KHI News Service

Hospital officials say refusal to expand Medicaid will hurt their bottom lines

Money needed to offset other cuts coming because of Obamacare

By Jim McLean | January 13, 2014

For Jodi Schmidt and other hospital administrators across Kansas, Medicaid expansion is a critical business issue not a political one.

Schmidt is chief executive of Labette Health, a 99-bed regional medical center that serves Parsons and several surrounding communities in southeast Kansas. She said the money being lost because of the decision by Gov. Sam Brownback and legislators to not participate in the first year of expansion could mean the difference between the hospital finishing the year in the black or with a deficit.

“Whatever your politics, the reality on the ground for hospitals is that Medicaid expansion is critically important for us,” Schmidt said.

Expansion could provide coverage to an estimated 85,000 Kansans who make too much to qualify for the state’s existing Medicaid program — called KanCare — but too little to be eligible for federal tax credits to help them purchase private coverage on the exchange.

Jodi Schmidt, chief executive of Labette Health.

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A study done last year for the Kansas Hospital Association estimated that expanding eligibility to the level called for in the Affordable Care Act would increase federal Medicaid spending in the state by $3 billion between this year and 2020. The federal government has pledged to pay the full cost of covering the expansion population for three years and no less than 90 percent thereafter.

Expansion would provide Labette Health and other hospitals in the association’s southeast district an additional $2.7 million a year to share.

The money is needed, Schmidt said, to partially offset anticipated Medicare cuts and looming reductions in federal payments that help hospitals offset the cost of caring for the uninsured.

“We could be seeing an additional $1.7 or $1.8 million in reduced reimbursement next year,” Schmidt said. “And so this lack of Medicaid expansion is just one more hit and there is only so much individual hospitals can bear.”

Forty miles up U.S. Highway 59 from Parsons the story is much the same in Chanute. There, Dennis Franks, the CEO of the 25-bed Neosho Memorial Regional Medical Center, said the hospital needs the money that would come with Medicaid expansion to offset cuts in other reimbursements.

“When you live on the margin every dollar counts,” Franks said. “So, when I’m taking $700,000 to $1 million a year out of my budget that means there are services I can no longer provide. What am I going to do to make sure that I keep my doors open and do the things for this community that I need to do?”

Via Christi Regional Medical Center in Wichita may be the Kansas hospital most affected by the state’s reluctance to participate in the Medicaid expansion. Last year, it received nearly $13 million in so-called disproportionate share payments to help offset some of the costs of caring for the uninsured. Starting next year, those payments will be steadily reduced along with Medicare reimbursement rates.

That prospect has put Via Christi at the forefront of an effort being mounted by the hospital association to work out a Medicaid expansion compromise with the Brownback administration and Republican legislative leaders.

Photo by Melissa Lacey Nagy / Via Christi Health

Bruce Witt, director of legislative affairs at Via Christi.

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“We’ve made some progress with the public and with some legislators in making the case for Medicaid expansion,” said Bruce Witt, director of legislative affairs at Via Christi. “We’re at the point now where politics has kind of come into play and that’s where the real challenge lies.”

Put simply, the challenge is getting Brownback and legislators to decouple the expansion issue from Obamacare, which remains anathema to the Republican Party’s base and unpopular with most Kansans, assuming the polls are accurate.

The hospital association has hired former U.S. Health and Human Services Secretary Mike Leavitt, a Republican who served in the Bush administration, to try to persuade Kansas Republican leaders to move forward with expansion using a private-sector approach similar to those being developed or implemented in Arkansas, Iowa, Pennsylvania and a handful of other states.

Witt said he is hopeful progress can be made if expansion advocates with Leavitt’s help can “engage the business community.”

“The Kansas Chamber, for example, has, at least, expressed a willingness to continue discussions about Medicaid expansion, particularly if it’s taking a more Kansas-based, private-market solution,” Witt said.

Mike O’Neal, chief executive of the Kansas Chamber, confirmed the business organization is willing to participate in such talks.

“I can’t predict at the end of the day whether that discussion will bear fruit in a way that the people who want the expansion are going to be satisfied,” O’Neal said. “But the discussion of an issue this important is healthy and it should take place.”

Both O’Neal and Senate President Susan Wagle, a Wichita Republican, have said they expect the messy rollout of the ACA will make the expansion discussion more difficult. But both said they would be open to Kansas pursuing a plan like the one Pennsylvania officials are seeking federal approval to implement.

“I’m intrigued by the Pennsylvania plan because it has a work component to it,” O’Neal said. “They are actually trying to change the profile of the Medicaid population and incentivize some that are in that population to get into a work situation.”

Approximately 45 percent of uninsured Kansans in the Medicaid eligibility gap are employed, according to the Kansas Health Institute, a nonpartisan research and policy organization that includes the editorially independent KHI News Service.

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Rep. David Crum, R-Augusta

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If the reaction of a key member of the Kansas House is any indication, reaching a compromise on Medicaid won’t be easy. Rep. David Crum, chairman of the House Health and Human Services Committee, said he doesn’t support the alternative approach being proposed by the hospital association.

Crum said plans that propose using federal Medicaid dollars to help low-income persons purchase private coverage “don’t really create any significant advantage.”

“It’s just kind of a way, I guess, to possibly expand Medicaid and make it look like you’re not — like you’re shifting it to the free market and so forth,” Crum said. “But the bottom line is, it’s still basically going to be the same cost over time. I’ve not seen any magic bullet for a way of expanding Medicaid that’s superior to the standard Medicaid expansion.”

Staff writers Dave Ranney, Phil Cauthon and Mike Shields contributed to this report

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)

→ 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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