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Study Finds Gains for Hospitals in Medicaid Expansion States

By Marissa Evans, CQ Roll Call

April 30, 2015 -- Hospitals in the nation's largest non-profit health care system are seeing fewer uninsured patients in states that expanded Medicaid and are bringing in enough revenue to cover the cost of treating poor patients, according to a Kaiser Family Foundation report.

The Ascension Health system hospitals saw a 32 percent drop in uninsured patient visits in states that expanded Medicaid under the federal health care law, compared to just a 4 percent decline in non-expansion states, according to the report released last week. Medicaid is the joint federal-state insurance program for the poor and disabled. 

The report focuses on Ascension, the largest non-profit health system in the U.S., with 131 acute-care hospitals and more than 30 senior care facilities in 23 states and the District of Columbia, where it is based. The report looks at the hospital's progress over the last three quarters of 2013 to Sept. 30, 2014.

Ascension hospitals in expansion states saw an 8.2 percent bump in Medicaid revenue from 2013 to 2014 and a 63.2 percent decrease in revenue from non-Medicaid families paying a predetermined amount out of pocket before being eligible for the program, also known as self-pay. Meanwhile, hospitals in non-expansion states experienced a 9.4 percent drop in Medicaid revenue over the same period and only a 2.6 percent increase in revenue from self-pay.

Charity care costs fell 40 percent among hospitals in Medicaid expansion states compared to 6.2 percent in non-expansion states, according to the report. While hospitals saw the gap between what Medicaid pays and the cost of treating low-income patients increase 31.9 percent in expansion states the increase in revenue helped. According to Kaiser, state cuts for provider reimbursement rates for hospitals operating in non-expansion states may have increased shortfalls but there was no sizeable increase in Medicaid revenue to offset this. 

Kaiser's report comes as lawmakers in Alaska, Florida, Kansas, and Utah continue weighing Medicaid expansion in their states. Montana, pending negotiations with the U.S. Department of Health and Human Services, became the 29th state to expand its program this week.

Under the 2010 health care law, states can accept federal funds to expand Medicaid eligibility to people with incomes at or below 138 percent of the federal poverty level. The federal government pays 100 percent of the cost until 2016, when the U.S. subsidy begins to decline, falling to 90 percent by 2020. Republican-led legislatures have said they are skeptical about expansion due to potential costs and fear that the federal government will discontinue funding.

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