In study of how 15 states dealt with health reform, Kentucky was by far No. 1 in cutting the number of unpaid hospital stays

By Melissa Patrick
Kentucky Health News

Kentucky hospitals had the biggest drop in non-paying patients among 15 states in an ongoing study of the effects of Medicaid expansion under federal health reform.

Kentucky showed a decline of 13.5 percent in unpaid hospital stays in just the first six months after the 2014 expansion, according to the study at the University of Michigan. The next highest state was Colorado, with 9.1 percent.

Hospitals in states that expanded Medicaid, like Kentucky, are taking care of more patients with health insurance, and thus have seen an increase in payments for their care. The study looked at nine of those states and six that did not expand Medicaid coverage, based on data available at the start of the study. Four of those six also saw decreased in unpaid hospital stays, but less than most of the expansion states.

Overall, hospital stays by uninsured patients went down 50 percent, and stays by people with Medicaid went up 20 percent, between the end of 2013 and the middle of 2014, a University of Michigan news release says.

That is what the Patient Protection and Affordable Care Act intended, giving hospitals a chance to recoup some of the cost of care they have long provided at no cost, the release said.

Kentucky has added about 400,000 people to its Medicaid rolls since it expanded the program to those with incomes up to 138 percent of the federal poverty level. The previous limit was 69 percent.

Republican Gov. Matt Bevin has repeatedly said Kentucky can't afford to pay for this expanded population. He has appointed Mark Birdwhistell, a University of Kentucky health executive and former state health secretary, to help him design a new Medicaid plan that will save money while providing needed care.

If the plan reduces the number of Kentuckians on the Medicaid rolls, that is likely to increase the amount of uncompensated care absorbed by Kentucky's hospitals. That would increase the financial pressure on hospitals at a time when the federal government will "ratchet back the federal funds that some hospitals get to make up for some of the cost of caring for the uninsured," the release notes.

The study, published in the January issue of the journal Health Affairs, looked at Medicaid expansion states Arizona, California, Colorado, Hawaii, Iowa, Kentucky, Minnesota, New Jersey and New York. The non-expansion states were Florida, Georgia, Indiana, Missouri, Virginia and Wisconsin.

The study found that hospitals in states that did not expand Medicaid "continued to experience the same or even higher demand for care from people without insurance." Georgia, a non-expansion state, saw a 7 percent rise in uninsured hospital stays in the first half of 2014.

In Wisconsin, which had a drop in unpaid stays larger than some of the expansion states, there was a "welcome mat" effect, which prompted enrollments from people who had been eligible but not on the program but became aware of it because of the reform law. In Kentucky, that is called the "woodwork effect," as in "people coming out of the woodwork."

Legislators wary of commenting on study that says Medicaid expansion will pay for itself by creating jobs and tax revenue

By Al Cross
Kentucky Health News

Kentucky legislators reflected mainly partisan attitudes about the state's implementation of federal health reform in a statewide call-in interview show about the state budget Monday night, but were generally cautious in discussing the financial impact of reform.

The lawmakers on KET's "Kentucky Tonight" were Sens. Chris McDaniel, R-Union, and Robin Webb, D-Grayson; and Reps. Rick Rand, D-Bedford, and Steven Rudy, D-West Paducah. Rand and McDaniel chair the budget-writing committees in the House and Senate.

Kentucky Health News asked the legislators if they thought the predictions of the study that says the state's Medicaid expansion of Medicaid eligibility will pay for itself through 2020 – by expanding health-care jobs and raising income-tax revenue – will be proven accurate.

McDaniel, answering first, noted that the expansion enrolled many more people than expected and their benefits would cost the state about $250 million in the next two-year budget, beginning in July 2016. He did not comment on the state-financed study by Deloitte Consulting LLC, which Republican gubernatorial nominee Matt Bevin has called "nonsense."

Rand replied, "We're talking about real people and real people's health," and noted that the expansion has saved the state money in several ways, such as largely eliminating the state appropriation for charity care at the University of Louisville Hospital. He said "Kentucky is one of the unhealthiest states in the United States," and told the story of a constituent who had never had health insurance but was able to get Medicaid treatment for a serious health episode.

"I think the Medicaid expansion is working" and is "creating jobs and reducing costs," Rand said, but also did not comment on the study.

Later in the discussion, Webb said, "I am concerned any the cost, the potential cost, because the numbers have been very elusive." She also said that expanded Medicaid treatment for the mentally ill and substance abusers was "much needed."

McDaniel steered the discussion away from Medicaid to health reform in general, noting that many people with private insurance are paying higher deductibles and "There has been mixed reviews at best about all that's going on."

Asked by host Bill Goodman how will it turn out in Kentucky, McDaniel said that would depend largely on what happens in the election for governor on Nov 3.

Bevin first said he would abolish the expansion, but recently said he would cut costs by making it more like expansions in some other states such as Indiana, where Medicaid clients can pay premiums to get better coverage and get some of their money back if they don't use the benefits. Conway has said the state must find a way to pay for the expansion, while reserving the right to cut back on it.

McDaniel then jumped to a separate subject, the Kynect insurance exchange where Kentuckians with incomes under 138 percent of the federal poverty level can sign up for free Medicaid and others can get private insurance that is subsidized by the federal government.

Bevin has called for abolishing Kynect and moving Kentuckians to the federal exchange. Critics of that idea note that the federal exchange charges a 3 percent fee on policies while Kynect charges 1 percent, but McDaniel said the latter fee is paid by all Kentucky policyholders, even those who don't use Kynect, so those people would pay less. Subsidized insurance through Kynect is available based on income; a family of four can make $95,400 a year and still get a small subsidy

Rand replied, "I think Kynect by any stretch has been a tremendous success. . . . You're probably talking about people who are working, We need to keep Kynect. It's an important part of making a healthier Kentucky."

Rudy, raising yet another subject, said lawmakers "need to look at how providers are being compensated" by managed-care companies that oversee Medicaid clients. He said the closure of the Fulton hospital, in his district, was partly a result of managed-care payment issues.

Rand noted that Gov. Steve Beshear rebid the managed-care contracts to resolve such problems problems, and said "One hospital in my district is in black earlier in the year than ever." He and Webb noted that hospitals have fewer bad debts to write off because more patients have coverage.

Auditor will hold meetings in Prestonsburg, Princeton and Somerset to discuss his report on financial status of rural hospitals

State Auditor Adam Edelen will hold three public meetings in rural communities to discuss the findings of his special report about the financial health of rural hospitals.

The meetings will be held Monday, April 21 at 1 p.m. at the Mountain Arts Center in Prestonsburg; Monday, May 4 at 11 a.m. (CT) at the Caldwell County Memorial Hospital in Princeton; and Thursday, May 6 at 1 p.m. at the Liberty center of Somerset Community College.

The report, which covers fiscal years 2011 through 2013, found that as many as one-third of Kentucky's rural hospitals were in poor financial shape, with 68 percent of them ranking below the national average financially.

“Although closure may be an unfortunate reality for some," Edelen said in the press conference, "I believe more can and should be done to help these hospitals rethink their models of business in delivering health care in the 21st century." He went on to suggest rural hospitals consider hiring outside managers, merge with larger hospitals, form coalitions with other rural hospitals or find a specialized health niche as possible alternate business models to consider.

The report calls for the creation of a state work group to monitor rural hospitals, including making sure state law gives them the flexibility to retool their business models. Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, suggested that the proposed work "could be incorporated into the work already under way under a State Innovation Model grant, which is engaging many sectors of health service in Kentucky in an ambitious, collaborative redesign effort."

Edelen said some of the primary problems faced by rural hospitals stem from the many changes in health care since the inception of Medicaid managed care, a decrease in the number of health-care providers, and an economic climate in some areas that doesn't support the current health payment model, which depends on the majority of its users to have private health insurance.

The report suggested that the Cabinet for Health and Family Services negotiate better contracts with managed-care organizations as it approaches the June 30 deadline, especially to address provider payments, stricter penalties for non-compliance and increased administrative burdens that managed care has put on hospitals. Edelen and Haynes sounded hopeful that this was going to happen.

Gov. Steve Beshear called Edelen's report "a dated snapshot" because the 2013 data used in the report does not include 2014 information,when the federal health reform was fully implemented through expansion of Medicaid to people with incomes up to 138 percent of the federal poverty line. Beshear said hospitals received $506 million to care for such people in 2014 while seeing significant reductions in losses on patients who couldn't or wouldn't pay.

Edelen's spokeswoman, Stephenie Hoelscher, said in an email that Edelen believes the full effect of all the changes in health care to hospitals' bottom line is still not clear, and his report establishes a baseline for critical analysis going forward.

Christian Co. Health Dept. to stop providing cancer screens, contraceptives to residents of other counties

As of Jan. 1, the Christian County Health Department will not provide contraceptives or cancer screening to indigent patients if they do not reside in the county. Nick Tabor of the Kentucky New Era reports the department will provide those services to other counties' residents if the county in which they reside has signed a contract with Christian County before the Jan. 1 deadline agreeing to repay Christian County for those services. Tabor writes that the policy is not applicable to those services that are covered by state or federal government reimbursements.

The health department's move was prompted by a budget deficit that is close to $200,000, some of it traceable to a lack of reimbursement for contraceptive care. Mark Pyle, director of the department, told Tabor that residents of both Todd and Trigg counties often seek services in Christian County and Christian county taxpayers foot that bill. Pyle explained that there’s nothing in state law saying the health departments have to serve anyone who comes in, regardless of residence.

The New Era is behind a paywall. To obtain a subscription, go here.

University Hospital cuts contribution to U of L by half

University Hospital. Photo by Bill Luster, The Courier-Journal.

In the midst of financial woes, University Hospital gave just half of what it normally does to the University of Louisville Health Sciences Center — and is considering reducing its contribution to zero.

The hospital gave $5.5 million rather than its usual $11 million annually.

In the past, critics have asked why the hospital wasn't using the funds given to the health center to shore up its own financial problems. Dr. David Dunn, U of L's executive vice president for health affairs, said "symbiotic arrangements between teaching hospitals and health sciences centers are common across the nation, and cutting the contribution in half has meant struggles to recruit and retain physicians and nurses," Laura Ungar reported for The Courier-Journal.

University Hospital has long been looking at ways to stabilize its finances. Last year, Gov. Steve Beshear nixed plans for the hospital to merge with a Catholic health system since it would have been subject to Catholic health directives. Since, it's been looking for a new merging partner, a process that has been delayed until the end of this month. (Read more)

University Hospital's trust to pay for indigent care lacks oversight, state auditor finds

An audit of the trust that disburses more than $30 million in state and local funding to provide indigent care at University Hospital has found there is a lack of oversight. There is no evidence taxpayer dollars were abused, however.

"The audit, released by state Auditor Adam Edelen, found that the board structure wasn't suited for proper oversight and the agreement between University Medical Center, which runs the hospital, and state and local governments to administer the money is outdated," reports Laura Ungar of The Courier-Journal.

The audit also found there is insufficient record keeping. "The responsibility for providing a safety net for our most vulnerable is a critical one shared by the university, city and commonwealth," Edelen said. "While this audit underscores the need for modernization and reform of the governing structure, it does not provide justification for those who desire a retreat from that mission." (Read more)

ER at Louisville's University Hospital says it is pushed to brink; many other hospitals seeing more emergency patients

Louisville's University Hospital is straining to meet the vastly increased demand of patients coming to the emergency room. Last year, there were 58,010 visits to the ER to the facility, which is meant to act as a safety net for indigent care. That's way up from 33,058 in 2006.

"The safety net is frayed and getting ready to break completely," said Bill Wagner, executive director of Family Health Centers and ex-officio member of the Louisville Metro Board of Health. "The current situation isn't sustainable ... The system is broken and it's gonna get worse."

"The rising number of uninsured patients is a major driver" of the exploding ER volume, reports Laura Ungar of The Courier-Journal. Between 2008 and 2010, 663,000 Kentuckians — or 15.5 percent of the population — lacked health insurance. In 2010, University Hospital received almost $69 million from federal, state and local governments to pay for indigent care, but it fell short by $20 million of the actual cost.

The strain has strapped the facility for cash to make improvements such as adding beds — to deal with overflow, 12 have been installed in the facility's hallways — or upgrading technology. Recently, University tried to merge with Jewish Hospital & St. Mary's HealthCare and Catholic Health Initiatives to gain an influx of funds, but Gov. Steve Beshear blocked the move, since it would mean losing University as a public asset. University is now looking for other merger options.

Some of the increase in visits is due to the fact that fewer people are leaving the ER without being treated because of long waits. In 2009, 15 percent left for that reason, but "That's down to 1.7 percent this year, after a push to attend to patients immediately and get physicians to see them more quickly," Ungar reports.

But there's evidence there are just more patients coming to the hospital for treatment, as is the case in a program called First Care, meant for patients with less serious ailments, such as tooth abscesses. "Two-thirds or more of First Care patients are uninsured, and in recent years increased demand has led the hospitals to expand its beds from six to 13, become a 24-7 facility and hire a handful of new nurse practitioners," Ungar reports. "First Care cases, which are not included in the hospital's ER volume totals, rose from 8,353 in 2006 to 20,546 last year." Of those patients two-thirds or more were uninsured.

Other area hospitals have also seen increases in ER visits. From 2006 to 2010, visits increased from 45,377 to 49,462 at Kosair Children's Hospital; from 27,836 to 29,357 at Norton Hospital; and from 29,779 to 33,508 at Jewish Hospital. Some hospitals have seen slight declines, such as Baptist Hospital East, but that may be due in part to its retail clinics in Walmart and increased numbers of urgent-care centers. (Read more)

State auditor will examine University Hospital's indigent-care trust

After the Jefferson County attorney said the fund lacked oversight, state Auditor Adam Edelen said he will audit and review the indigent-care trust in Louisville through which $32 million tax dollars flow. (Courier-Journal photo by John Rott)

The audit will determine "whether there are adequate resources to treat indigents in the Louisville area," reports Patrick Howington of The Courier-Journal. The issue came up recently when University Hospital, the recipient of the funds, tried to merge with two other hospital systems.

Earlier this month, County Attorney Mike O'Connell said the trust's board, which is appointed by the University of Louisville, "had not met in more than two years," Howington writes. The next day, U of L President James Ramsey asked Edelen to look into the trust's financial records.

Edelen spokeswoman Stephenie Steitzer said the lack of board meetings raises the question of "whether there is a proper and effective governance structure in place."

The trust receives $25 million each year from the state and $7 million from Louisville Metro Government. University Hospital uses those funds to treat poor, uninsured patients. Last year, the trust only paid for "about one-third of the facilities' charity care last year, which cost $88 million and involved more than 63,000 cases," Howington reports. (Read more)