Medicaid Expansion May Prove Beneficial for Hospitals

Investigators recently found that trauma centers could greatly benefit from Medicaid expansion since they care for a significant amount of the uninsured population.

Since these trauma centers provide care for patients regardless of their ability to pay, approximately 20% of patients admitted did not have health insurance. However, due to low reimbursement rate, these hospitals are financially vulnerable.

The Affordable Care Act has made great strides in providing access to insurance options for uninsured individuals, and the uninsured rate has hit a historic low. Many states have also chosen to expand their Medicaid programs under the law. By June 2016, 21 states and the District of Columbia had expanded their Medicaid programs.

In August, Healthy Louisiana, the state’s Medicaid program, announced its enrollment has surpassed 278,000 new enrollees since they expanded the program on July 1, 2016. The state’s goal was to cover 375,000 people by next June, which they will likely exceed.

A recent study, presented at the 2016 Clinical Congress of the American College of Surgeons, examined the financial impact of Medicaid expansion on trauma centers that treated the highest numbers of patients in the country.

“Trauma centers have a high proportion of uninsured patients because they do not turn anyone away for trauma care,” said lead author John W. Scott, MD, MPH. “We looked at trauma centers that take care of the highest proportion of patients without insurance to determine whether state-level Medicaid expansion benefits the facilities and the patients that are at greatest financial risk.”

Investigators examined publicly available data from the National Inpatient Sample, which collects data from approximately 7 million hospital stays annually. They included data from adults 18- to 64-years-old with low incomes who were treated for trauma in 2010, which was 1 year prior to the implementation of the Affordable Care Act (ACA).

The investigators used National Inpatient Sample cost-to-charge ratios and payer-specific reimbursement rates, and calculated total reimbursement and trauma-related financial margins based on payer type, according to the study.

Hospitals were categorized by how many uninsured trauma patients they treated. Safety net hospitals were considered those that treated the highest amount of uninsured patients.

“This information gave us an understanding about the reimbursements hospitals received for the trauma care they provided before passage of the ACA,” Dr Scott said.

Investigators then created a simulation that would find the differences between health coverage and financial performance in states that expanded Medicaid compared with those that did not.

“We don’t have the luxury of having years of data to look back upon; we have to conduct the best analysis we can of the available information,” Dr Scott said. “We created a post-ACA model that incorporates what we know about the law and about projected Medicaid enrollment estimates in order to determine the number of patients who would be eligible for health coverage and how that would affect finances at the hospital level. The results reflect our estimates of the impact on hospital finances and reimbursement for trauma care specifically due to Medicaid expansion under the ACA.”

The model found that 54% of previously uninsured patients would become insured through private plans in Medicaid expansion states and 48% in non-expansion states, according to the study. Some of these individuals would gain coverage through Affordable Care Act marketplaces, and some through employer plans.

Approximately 31% of uninsured individuals would gain Medicaid insurance in expansion states compared with 12% in non-expansion states.

Investigators also discovered that safety net hospitals would have a great gain in financial margin. In Medicaid expansion states, the increase would be 26.2% compared with 18.9% in non-expansion states, according to the study.

“The facilities we will expect to gain the most from the ACA Medicaid expansion are those that are furthest behind to begin with,” Dr Scott concluded. “The change in reimbursement for trauma care will likely be greatest in states that have made the most effort to expand insurance coverage, namely Medicaid.”