The chancellor of the University of Arkansas for Medical Sciences said Tuesday that his institution will lose $22 million in federal fundsin 2014, but would more than make up for it if the state adds 250,000 to its Medicaid rolls.
Chancellor Dr. Dan Rahn told a statewide audience of health-care providers in a video conference call that theyneed to educate themselves on a complex set of issues that are all occurring simultaneously: the “short-term” struggle over the estimated $138 million state Medicaiddeficit, an “intermediate” effort by Medicaid and two of the state’s largest private insurers to undertake a dramatic overhaul of medical payments, and the health-care industry’s “long-term” goal to tackle rising costs by becoming more efficient.
But expanding the state’s $5 billion Medicaid program - which covers about 780,000 people - is the highest priority, Rahn said.
“If we don’t expand Medicaid, the whole situation is much worse,” he said.
Medicaid expansion is expected to be the biggest issue facing the Legislature when it meets in January. The Patient Protection and Affordable Care Act, championed by President Barack Obama, allows states to decide if they want to offer coverage to people with income up to 138 percent of the federal poverty level, about $15,400 for an individual. So far, many Republican state lawmakers remain cool to expansion, while most Democrats and Gov. Mike Beebe favor it.
UAMS would gain $42,341,480 in additional revenue from Medicaid payments for previously uninsured patients under the expansion. The hospital estimates that about half of its currently uninsured patients - people who frequently are unable to pay their hospital bills - would be covered under expansion.
The new federal healthcare law reduces federal payments for indigent care by $22 million in 2014. If the expansion doesn’t occur in Arkansas and if the hospital continues to treat poor, uninsured patients, the hospital would take a huge financial hit, Rahn said.
Across the state, hospitals are expected to provide $450 million in uncompensated care by 2014. If expansion is approved, uncompensated costs would fall to $250 million, said Bo Ryall, president and chief executive officer of the Arkansas Hospital Association.
Rahn said he thought the public had a “lack of understanding that uninsured care is not free. We’re all paying for that.”
Tuesday’s event was planned because “providersacross the state had questions about expansion,” said Leslie Taylor, UAMS spokesman.
Sip Mouden, chief executive officer of Community Health Center of Arkansas Inc., said her low-income community clinics estimated that their uninsured patient numbers would fall by about half with Medicaid expansion, but nearly a quarter would remain uninsured, requiring significant future spending on indigent care.
Rahn said how many uninsured would remain after expansion and the opening of the state’s insurance exchange was still unknown. Some people eligible for federal subsidies on the exchange may prefer to pay the penalty for not acquiring insurance and some small businesses might prefer fines to providing coverage, he said.
Private consumers pay for indigent care through higher premiums while taxpayers pay more in federal taxes to cover medical expenses for the uninsured.
A recent study by the National Academy of Sciences’ Institute of Medicine found that Americans waste $765 billion in health-care costs each year in unnecessary and inefficiently-delivered services, excess administrative costs, lack of adequate preventive care, excessive pricing and fraud: about 30 percent of the $2.5 trillion nationwide healthcare bill.
To reduce inefficiency, UAMS is exploring a possible alliance with St. Vincent Health Systems, Rahn said, adding that the state’s payment overhaul will also help reduce costs by better coordinating care and eliminating redundant services. The payment restructuring, led by Medicaid, seeks to move providers from a “fee for service” model, where they are rewarded for high-volume work, to an “episodes of care” system where providers are rewarded for efficiency and penalized for waste.
The “disruptions” brought about by the federal health-care law, the payment overhaul and Medicaid expansion will fundamentally change the way medicine is delivered in the U.S., Rahn said. The largest institutions - like UAMS - often have the hardest time adapting to major change because they are so heavily invested in the status quo, he said.
Northwest Arkansas, Pages 7 on 12/12/2012