Private-option plan lifts hospitals, legislators told

Arkansas Surgeon General Joe Thompson answers questions Thursday after a legislative meeting on the private option.
Arkansas Surgeon General Joe Thompson answers questions Thursday after a legislative meeting on the private option.

Arkansas' private-option Medicaid expansion program has given hospitals a financial boost, according to preliminary survey results released Thursday.

Hospital officials warn that elimination of the private option could force some Arkansas hospitals to close.

Hospital administrators spoke to the Hospital and Medicaid Study Subcommittee of the Arkansas Legislative Council on Thursday. They credited the private option with increasing their revenue in a time when the federal Patient Protection and Affordable Care Act is reducing Medicare reimbursements. Several said the program has kept them "in the black."

Arkansas was the first state to receive a waiver from the federal government to implement its version of the private-option Medicaid expansion, which uses federal dollars to purchase private health insurance for poor Arkansans on a state-run exchange.

The meeting, which was scheduled this week, was largely organized by private-option supporters to answer legislative critics who last week asked for an independent assessment of the program. Sen. Bryan King, R-Green Forest, and Rep. Joe Farrer, R-Austin, said the state is on track to exceed original estimated costs for this year by more than $100 million.

Speakers at the meeting included Arkansas Surgeon General Joe Thompson and Arkansas Hospital Association Chief Executive Officer Bo Ryall.

"I think this does answer some of those claims," Thompson said. "It will take a year or more before we get all of the claims processed and get to the cost issues both positively for the hospitals and specific to the waiver. There have been several legislative concerns about cost overruns, but I don't know that we have the data to say whether that is a true concern at this point."

Thompson and Ryall came armed with preliminary study results that show fewer emergency room visits and fewer uninsured patients seeking care in the emergency rooms since the private option was launched. Of the state's 83 acute-care hospitals -- excluding mental health and children's hospitals -- 42 hospitals returned information about the first three months of this year compared with the first three months of 2013.

The two officials highlighted three major findings in the seven-question survey:

• The total number of emergency-room visits in the 42 hospitals decreased by 2 percent.

• The number of uninsured patients in those emergency-rooms decreased by 24 percent.

• The number of uninsured patients requiring hospital stays decreased by 30 percent.

A closer look at the numbers provided by the Arkansas Hospital Association showed 25 of the surveyed hospitals had a decrease in emergency-room visits and saw fewer uninsured patients in their emergency rooms. Overall, 37 of the hospitals reported seeing fewer uninsured patients.

Sixteen hospitals reported seeing more people in their emergency rooms, and of those, four also reported an increase in uninsured patients in the emergency room.

"All three of these indicators are going in the right direction to improve the fiscal stability and well being of our hospitals," said Thompson. "But more importantly, we're removing a financial barrier for individuals who have needed care and needed service use, so they are not waiting later to have more complicated, less effective, more costly outcomes."

Though the preliminary report presented mostly sunny results, some legislators were still wary.

"I'm very hesitant and concerned that we are reporting this information when not even half of the hospitals are reporting," said Rep. David Meeks, R-Conway.

Private-option supporter Sen. Stephanie Flowers, D-Pine Bluff, agreed, calling the rushed meeting unorthodox.

"I'm just getting to the point where I need some hard facts. I need something in black and white before I am going to take the word of individuals who testify in this committee," she said. "Is this politics, posturing or what?"

Ryall said the preliminary numbers were put together "quickly," and the association expects to see more complete responses by the six-month mark. He said hospitals thus far are receiving a financial benefit from the private option, but said it isn't going to fix all of the problems created by reductions in Medicare reimbursements and increased uncompensated-care costs.

He estimated that Arkansas hospitals will lose $2.5 billion in Medicare funding over the next 10 years, and as of 2012 his member hospitals had lost $389 million by treating uninsured or indigent patients.

Medicare is a federally managed insurance program that serves primarily people 65 and older or those permanently disabled. Medicaid is an assistance program that uses federal, state and local dollars to help low-income residents pay for medical needs.

"The private option is in no way going to back-fill those Medicare numbers -- those reductions -- or back-fill the uncompensated care. But we certainly need the private option for our rural hospitals to survive," Ryall said, noting nine Alabama and four Georgia hospitals had closed in the past few years. Neither state had expanded its Medicaid rolls as of the beginning of this year.

The expansion of the Medicaid program extended eligibility to adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.

Those who do not qualify for Medicaid but have incomes below 400 percent of the poverty level may qualify for tax-credit subsidies to help pay their premiums for plans offered on the exchange.

As of March 31, 155,567 applicants had been approved for coverage, but not all of them had enrolled. Thompson said Thursday that number was closer to 160,000.

Arkansas Insurance Department numbers from April 21 showed 44,665 Arkansans who did not qualify for the private option had enrolled in the state's insurance exchange.

With the number of insured Arkansans rising, the amount of money going to hospitals has also risen, hospital officials said.

At Thursday's meeting, four hospital administrators described the effects of the private option they are seeing both on patient numbers and on their financial health.

Ray Montgomery, the chief executive officer of White County Medical Center in Searcy, said the private option would offset about $15 million of an estimated $66 million in Medicare reimbursement reductions he expected the hospital would see in the next 10 years.

"With the private option, we have literally seen a 50 percent reduction in uninsured patients coming through our emergency room ... and we have 50,000 visits each year," he said, comparing the first four months of 2013 with the first four months of this year.

Baxter County Regional Medical Center in Mountain Home could see as much as $40 million in Medicare reimbursement cuts over the next six years, about $14.6 million of which would be offset by the private option, said Chief Executive Officer Ron Peterson. He recounted a 10 percent drop in emergency room visits and a 42 percent drop of uninsured patients in the center's emergency room during the first three months of this year compared with the same period in 2013.

Peterson said the hospital receives about 70 percent of its income from Medicare reimbursements. He said the amount of uncompensated care has been steadily increasing over the past few years while reimbursements have been decreasing. He said those factors contributed to the center being in the red the past two years -- a $3.5 million deficit in 2013 -- but the center is about $500,000 in the black for the first few months of this year.

"The difference between us being in the red and us being in the black is the private option," he said.

A section on 05/16/2014

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