Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Why Is Medicaid Expansion a Win for Healthcare Providers?

By Jacqueline DiChiara

- As anyone standing before a plate of freshly baked desserts or fearfully opening a credit card bill post online shopping binge can attest, the art of equilibrium is essential.

This idea of balance is also needed within the financial realm of a physician practice’s revenue cycle management and payer mix – the percentage of patients with various types of health insurance coverage, most commonly Medicare, Medicaid, HMO, PPO, or cash/private pay. The primary means of successfully balancing payer mix to ensure a financially healthy revenue cycle have transitioned considerably since the implementation of The Affordable Care Act (ACA), intended to sustain consumer-centric care.

Physician practices implementing a solidly executed payer mix exemplify a necessary balance and will likely financially outperform those practices earning less money per patient as a result of unstable equilibrium. In light of recent news of physicians seeking to overturn the ACA despite its new quality incentives to provide affordable quality care, healthcare providers are continuously evaluating their methods and means of revenue cycle management and volume in direct relation to two specific underlying elements of the ACA — Medicaid expansion and reform.

RevCycleIntelligence.com spoke with Katherine Hempstead, PhD, Team Director and Senior Program Officer at Robert Wood Johnson Foundation (RWJF) to acquire more detailed information about a second February athenahealth ACA report monitoring the specific impact and complexity of the ACA and its effects on care delivery among 15,000 providers.

Coverage expansion boosted the proportion of Medicaid patients, confirms the report. A “significant” increase in the number of patients who switched from commercial insurance coverage to Medicaid from 2012 to 2013 from to 1.8 percent from 2013 to 2014 “could reflect both individuals who lost their jobs and low-income workers who chose Medicaid to avoid premium contributions and to reduce their out-of-pocket costs,” the report adds.

RevCycleIntelligence.com: Can you provide insight and perspective into how/why the ACA has disrupted payer mix trends?

Katherine Hempstead: One of the most important reasons is the reduction in uncompensated care – especially seen in hospitals, but as this report shows, in physicians’ offices too.

RCI.com: I’m curious to know more about the financial impact of changing Medicaid enrollment trends on providers?

KH: For hospitals, many are reporting that it has made a big difference, as charity care numbers are down. At the same time, there are some offsetting threats to hospital revenue – such as declining inpatient volume and increasing bad debt from insured patients.

RCI.com: Can you explain the specific impact on Medicare and Medicaid beneficiaries regarding Figure 11 from the ACA report?

KH: We see in expansion states that Medicaid volume is up as a percent of visits in expansion states (12.8% to 15.6%) and slightly down in non-expansion states (6.6% to 6.0%).  Medicare does not change too much – declines slightly in both.

RCI.com: I’m curious to more clearly understand why there was a rapid increase in Medicaid utilization in expansion states within ACA implementation.

KH: Expansion states in general had large increases in Medicaid population, and also, demographic characteristics of expansion enrollees include older adults – not just the traditional categorically eligible population of children and mothers.

So it is expected that there is utilization of the health system by these newly enrolled patients. In many expansion states, roughly 75% of the coverage increase came via Medicaid expansion states.  

RCI.com: Regarding the small but increasing number of patients who switched from commercial insurance coverage to Medicaid, where do you see this number heading in 2015/2016? What is the impact of this number for healthcare providers and payers?

KH: This seems like something that might remain a constant trickle as there will be low income people with commercial insurance take advantage of this opportunity, but would not turn into a mass event due to the fairly low income eligibility at 138% FPL.

That aspect of Medicaid expansion is challenging for providers of course, and some of the proposed expansion strategies provide a voucher for eligible people with an employer offer to offset the cost so that providers can continue to get commercial rates for part of the expansion population. That being said, Medicaid expansion still seems like a definite win for providers overall.

Editor's note: Medicare and Medicaid were mislabeled on Figure 11

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