Medicaid Expansion Leading To Increased Care For Poor And Increased Revenue For Hospitals

After Medicaid was expanded in Oregon prior to the passage of the Affordable Care Act there was an increase in Emergency Room visits from people using their new coverage. This was not surprising and the challenge was to get those with the new coverage both established with primary care physicians and to get the Medicaid patients in the habit of seeing a primary care physician as opposed to over-utilizing Emergency Rooms. This raised questions as to whether we would see a similar initial increase in Medicaid utilization of Emergency Rooms with the expansion of Medicaid coverage under the Affordable Care Act. So far there are optimistic reports regarding the effects of Medicaid expansion.

A recent survey conducted by the American College of Emergency Physicians found that 37 percent of ER physicians reported that patient volume had increased slightly, 9 percent reported that it had increased greatly, and 27 percent reported that the number of ER visits had remained the same.  Only 3 percent reported an increase in patients with private insurance  while 35 percent reported an increase in patients with Medicaid. This could be an indicator that those with Medicaid were having more difficulty than those with new private insurance in finding private primary care physicians. This might also be partially due to patients receiving Medicaid being poorer and sicker and in greater need of emergency services.

Kaiser Health News reported on more promising news for those receiving Medicaid. They found that safety-net hospitals were seeing more paying patients due to more poor patients receiving Medicaid, and these hospitals were therefore bringing in more money.

One of the biggest beneficiaries of the health law’s expansion of coverage to more than 13 million people this year has been the nation’s safety-net hospitals, which treat a disproportionate share of poor and uninsured people and therefore face billions of dollars in unpaid bills.

Such facilities had expected to see a drop in uninsured patients seeking treatment, but the change has been faster and deeper than most anticipated— at least in the 25 states that expanded Medicaid in January, according to interviews with safety-net hospital officials across the country.

“This is really phenomenal,” said Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va., which represents inner-city safety net institutions. “It shows the Affordable Care Act is clearly working in these locations.”

Safety net hospitals, most of which are government-owned or nonprofit, have typically struggled financially because their urban locations mean they treat more uninsured patients who show up in emergency rooms and cannot be turned away.

An Urban Institute study published in the May edition of Health Affairs estimated the costs of uncompensated care to hospitals were as high as $45 billion in 2013. Government programs helped defray 65 percent of those costs, the study estimated.  That left providers billions of dollars in the hole.

They also found that more were receiving care from primary care physicians as opposed to from Emergency Rooms:

Hospital officials say the biggest impact of the change is on patients themselves. Rather than having to rely on emergency rooms, newly insured patients can see primary care doctors and get diagnostic tests and prescription drugs, among other services.

Some safety-net hospitals say they started to see their numbers of uninsured patients dropping almost immediately after the Medicaid expansion took effect in January.

“We have seen a steady decline in our uninsured visits,” said Roxane Townsend, CEO of UAMS. “We did not anticipate this big a drop this quickly.”

About 80 percent of the system’s new Medicaid patients had previously been seen by the hospital as uninsured patients, she said. Their enrollment in coverage means the hospital is paid more for their care and is able to direct them to outpatient services and preventive care.

She said that UAMS has also seen a drop in ER visits by uninsured patients — from 6,000 visits in first three months of 2013 to about 4,000 visits in first three months of this year, calling the decline “significant.”

While some emergency physicians have offered anecdotal reports of increased use of the ER since January, there is no documentation of the health law’s impact yet. Studies examining ER use in Massachusetts following that state’s expansion of coverage showed an initial surge followed by a decline in those numbers over several years.

Denver Health officials said the increase in insured patients since January — most of whom are enrolled in Medicaid – appears to be boosting the number of people seeking care at its primary care clinics, rather than through the emergency room.

Patient visits to Denver Health primary care offices are up 14 percent this year, while ER visits are down 2 percent. Patient visits for mental health and substance abuse services are also up nearly 50 percent.

“Patients are seeking care at better and more cost-effective and more appropriate settings,” said Peg Burnette, chief financial officer at Denver Health.

This trend was not limited to safety-net hospitals. For-profit hospitals are also benefiting from increased coverage:

Although safety-net hospitals may be experiencing the biggest impact from the expansion of coverage, the improvements are not limited to them.

Investor-owned hospital companies HCA, Tenet Healthcare Corp., Community Health Systems (some of which own safety-net hospitals) say they saw their rates of uninsured patients drop by as much as a third in the first quarter of 2014 in hospitals located in Medicaid-expansion states.  HCA said its hospitals in states that chose not to participate in the health law’s expansion of the program saw rates of uninsured patients rise by 6 percent.

LifePoint Hospitals, a Brentwood, Tenn.-based company that owns 60 hospitals nationwide, said the Medicaid expansion led to an average 26 percent reduction in uninsured patients at its facilities.

“It’s been a big financial help,” said Chief Financial Officer Leif Murphy, noting the reduction will help offset the health law’s Medicare funding cuts.

Converting patients from no cash to some cash “is a good thing,” said Sheryl Skolnick, a hospital analyst with CRT Capital Group in Stamford, Conn.

The exception to this trend is in states where Republicans have blocked Medicaid expansion. This is especially foolish as the federal government pays most of the cost, with states, along with hospitals, benefiting from the decrease in uninsured. Salon reported over the weekend on efforts in Georgia, also being seen in other Republican states, to make it more difficult to expand Medicaid in the future by requiring that the decision be made by the state legislature as opposed to by the governor. The conservatives Republicans don’t want to gamble on a Democrat, or even a rational Republican, becoming governor in the future and deciding to accept the federal funds to expand Medicaid.

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