Lack of Medicaid Expansion Leads to Hospital Revenue Loss
Some major problems in the healthcare revenue cycle could ultimately bring states to institute Medicaid expansion, as some hospitals may end up foreclosing.
By - Ever since a number of states refused to expand their Medicaid programs and receive the majority of funding for this enterprise from the federal government, there has been a division of revenue between states that have broadened Medicaid coverage and those who’ve been reluctant to do so. Hospitals in states with Medicaid expansion have seen a rise in patient numbers and revenue.
An Urban Institute study found that hospitals are losing up to $400 billion in federal Medicaid funds when states do not participate in Medicaid expansion. Additionally, these same hospitals are spending $44 billion on treating patients who lack health insurance.
This shows how beneficial it is for the healthcare revenue cycle when states adopt the Medicaid expansion provisions of the Affordable Care Act. When the Supreme Court ruled that Medicaid expansion was optional, various states essentially created a gap in healthcare coverage by declining to broaden the program.
However, the Department of Health and Human Services (HHS) is encouraging these regions to consider the importance of expanding Medicaid coverage. Hospital systems would be much less likely to pay for uninsured medical care when more patients have Medicaid coverage.
HHS Secretary Sylvia Burwell is urging states to implement the expansion and is working to grant waivers to governors to offer more flexibility, reports Kaiser Health News. Some major problems in the healthcare revenue cycle could ultimately bring states to institute Medicaid expansion, as some hospitals may end up foreclosing while others struggle with the costs of treating uninsured patients.
Currently, 19 states have not joined the rest of the country and find the costs of expanding the program prohibitive. Nonetheless, Burwell is determined that the nation will adopt this expansion.
Along with Medicaid expansion, the Patient Protection and Affordable Care Act has brought a wide variety of reforms for the healthcare industry. The shift away from fee-for-service payments toward value-based care reimbursement seems to be the most complex and challenging reform taking place around the country, according to a survey from The Economist Intelligence Unit.
The survey polled 301 executives from a number of different hospitals around the country and found that decreased Medicare/Medicaid reimbursement along with service talent shortages are some of the biggest challenges for hospitals today. Additionally, decreased reimbursement from private payers and managed care insurers are causing financial strain on hospitals.
“Attracting and retaining talent is a critical issue for the hospital sector as a whole, according to 39 percent of survey respondents. As far as their own hospitals are concerned, a far larger number—69 percent—say that strategic talent management will be critical to staying competitive, and 74 percent believe their organization needs to pay more attention to retaining and attracting the best talent,” the report from The Economist Intelligence Unit stated.
“An ageing workforce is on the healthcare horizon too. One in three practicing physicians are over 65 years old. The American Association of Medical Colleges estimates that by 2025, the shortfall in medical, surgical and other healthcare specialists in the country will be between 28,200 and 63,700. According to the EIU survey, 65 percent of respondents see an ageing workforce presenting a problem in the long term, with talent costs and the need for newer areas of expertise driving this challenge.”
Nonetheless, the biggest issue by far was the move toward value-based care reimbursement, the survey found. The Affordable Care Act has positioned hospitals and medical facilities to reform their compensation from volume-based fees to payment that is related to quality and performance.
The value-based care reimbursement model has been a problem in certain low-income areas, however. Specifically, providers who manage the treatment of those with chronic disease or elderly patients are seeing their reimbursement dwindle because it is tied with patient outcomes.
The rise in healthcare costs is also causing unease among hospital executives, the survey discovered. For instance, in 2014, medical spending rose by 5.3 percent, which is a jump from the 2.9 percent rise in 2013.
Out of all polled executives, 60 percent stated that cost is an “extremely” or “very critical” obstacle. Medicaid reimbursement is also expected to continue dropping, as the federal government has begun to pull the purse strings in order to reduce rising healthcare spending.
As hospitals are working to implement value-based care reimbursement, there are key areas of focus these entities are targeting including mobile health, preventive healthcare services, an expansion of alliances between providers, and greater development of specialty areas. Patient satisfaction and engagement will also become a more important area for ensuring quality and performance benchmarks are met in value-based payment arrangements.
Both value-based care and Medicaid expansion will become targeted throughout the country as more hospitals, providers, and payers move to reforming the industry, lowering cost, and improving patient outcomes.
