Meadville Tribune

February 27, 2013

Compensation for treating uninsured in limbo amid state Medicaid battle

By John Finnerty
Meadville Tribune

HARRISBURG — Gov. Tom Corbett has notified the federal government that he does not intend to approve an expansion of Medicaid that would make 1-in-4 Pennsylvanians eligible for medical assistance coverage.

Advocates say the decision is not only unfortunate for the hundreds of thousands of Pennsylvanians who will not gain insurance. The move could be fatal to small, rural hospitals that find themselves providing too much uncompensated care.

Medicaid, also known as medical assistance or MA, pays for health care services for eligible individuals including blind or disabled individuals and low-income families with children.

The reason Corbett doesn’t want to expand Medicaid? The federal government plans to reduce the amount it reimburses hospitals because there were supposed to be fewer people without insurance showing up for medical care due to the Affordable Care Act.

“Federal (disproportionate share) payments are significantly cut beginning in 2014 with the start of the ACA coverage,” said Ann Bacharach with the Pennsylvania Health Law Project. “The monkey wrench is that the Supreme Court decision made the Medicaid expansion optional for states by essentially removing the enforcement mechanism of denying all Medicaid funding if states did not expand.”

Pennsylvania hospitals received more than $500 million in these disproportionate share payments in fiscal 2011.

“So, if Pennsylvania does not expand Medicaid,” Bacharach said, “hospitals will still be required to provide care to the uninsured under federal law but will see their compensation for those patients seriously curtailed.”

That possibility has Titusville Area Hospital concerned, Anthony J. Nasralla, the hospital’s president and chief executive officer, said in a statement.

“I would rather have seen the governor opt-in to medical assistance expansion and find a way to insure those who do not have health insurance (and provide more options to those that do),” Nasralla said.

“But given the uncertainty and lack of commitment from the federal government, I can certainly understand why Pennsylvania would not enter into a situation that could change within a few years and be a burden to the Commonwealth,” Nasralla said.

Dr. Barry Bittman, Meadville Medical Center spokesman, said an expansion of Medicaid would actually help control health care costs in the long run.

Under federal law, people can’t be turned away when they show up at a hospital emergency room for treatment.

However, Bittman said people without some type of health insurance care or whom have high insurance deductibles may not seek care right away when ill because of their out-of-pocket cost.

A simple urinary infection that may be treated with an antibiotic, if left untreated, may evolve into urinary sepsis that can require an extended hospitalization and cost $25,000 to $30,000 to treat, Bittman said.

“By the time they’re really ill, an already serious situation becomes more difficult to treat,” he said.

“Expanding Medicaid would expand the level of care available to keep them out of the hospital,” Bittman said.

Medicaid was 10.20 percent of Titusville’s net patient revenue in fiscal year 2011 while uncompensated care was 4.68 percent, according to the Pennsylvania Health Care Cost Containment Council, which does financial analysis of each hospital in Pennsylvania. Fiscal year 2011 is the latest year figures are available from the PHCCCC.

Medicaid was 7.14 percent of Meadville’s net patient revenue in fiscal year 2011 while uncompensated care was 2.03 percent, according the PHCCCC.

For all 23 northwest Pennsylvania acute care hospitals — those that provide short-term medical care for sudden or severe disease or trauma — Medicaid averaged 10.54 percent of net patient revenue in fiscal 2011, while uncompensated care was 2.80 percent.

For the 168 Pennsylvania acute care hospitals in fiscal 2011, the statewide Medicaid average was 12.5 percent while uncompensated care averaged 2.72 percent, according to the PHCCCC.

Currently, 17 percent of the Crawford County population is receiving Medical Assistance.

The Center for Rural Pennsylvania estimated that one-quarter of Pennsylvania’s rural hospitals are already financially-distressed and the strain of absorbing more of the cost of treating uninsured people could be more than many can bear, advocates warn.

Pennsylvania’s reduction in uncompensated care reimbursements from the federal government is expected to be $1.9 billion over the next decade.

“Many Pennsylvania hospitals, especially those in rural areas, may not survive,” according to a study released in January by the health law project and the Office of Rural Health, based at Penn State.

A spokeswoman from the governor’s office did not dispute the concerns about the uncompensated care costs, but she suggested that the federal government was at blame for holding hospitals hostage.

“We are aware and have strong concerns with the federal government’s proposal to take away millions of dollars for Pennsylvania hospitals,” Corbett spokeswoman Christine Cronkright said. “Payments to hospitals have always been partly based upon the amount of uncompensated care delivered, and it appears that the federal government is trying to leverage hospitals and place them unfairly in the middle of states’ expansion decisions.”

The Corbett Administration said it estimated that participating in the Medicaid expansion that would add 800,000 people to medical assistance would cost Pennsylvania $1 billion through 2014-15 and a total of $4.1 billion.

Advocates say the governor is overestimating the number of people who would be added to the Medicaid rolls and misrepresenting the costs. Bacharach, with the health law project, said that Census estimates suggest about 475,000 people would be eligible for Medicaid under the expansion.

The study by the health law project and the Office for Rural Health found that the expansion would save the state more than $300 million and generate more than $50 million in new tax revenue on managed care companies that would expand to meet the demand created by the increased number of people enrolled in Medicaid.

Finnerty reports from Harrisburg for Community Newspaper Holdings Inc.’s Pennsylvania newspapers, including The Meadville Tribune. Follow him on Twitter @cnhipa. Meadville Tribune reporter Keith Gushard contributed to this story.