Providers in Medicaid Expansion States Report Better Finances

While industry analysts expected Medicaid expansion states would see larger increases in paying customers compared to non-expansion states, the gap was greater than predicted, according to a new report.

In a new report, PwC’s Health Research Institute (HRI) analyzed financial data from the nation’s 5 largest for-profit health systems: Community Health Systems, HCA Holdings, LifePoint Hospitals, Tenet Healthcare, and Universal Health Services. These systems represent 538 hospitals in 35 states.

With the addition of Pennsylvania, there are currently 28 states (including the District of Columbia) that have chosen to expand Medicaid under the Affordable Care Act. According to earnings and patient volume data, there is a large divide between providers in states that expanded Medicaid and those that did not.

“The growth in Medicaid expansion states starkly contrasts the experience in the 24 states that did not expand the joint federal-state health program,” according to the report. “In those states, hospitals continued to see flat or sagging admission rates and little reduction in the number of uninsured, largely non-paying patients.”

Since the beginning of the year, Medicaid admissions in expansion states increased by a range of 10.4% to 32% across the 3 largest health systems, according to HRI. Meanwhile, uninsured or self-pay admissions declined by 47%. While all states saw increased Medicaid enrollment, expansion states reported increases of 18.5% compared to just 4% in non-expansion states.

Physicians and surgeons witnessed the change. During the first 3 months of the year, primary care physicians, surgeons, and other specialists in expansion states saw a higher percentage of Medicaid patients than their counterparts in non-expansion states.

“Take away the finance for a second and think about the mission of hospitals, which is to improve the health of a population,” Chris Tholen, vice president of financial policy at the Colorado Hospital Association, told HRI. “An insured community is a healthier community. I don’t want to lose sight of that either.”

HRI also reported that the non-expansion states will give up more than $400 billion in federal Medicaid dollars through 2022. Furthermore, health systems in those states could lose more than $150 billion in enhanced Medicaid payments used to offset reductions in federal reimbursement.

In the second quarter, Tenet reported a $78 million reduction in unpaid care. The system operates hospitals in 5 expansion states, where uninsured and charity care admissions declined by 46%.

Community Health Systems operates hospitals in 12 expansion states and 17 non-expansion states. Although just 23% of overall revenue come from expansion states, self-pay emergency room visits in those 12 states declined 41%, which provided a major financial lift.

Within the 5 expansion states in which HCA Holdings operates, uninsured admissions declined 48%. In the non-expansion states, the uninsured volume only declined 2%.

LifePoint Hospitals, which operates in 7 expansion states and 13 non-expansion states, reported second-quarter earnings increased 35.8% over the same period in 2013. During the second quarter, 80% of newly-covered admissions came from Medicaid.

Universal Health Services is based in Pennsylvania, which just approved a Medicaid expansion plan. The system reported a 30% increase in second-quarter adjusted net income from the same period a year ago.

“In states that have expanded Medicaid, an influx of newly insured patients has helped reverse long-running hospital trends such as declining admissions and a rise in uncompensated care,” the report concluded.