Blackmon says match would save hospitals, improve care

Hospital group pushing Medicaid expansion

By ED HOWELL
Posted 1/23/19

A top official with the state's hospital association promoted Medicaid expansion, costing $150 million the first year, as a way to help bring needed funding for the state's hospitals, noting success …

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Blackmon says match would save hospitals, improve care

Hospital group pushing Medicaid expansion

Posted

A top official with the state's hospital association promoted Medicaid expansion, costing $150 million the first year, as a way to help bring needed funding for the state's hospitals, noting success seen in other states. 

Rosemary Blackmon, the executive vice president and chief operating officer for the Alabama Hospital Association, which represents more than 100 hospitals in the state, spoke to the Rotary Club of Jasper Tuesday. She has been with the association for 30 years. 

In order to address some of the issues Alabama hospitals are facing, Blackmon said the association is dealing with the expansion of Medicaid to cover people not covered. 

"We're trying to get the word out because we've found so often it is hard to get a message like this across. There are so many misconceptions about what this is all about," she said. 

She noted the current debate on a gas tax increase to improve infrastructure such as roads and bridges. Blackmon said hospitals are key infrastructures in local communities, many times being the largest employer there and being a $20 million economic impact in the state, she said. About 90,000 are directly employed in the state, which doubles with indirect effects included, while hospitals are an important factor in recruiting industry.

"We really don't get paid for taking care of the people we take care of," Blackmon said. "About 40 percent of hospital patients are Medicare patients, and Alabama's hospitals have the lowest Medicare reimbursement in the country" due to a formula created years ago. Beyond a base payment, hundreds of illness each have their own financial repayment amount, and hospitals also can lose money the longer the patient is in the hospital. 

Also, a wage index makes the rates of repayment different around the nation due to inflation around the different regions, which she said makes sense.

"But right now the range has become so great over the years, that now hospitals in California and other areas of the country with a higher wage index get paid three times than our hospitals do for the exact same service," she said. "So you think about 40 percent of your business that you are losing money on, and then we have 10 to 20 percent that is Medicaid, and we don't get paid our cost on that.

"And then you have this uninsured population, because we haven't expanded Medicaid. We have a lot of people who come to our emergency rooms but don't have any coverage, and by law we are required to take care of them.

"It is really hard to run a business when you are giving away a lot of your product," she said, adding that Alabama hospitals are providing $500 million in service they are not being paid for. 

The problem has only gotten worse, so that Alabama is now second in the nation in hospital closures, Blackmon said. 

"We lost six of our rural hospitals since 2011. Today, the last survey we did shows 88 percent are operating in the red," she said, surviving  by dipping into reserves or operating office buildings or nursing homes. Half of the state's hospitals are rural, but as Walker County is in the Birmingham-Hoover metro area, it would not be considered rural.

She said uninsured people who would go to the rural hospitals that shut down would instead go to the urban hospitals, giving them extra burden. 

While six rural hospitals have closed, 12 overall (rural and urban) in the state have closed, and 75 percent of all hospitals have operated in the red. "Half of our hospitals have negative total margins," she said, with problems meeting payroll.

"Whenever you bring up something that costs money, it is real easy for people to say, 'We don't have any money,'" Blackmon said. "But if we are looking at this like we look at roads and schools, we have got to figure out a way to pay for this so we can keep our healthcare infrastructure." 

Blackmon said Southern states such as Virginia, Kentucky, Arkansas and Louisiana have expanded Medicaid among 33 that have taken such action, with three more considering it.

Medicaid is a health insurance program for low-income people. Half of all birth deliveries are covered by it in Alabama, as well as 70 percent of nursing home care. 

"Unfortunately, Alabama has one of the most restrictive Medicaid programs in the country," she said. "It is not like we are spending money hand over fist on our Medicaid program." Alabama adults do not even qualify if they have no children. A family of three can make no more than $377 a month to be eligible. 

"Basically no one is eligible for Medicaid if they are an adult," she said. "We cover kids, we cover the elderly and we cover the disabled," while mothers who are pregnant are covered only as long as they have not had the baby, and must go off the rolls once they have delivered.

Mandated programs are all that Alabama offers to qualify for federal dollars, except for prescription drugs and hospice option programs, she said. Alabama has the lowest costs in the country, with administrative costs are less than 3 percent. 

Those who are insured with major insurance plans are still affected, she said. If, for example, someone uses Children's of Alabama in Birmingham, or rural hospitals, without Medicaid payments the hospitals would close to everyone.  

Of the 30 percent in state funding for Medicaid, only 10 percent of that comes from the General Fund, she said. The other 20 percent comes from providers and other sources, with hospitals, nursing homes and pharmacies providing more than $370 million each year through assessments. The other 70 percent comes from the federal matching funds. 

"Alabama is not spending a lot of money to cover who we got," she said, saying that the problem is not Medicaid growing out of control. Instead, she said Alabama's Medicaid budget has grown at a slower rate than the national rate of medical inflation. Over the years, Medicaid has been dependent on one-time funds that are no longer available, such as stimulus and BP oil spill funds. "(T)hey've been patching it all along," she said. 

Taxes on hospital to help this have been increased to the maximum that are allowed by law and can not be raised anymore. "We can't legally give anymore," Blackmon said.

Medicaid would not involve expanding programs, but only the number of people who would qualify, with more than 300,000 people expected to be added to the rolls, she said, which would also decrease need for expensive emergency room service. Expansion wold bridge the gap between people who currently make too much money to qualify for Medicaid, but don't earn enough to afford insurance. 

Alabama would pay no more than 10 cents on the dollar for expansion under a 90-10 percent division, she said. Most of the 300,000 would be for working people, she said. With opening medical facilities and services, the state would have a $28 billion boost for the Alabama economy, while 30,000 jobs would be created statewide. The 90-10 match would provide the state savings to a 70-30 match or under uninsured programs where the state funds 100 percent of the costs currently.

She said Montana saved $36 million after expansion, with 5,000 new jobs, $280 million in new personal income and $47 million in new tax revenue. Kentucky had 12,000 new jobs, a 55 percent decline in uncompensated care and $300 million positive impact on its General Fund. Arkansas has saved $131 million and had no rural hospital closed since expansion. Louisiana had 19,000 jobs created and increased tax receipts by $103 million. 

Hospitals in expansion states were 84 percent less likely to close than in non-expansion states, she said, with a total estimated savings of $6.2 billion for hospitals in expansion states. 

As for how the state would come up for the 10 percent match, "I don't know that we have the answer for that. We are certainly asking the Legislature to look at it and come up with a way to fund it. It is about $150 million if you look at the 10 percent that would need to be covered for the first year. As time goes on as you get the tax dollars and you get more the savings, a lot of it pays for itself, but you do have to come up with that upfront money." 

More information is at alhealthmatters.com, she said.