000 additional low-income, disabled and elderly Kansans would enroll in a program that currently serves about 380,000, likely costing the state an additional $519 million between 2014 and 2020.

If the governor and Legislature decide to not expand Medicaid, Bell said hospitals would be forced to cut expenses.

“They’d be looking at things like staffing, or maybe doing away with a service that may be popular or needed in the community but isn’t breaking even or covering its costs,” he said. “It will vary from hospital to hospital.”

The hospital association, he said, has asked the governor to address the issue prior to Jan. 1, 2014.

“The whole issue of Medicaid expansion is very complicated and when you add in the disproportionate-share issue, it gets even more complicated,” Bell said. “So we’ve asked the governor to take a serious look at how this would affect our state, our health care providers, and our (Medicaid) beneficiaries. And then let’s do what makes the most sense for Kansas.”

“We’re the safety net”

Dennis Franks, chief executive of Neosho Memorial Regional Medical Center in Chanute, said he’s been encouraging legislators from his area to expand Medicaid.

“We are the largest employer in our county in the poorest region of the state,” Franks said. “We have a lot of people down here who are casualties of the economy and have a difficult time paying for health care, so I’m trying to help legislators understand that if hospitals end up having fewer dollars coming in – that doesn’t mean we’re going to have fewer patients. The two don’t cancel each other out.”

Franks said hospitals throughout the state will be forced to create new revenues. "“We would have to create new revenues, and I don’t know what those would be," he said. "Some hospitals would have to ask for a mill levy, but in southeast Kansas, that isn’t a feasible option."

Franks said hospitals could be forced to sue patients who haven’t paid their bills. But in Chanute, he said, that wouldn’t be a good idea.

“This is the poorest region in the state,” Franks said. “We have a lot of people down here who have great difficulty paying for health care. Now, you can expose them to the legal system but once you do that they’ll just keep putting off health care until they absolutely can’t wait any longer. Then they’ll show up in your emergency room even sicker than they were before, and you still have to see them. You’re just making things worse.”

Federal law prohibits hospitals from turning people away from emergency rooms because of inability to pay.

Neosho County Regional Medical Center expects to receive $937,600 in disproportionate share payments this year.

Some protected

Of the 64 hospitals that divide the state’s disproportionate share monies, two already are protected from major reductions: University of Kansas Hospital in Kansas City, Kan., and Children’s Mercy Hospital in Kansas City, Mo.

Children’s Mercy, which borders the state line, draws from a special fund designed to ensure children access to highly specialized care.

Similarly, the KU hospital’s Medicaid contract is structured in a way that allows it to recoup a sizeable portion of its costs in exchange for providing training opportunities for most of the state’s medical students.

The state-run mental hospitals, Larned State, Osawatomie State and Rainbow Mental Health Facility in Kansas City, Kan., also receive disproportionate share dollars.

They also would see reduced sums, but would be hit less hard than the private hospitals because of a variety factors, including the fact that they receive state operating dollars.

The three hospitals are expected to receive about $25.2 million in the current fiscal year apart from the $51.3 million going to the general hospitals. Larned State is the biggest beneficiary, collecting about $15.6 million of the total for the state mental hospitals.

KHI News Service coverage of Medicaid expansion

Medicaid Access Coalition launches online "ticker" showing foregone federal dollars (2/13/14)
→ KHI report: Nearly 182,000 Kansans in the ‘Eligibility Gap’ (1/11/14)
House speaker says Medicaid expansion is "up to the governor" (1/10/14)
KS Senate president says Medicaid expansion unlikely to gain approval this session (1/7/14)
Profiles of the coverage gap: Kathleen Christian (1/6/14)
Efforts continue to expand Medicaid in Kansas and Missouri (1/6/14)
Hospital association hires former Bush HHS secretary to help craft a plan Kansas Republicans might support (12/23/13)
Iowa wins approval to expand Medicaid by using federal funds to buy private insurance (12/11/13)
White House officials hold call to urge Medicaid expansion in Kansas (11/21/13)
Republican governor talks up plan to expand Medicaid — his way (10/28/13)
Challenger says Brownback owes voters a decision on Medicaid expansion (10/22/13)
Nearly 5.2M Americans fall in coverage gap in states not expanding Medicaid (10/16/13)
Sebelius: Feds flexible on how states expand Medicaid (9/22/13)
Sebelius says Kansas and Missouri are missing the boat on Medicaid expansion (9/20/13)
Medicaid expansion coalition finds strength in numbers (9/17/13)
Republican Gov. Corbett proposes expanding Pennsylvania Medicaid (9/16/13)
Kansas lawmakers urged to consider Medicaid expansion by Wesley CEO (8/29/13)
Estimating maneuver could help more people gain from Obamacare: How the poor might qualify for Affordable Care Act subsidies in states that don't expand Medicaid (8/12/13)
Report: States not expanding Medicaid stand to benefit most from doing so (7/18/13)
CMS won’t penalize hospitals in states slow to expand Medicaid (5/14/13)
Insurer Centene: We can do Arkansas-style Medicaid (5/14/13)
The Arkansas Medicaid Model: What you need to know about the 'private option' (5/2/13)
Nothing to be done about coverage gap in states not expanding Medicaid, feds say (4/29/13)
Brownback says he's listening to Medicaid expansion proponents, opponents (4/5/13)
Oregon shows costs of putting Medicaid enrollees in private coverage (3/29/13)
Governor urged to expand Medicaid eligibility (3/27/13)
Arkansas Medicaid expansion attracts other states' interest (3/26/13)
Senate president prefers options remain open on Medicaid expansion (3/25/13)
States urged to expand Medicaid with private insurance (3/22/13)
Senate budget amendment underscores opposition to Medicaid expansion (3/21/13)
Study: Kansas employers face millions a year in possible penalties without Medicaid expansion (3/15/13)
More than 30 Kansas groups pushing for Medicaid expansion (3/12/13)
Health insurers see big opportunities in health law’s Medicaid expansion (3/8/13)
Medicaid expansion supporters to step up lobbying efforts (3/7/13)
Budget committee hears resolution opposing Medicaid expansion (2/22/13)
Legislators focusing on Medicaid expansion cost estimates (2/19/13)
Kansas hospital group study predicts expanding Medicaid would generate 4,000 jobs (2/18/13)
Brownback officials release their cost projections for Medicaid expansion (2/8/13)
Medicaid expansion bill introduced (1/22/13)
Kansas hospitals worried about loss of dollars for charity care (1/14/13)
Brownback compiling own estimate of Medicaid expansion cost (12/20/12)
Group urges Brownback to expand Medicaid eligibility (11/9/12)
Debate begins on possible Kansas Medicaid expansion (10/25/12)
Amerigroup CEO says states ‘need’ to go along with Medicaid expansion (7/11/12)
Kansas hospitals ready to get on with federal health reform, spokesman says (7/2/12)
Kansas AG claims partial victory in health reform case (6/29/12)
High court upholds Affordable Care Act, but ruling puts limits on Medicaid expansion (6/28/12)

Commentary
→ Kansas Hospital Association: An opportunity for the Kansas Medicaid program
→ Americans for Prosperity-Kansas: Well-intentioned policies do more harm than good
→ Health Reform Resource Project: The cost of not expanding Medicaid
→ Rep. Jim Ward: Medicaid expansion essential for healthier Kansas
→ Rep. David Crum: Reasons for opposing Medicaid expansion
→ National Academy for State Health Policy: Much ado about Arkansas: Medicaid in the insurance exchange

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