June 22 — While most hospitals have seen a stark decrease in uncompensated care costs related to the Affordable Care Act (ACA) and Medicaid expansion, some hospital groups have not substantially benefited from the change.
As some states have expanded Medicaid, others haven’t. As a result, hospital companies with a significant presence in non-expansion states are feeling the financial burden from increasing uncompensated care costs, particularly Ascension Health Alliance and HCA Holdings Inc. (HCA).
Relative to total hospital expenses, Ascension saw an increase in uncompensated care costs of about 1 percentage point from 2013 to 2015, slightly less than $500 million in total. The increase was even more substantial for HCA, where uncompensated care jumped almost 8 percentage points to 57.6 percent of expenses, an increase of more than $1 billion for the same time period. Both Ascension and HCA had the largest total number of hospital and urgent care facilities in non-expansion states of those reviewed, with 310 and 292 locations respectively.
Nick Ragone, chief marketing and communications officer for Ascension, said its increase in uncompensated care costs were a direct result of the lack of Medicaid expansion. According to Ragone, even though Ascension's charity care costs have decreased, “a majority of Ascension hospitals are located in states that have not expanded Medicaid, and several of those states have some of the highest rates of uninsured in the nation, such as Florida at 19 percent and Texas at 20 percent.”
A representative from HCA did not respond to requests for comment.
In comparison, both Lifepoint Health, Inc., Tenet Healthcare Corp. and industry group American Hospital Association (AHA) all saw uncompensated care costs diminish in the same time period, with Lifepoint experiencing the largest change. Tenet was an outlier because it had a significant number of locations in non-expansion states—243 out of 290 facilities—yet still saw a decline in uncompensated care.
While supportive of the decline, Ashley Thompson, senior vice president for public policy analysis and development for AHA, criticized the state of uncompensated care. “There’s still a lot [of costs] that are being swallowed by the hospitals,” she told Bloomberg BNA.
While uncompensated care costs varied for all the hospital groups Bloomberg BNA investigated, all of them saw charity care rates—the percentage of care provided free of charge to lower income patients relative to revenue—drop in the last two years.
Such findings partially bolster a May report by Alliance for Integrity and Reform of 340B showing a decline in charity care in 2014 for short-term acute-care hospitals (STACH). But results of the report were disputed by 340B health-care providers who called it “drug industry astroturf” because eligibility in the 340B plan is unrelated to charity care rates (See previous story, 05/13/16).
According to numbers from the Kaiser Family Foundation, emergency room visits per person nationwide have not changed with ACA implementation and have continued to rise in the last three years. The implication is that, while more people are having their hospital treatment paid for by Medicaid, private insurance or the individual, that hasn't changed the inpatient process.
Hospital company numbers reiterated this trend. All companies with numbers available showed an increase in emergency room visits between 7 percent and 24 percent. Lifepoint, with fewer facilities in non-expansion states, actually saw the largest increase.
Uncompensated care costs are also set to rise in 2018 when new changes to the ways in which the Department of Health and Human Services calculates reimbursements for Disproportionate Share Hospitals (DSH)—those that serve a disproportionate share of low-income and uninsured patients—are phased in. Numerous hospitals have sued over the calculation change insisting that it is incompatible with previous precedent (See previous story, 05/25/16).
Other hospital groups have pushed HHS to abandon the proposal because of the burden it would place on hospitals that treat a majority of low-income patients. (See previous story, 06/21/16).
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