State’s delay in ACA implementation may cost hospitals,
says health care think tank
By Pam O’Dell
Grave uncertainty plagues Jimmy Lewis as he hurriedly visits hospital administrators in rural Georgia, particularly those in south Georgia among the state’s poorest areas. CEO of Home Town Health, (a management consulting and advocacy group for rural hospitals) Lewis is on a mission to prevent the closure of more hospitals.
With a little more than four months before significant elements of the Patient Protection and Affordable Care Act (ACA) are implemented, news came of three facility closures.
“That’s just this week.” Lewis says in an exasperated but determined tone, “Community hospitals are the lifeline of rural Georgia. When a hospital closes, its economy and infrastructure fold. The tax digest is destroyed. It falls off the map… it dies.”
Lewis is concerned that the ACA may result in changes in federal reimbursement that will likely force the consolidation of rural hospitals, reducing the services available, and lengthening distances between critical access hospitals.
Lewis spends a significant time at the state capitol trying to convince an increasingly urbanized legislature of the severity of the problem. He’s got the governor’s attention.
“The governor hates that this is happening. He has done all that he can do. He is from rural Georgia…” Lewis puffs as he runs in to see a confused and concerned hospital administrator.
The Demographics of Rural Georgia: A
Challenge for Hospitals
Communities with a low population base and a high proportion of government subsidies are most susceptible. Lack of proper medical facilities has long been identified as a problem for south Georgia and with this ACA impact concerns are it could get worse.
Lewis claims that payer mixes of up to eighty-percent ‘government pay’ are common to vulnerable hospitals. “Around fifty percent Medicare, fifteen percent Medicaid, and up to fifteen percent ‘self pay’ will kill a hospital in a poor reimbursement situation.”
Rural areas have higher rates of elderly (Medicare) patients. Kevin Bloye, Vice President of Public Relations for the Georgia Hospital Association (GHA), believes concessionary cuts to Medicare reimbursement made by hospital lobbyists in exchange for Medicaid expansion are likely to haunt hospitals. “Now, as a result of the [Supreme] Court’s decision, (giving states the option to opt out of Medicaid expansion) we may be in a no-win situation.”
According to a recent GHA report, hospital-based services will be cut $155 billion (nationally) over a 10-year period as part of the pre-bill deal.
Failure to Expand
Georgia Budget and Policy Institute’s Director of Health Care Policy, Tim Sweeney, believes the governor’s decision to not expand Medicaid guts a necessary element of the ACA which was intended to serve as a financial cushion to rural and less affluent areas.
Sweeney, who disagrees with the governor’s estimate that expansion would cost Georgia $4.5 billion dollars over the next 10 years, believes that federal subsidies given to lower middle class patients for health insurance within the health insurance exchange may help keep hospitals in business but that, in the absence of Medicaid expansion, the ACA is crippled.
“The ACA is designed to increase health insurance on the front end, so that back-end help for hospitals serving uninsured patients is not as important. Georgia’s failure to participate in the coverage expansion on the front end prevents Georgia’s hospitals and other providers from realizing the same benefits as those in state that are participating,” he said.
American citizens will be able to access the federal health care exchange via the internet after Oct. 1 using the program’s website: http://www.healthcare.gov. Coverage will begin on January 1, 2014.
Sweeney hopes that hospitals participate in an outreach effort to expand the number of insured patients within their communities.
The health exchange is an essential part of a comprehensive plan to dramatically increase the number of insured and transform healthcare from a system which relies on expensive emergency services, to one that emphasizes prevention services, in order to save money and improve the nation’s health status.
High Unemployment: The seed of death in the Absence of Medicaid Expansion.
According to the GHA report, Georgia hospitals provided more than $1.57 billion (nationally) in uncompensated care in 2011, an increase of more than $65 million from 2010.
A Georgia Department of Community Health Hospital Financial Survey states that 38 percent of all hospitals in the state operated in the red in 2011. For rural hospitals that number was 55 percent.
Rural communities, having a disproportionate amount of uninsured, and plagued with higher unemployment rates, depend heavily on Georgia’s Indigent Care Trust Fund. The ICTF (which is a ‘matching’ 65 percent federal-40 percent state fund) has been the life saver thrown to hospitals on the brink of closure. Much of the state portion of the fund is provided by hospitals themselves.
Unfortunately, the ACA involves a phase out of the fund because Medicaid expansion was predicted to address the problem of the uninsured.
The ACA mandates that employers having over 50 full-time employees must offer those employees health insurance. However, the Obama Administration extended the deadline for compliance with this aspect of the law for one year.
Also, part of the ACA are federally-funded insurance subsides to low wage earners.
Subsidies provided within the health care marketplace begin at roughly $12,000 per year, per individual.
All three programs are intended for employed individuals.
Given high rates of unemployment and endemic poverty prevalent to some areas of rural Georgia, Medicaid expansion is the only means of providing compensation for indigent, non-elderly patients. It is the only program that does not require that an individual be employed.
While the existing Medicaid program serves many unemployed Georgians, there remains a significant ‘coverage gap’ thought to represent ‘underemployed” or part-time workers.
Demise of Rural Economies a Cause for Concern for Urban
Matt Caseman, Executive Director of the Georgia Rural Health Association (a trade group representing rural health providers) notes that seven counties in Georgia do not have a family physician and 65 counties are lacking a pediatrician.
When asked why that should concern urban and suburban Georgians Caseman responds emphatically: “Because they eat.”
Citing the fact that rural Georgia is home to a $70 billion dollar agricultural industry and one of every seven jobs in the state, Caseman believes the era of ‘two Georgias” benefits no one. “Agricultural economies can’t thrive in sick, economically debilitated communities. Hospitals are the heart of the medical industry and the medical industry is vital to the health of a community.”
Earlier this year, Stewart Webster Hospital in Richland, Georgia, and Calhoun Memorial Hospital in Arlington, Georgia, closed after they could not meet their payroll.
Gerald Green, State Representative of Calhoun County, witnessed a dramatic effort to save Calhoun Memorial.
“Everyone did all they could do. I cannot describe what it is like to lose your hospital- your largest employer. It takes the hope out of a community. I hope rural Georgians are mindful about what a community hospital represents. It is your life line when you are in a wreck, it can bring you back to life when you stop breathing. It pays taxes. If you still have yours, visit it, support it, fight for it because once it’s gone, it is likely not going to come back.”