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Hospitals' uncompensated care will drop $5.7 billion this year: HHS


The Obama administration has a new projection of the benefit hospitals will enjoy this year as they provide less care that no one pays for: $5.7 billion. Hospitals in states that expanded Medicaid are getting most of it.

According to a report HHS posted Wednesday, hospitals in the 26 states that raised Medicaid eligibility under the Patient Protection and Affordable Care Act will save about $4.2 billion because of lower costs of uncompensated care, while those in states that resisted the Medicaid expansion will save $1.5 billion. (Two more states have moved ahead with the expansion.)

The report adds a broader calculation to glimpses of the dynamic revealed in reports from credit-rating firms and individual hospital operators in financial filings. The reduction projected by HHS would amount to a significant dent in the amount of uncompensated care delivered by U.S. hospitals, estimated to be as much as $52 billion in 2012.

The trade group for hospitals that see the largest numbers of patients who can’t afford to pay for their care cautioned that many providers will still struggle as the CMS scales back disproportionate-share hospital funding, the enhanced payments intended to offset those expenses.

“Even in states that have expanded Medicaid, our members continue to face the burden of Medicaid payment rates that fall well short of the true cost of care,” Dr. Bruce Siegel, CEO of America’s Essential Hospitals, said in a statement. Dr. Siegel added that many Americans who qualify for premium subsidies still can’t afford to buy coverage on the exchanges.

The numbers are one part of the shifting revenue landscape for hospitals, which are accustomed to writing off large sums as bad debt. Even with more patients insured, hospitals have to collect increasing out-of-pocket shares from patients. They are also contemplating whether to redefine charity care — care that’s explicitly discounted or provided for free — as they encounter patients who aren’t eligible for Medicaid and declined to buy insurance from an exchange.

HHS researchers looked at results from five large investor-owned chains: Community Health Systems, HCA, Tenet Healthcare Corp., LifePoint Hospitals and Universal Health Services, as well as surveys conducted by the hospital associations in Arizona, Colorado and Arkansas.

While the number of Americans with health coverage increased, overall admissions remained steady. In states that expanded Medicaid, hospitals’ Medicaid volume was 4% to 31% higher in the first quarter of 2014 than the first quarter of 2013, according to the report.

Virgil Dickson writes for Modern Healthcare, a sister publication of Business Insurance.