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Research Examines Medicaid Expansion Effects on Hospital Closures

States that expanded Medicaid eligibility under the Affordable Care Act (ACA) experienced improved financial performance and substantially lower likelihoods of closure, especially in rural markets and counties that had large numbers of uninsured adults before Medicaid expansion, according to researchers at the University of Colorado School of Public Health.


“Those hospitals in the states that expanded Medicaid were much less likely to close than hospitals in states that did not expand Medicaid,” said one of the authors of the study. (“Medicaid Expansion Lessened Hospital Closures: Study, HFMA Weekly, January 12, 2018)


It appears that a surge in emergency department (ED) visits resulted from Medicaid expansion, the authors noted. In 2014, ED visits by Medicaid beneficiaries and the Children’s Health Insurance Program increased by 25 percent, or more than 10 million.


The Centers for Disease Control and Prevention reported an even larger increase in ED visits in 2014—11 million—and attributed it to Medicaid expansion.


The financial challenges for rural hospitals are varied. Financial performance could get worse if federal payment provisions such as Medicare “extenders,” or add-on payments (which lapsed in December) are not addressed.


Additionally, hospital advocates are pushing for the government to lift federal limits on the amount of bad debt that hospitals can write off.


“Because the ACA isn’t working the way it should and there are actually more people not being able to afford their care, these rural hospitals need to be allowed—as they have in the past —to offset their bad debt,” an author of the study said.


Bad debt has been falling for hospitals nationally but has more than doubled at rural hospitals since the ACA’s passage. In rural areas, people with serious health conditions who are enrolled in high-deductible health plans (HDHPs) get care at their local critical access hospital (CAH). By the time those hospitals stabilize the patients and transfer them to suburban and urban hospitals—as required by federal rules—the patients have exceeded their deductibles and insurers pay for the rest of their care. But deductibles for HDHP enrollees are never paid to CAHs because many policyholders cannot afford them. That lack of payment hits CAHs bottom line.


(Source: “Medicaid Expansion Lessened Hospital Closures: Study, HFMA Weekly, January 12, 2018)



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