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Health & Wealth Update
Wed April 10, 2013
Why rural Missouri hospitals are rooting for Medicaid expansion
The uphill congressional battle to expand Medicaid in Missouri is making rural hospitals that serve areas with high poverty levels really, really nervous. KSMU's Jennifer Davidson has the story.
Ozarks Medical Center in West Plains serves more than 150,000 people in one of the poorest Congressional districts in the nation. About 45 percent of patients have Medicare and about one in five have Medicaid, which is unusually high.
Hospital administrators here – and throughout Missouri – are a bit tense right now. They’ve done the math, and know that they’re in a unique position regarding the Medicaid expansion. The 2010 Health Care Law, known as the Affordable Care Act, called for a Medicaid expansion for low-income adults. But the US Supreme Court ruled that the expansion was optional for states.
“What the federal government does is, it designates hospitals as a Disproportionate Share Hospital, or ‘DSH,’” said David Zechman, president and CEO of Ozarks Medical Center.
OMC is a DSH hospital because it receives payments from the federal government to offset the charity care it provides. Charity care is health care that isn’t paid for, usually because the patient doesn’t have money or insurance. At OMC, the DSH money doesn’t cover all the cost of charity – but it does cover about 30 percent. A sizeable chunk of change.
The unforeseeable Supreme Court decision
When the federal health care law was passed, it included a 75 percent cut in those DSH payments.That’s because another part of the health care law – the Medicaid expansion part – was supposed to make up for that reduction. So: more people covered by Medicaid, less charity care – and less of a need for DSH payments.
But what lawmakers didn’t factor in was the U.S. Supreme Court’s later decision that states didn’t have to expand Medicaid. So, this hospital is still set to lose 75 percent of its DSH payments from the fed – and if Missouri lawmakers refuse to expand Medicaid, Zechman says OMC will be in a tight spot.
“I think that becomes pretty crystal clear, because at that point, we’re still going to be taking care of patients who don’t have any means to pay. And yet, some of the money to help offset that cost, 75 percent of that, will now go away as of October 1, 2013,” Zechman said.
Budget cuts across the board
He said hospitals are faced with the possibility of local services being reduced if the Medicaid expansion doesn’t go through.
Combined with the sequester cuts -- which is two percent of Medicare reimbursement payments -- and the Medicare cuts included in the Affordable Care Act, Zechman said OMC could see a 60 percent reduction in its bottom line if Medicaid doesn't get expanded.
"There aren’t very many businesses, or companies, that can survive in America with a 60 percent cut into their operating margin that keeps the current programs going, and allows you to recruit really good people to provide care, that allows you to pay people competitive salaries, that allows you to buy decent equipment and technology," Zechman said.
The OMC Board of Governors has endorsed the Medicaid expansion plan, even though the Affordable Care Act as a whole has not been popular in these parts.
“It was, I believe to be, a pretty landmark event,” Zechman said. “And they said, ‘We’re going to put aside what our personal beliefs are, and our personal ideological beliefs, because we believe this Medicaid expansion is the right thing for our community and the right thing for health are in our region.”
The vast majority of the Medicaid expansion would be covered by federal dollars, but many Missouri Republicans say they’re still concerned about the millions the state will have to pick up. Other conservatives say they think Medicaid needs to be reformed before its expanded.
Health & Wealth Update