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Hospitals see blue-red divide early into health care’s coverage expansion

May 13, 2014 - 12:05am

A few months into health care’s coverage expansion, there’s been plenty of debate about where the millions of newly insured have obtained coverage — whether through the law’s exchanges, directly from an insurer, through expanded Medicaid or through an employer. The health care law’s immediate impact is a little more clear in hospitals, which are starting to report who’s coming through their doors during the first months of expanded coverage under the Affordable Care Act (ACA).

In earnings calls, publicly traded hospitals also are reporting their first full quarter of results since the ACA took full effect. One thing that stood out: They’re reporting a blue state-red state divide in the kinds of patients they’re seeing.

The Hospital Corporation of America, which has facilities in 20 states, reported a big gap in Medicaid and uninsured admissions between expansion and non-expansion states. In the four states it operates where Medicaid expanded under the ACA, the company saw a 22.3 percent growth in Medicaid admissions, compared to a 1.3 percent decline in non-expansion states. The company also had a 29 percent decline in uninsured admissions in the expansion states, while non-expansion states experienced 5.9 percent growth in uninsured admissions, said chief financial officer William Rutherford.

Community Health Systems, with facilities in 29 states, also noticed an expansion gap. In expansion states it serves, CHS said it saw self-pay admissions drop 28 percent while Medicaid admissions increased by 4 percent. Self-pay emergency room visits decreased 16 percent in expansion states, but they increased in non-expansion states, the company said in its earnings call last week.

Tenet Healthcare reported last week that it had a 17 percent increase in Medicaid inpatient visits while uninsured visits decreased 33 percent in the four expansion states where it operates. In non-expansion states, Medicaid admissions dropped 1 percent as uninsured care rose 2 percent. Tenet also said it’s seeing that emergency room visits are continuing to rise.

Some Republican-led states have expanded their Medicaid programs. However, Republican governors run all but three of the 24 states that haven’t expanded Medicaid. Also, I’m looking at just the results from some of the largest for-profit hospital systems, which are required to report this information to investors.

This is generally the kind of trend, though, that hospitals expected to see under the ACA and why they’re lobbying hard for the Medicaid expansion. They’re getting more patients with Medicaid coverage, which reimburses at rates lower than private coverage, but still pays better than no insurance. And it suggests that patients with new coverage are seeking care, which backs last week’s finding from the Bureau of Economic Analysis that health care expenditures climbed 9.9 percent last quarter as coverage expanded.

A few of the hospital systems also said there was a missed opportunity to help more people to enroll in new Medicaid coverage through something known as presumptive eligibility. The process essentially allows hospitals to enroll their patients in Medicaid right away if their household income appears to meet Medicaid eligibility requirements, and the state later processes the full application. The advantages of this process, as reported recently in Health Affairs, are twofold: It allows people to get immediate care, and it puts them on a path to official coverage.

Before the health care law, states were allowed to use presumptive eligibility in limited circumstances. As of last year, 33 states used it to enroll women and children in Medicaid coverage. A 2004 study of children’s coverage found presumptive eligibility would increase the probability of enrollment by 6.4 percent, according to the Health Affairs article.

The hospitals said, though, they were surprised at how slow many states have been to adopt a process for the ACA’s much broader allowance of presumptive eligibility determinations. The ACA provision became effective in January, but states had until the end of March to submit a plan to the federal Medicaid agency explaining how they would implement it within their borders.

Community Health Systems said it’s doing presumptive eligibility in three of the 29 states where it operates — Alabama, New Mexico and Virginia. “[The states have] been a little slow, especially the, what would be called the red states,” chief financial officer Larry Cash stated during the company’s earnings call.

LifePoint, in its call about two weeks ago, said presumptive eligibility was available in 10 of the 20 states in which the company provides care.

“I think surprising to me it’s not in place at this point in all 20,” said LifePoint chief financial officer Leif Murphy, according to a transcript of the call.

The federal Centers for Medicare and Medicaid Services (CMS) said it’s still reviewing state proposals for implementing the process, and all but three states have filed formal plans. State Medicaid directors say CMS has made presumptive eligibility a priority, so they would expect all the states to have it ready this year.

“There was a long ACA to-do list for all states,” said Andrea Maresca, of the National Association of Medicaid Directors. “Medicaid agencies have been working with CMS on the many operational issues with hospital [presumptive eligibility] programs and will come into compliance as soon as practically possible.”