Hospitals Fear Proposed Medicaid Change Could Be Costly

The Arkansas Hospital Association fears an Arkansas Medicaid policy proposal could cost hospitals much more than the $11 million estimate from the Department of Human Services.

“We seem to think that that’s understated,” said Paul Cunningham, executive vice president of the AHA. “We don’t know exactly by how much though.”

DHS and AHA officials are working together “to review the numbers and ensure the estimates we have are accurate,” Amy Webb, a spokeswoman for DHS, said in a July 26 email to Arkansas Business. “We will assess the situation again once we know more.”

Under the proposed change, the Arkansas Medicaid program would stop covering the co-insurance or deductible costs, or both, for most of the patients who are eligible for both Medicare and Medicaid in cases in which Medicare is the primary payer, Cunningham said.

“Medicaid continually looks for ways to make the program more efficient,” Webb said in the email. “Since learning of the Hospital Association’s concerns, we have met with [the AHA] and talked about the issue.”

DHS projected the Medicaid reimbursements to Arkansas hospitals would drop by an estimated $37 million if the policy is implemented, Cunningham said. But DHS said hospitals could claim a portion of the lost payments as Medicare bad debt. So the program would really cost hospitals only about $11 million, DHS estimated.

Causing concern for hospitals, however, was the DHS estimate in November that the net reduction would be only $5 million to $6 million, Cunningham said.

“This particular policy increased from $5 million to $6 million in November 2012 up to $11 million in May 2013,” Cunningham said. “That’s what got us looking at it a bit more closely.”

In addition, there is always the possibility that Congress could slash the percentage of Medicare bad debt that a hospital could claim, which would cost the hospitals more under the proposal. Or Congress always could eliminate Medicare bad-debt expense altogether, Cunningham said.

In June, the AHA sent an email asking Arkansas hospital CEOs to weigh in on the policy proposal’s potential impact.

According to the consensus from the approximately two dozen responses the AHA received, the CEOs estimated the program would cost more than $11 million, but it was difficult to estimate a total amount, Cunningham said.

“We’re going to be working with our hospitals to try and refine that estimate,” he said. “Anytime you talk about reducing Medicare payments by multimillions of dollars, it’s a big deal, particularly in today’s environment.”