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Hospitals: Uncompensated Care Fell 55 Percent in Private Option’s First Year

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Uncompensated care fell 55 percent, or $149 million, during the first year of Arkansas’ private option, according to a report released Thursday by the Arkansas Hospital Association.

The report is based on a survey conducted by the Arkansas Chapter of the Healthcare Financial Management Association and the AHA in April. The AHA said hospitals responding to the survey represent more than 80 percent of all hospital patient services by revenue and admissions.

The report said that during 2014, the first full year of the private option, the number of people without insurance admitted to hospitals in Arkansas fell by about 49 percent compared to 2013.

That led to a reduction in uncompensated care losses, which the AHA said it helping its members offset “harsh Medicare payment cuts” that help pay for health care reform under the federal Patient Protection and Affordable Care Act.

More: See a summary in charts of the AHA’s findings.

“Arkansas continues to lead the nation in reducing the numbers of uninsured people. That has had a direct impact on hospitals,” AHA President and CEO Bo Ryall said in a news release. “The responses to this survey show once more that the new insurance coverage provided through the private option has reduced uncompensated care losses for hospitals in the state, giving every Arkansas hospital a way to better manage the effects of Medicare payment reductions that have grown over the past few years.”

In its report, the AHA said hospital respondents saw 11,698 uninsured patients for inpatient care in 2014, down from 22,786 in 2013. The number of uninsured patients seen in outpatient fell by about 46 percent. While the number of hospital emergency rooms visits rose 5 percent, the number of uninsured patients fell by about 39 percent, the report said.

The AHA said the 2014 results are consistent with results of a previous survey to measure the private option’s effects after six months of operation. That report showed hospitals seeing fewer uninsured patients in all settings, including patients admitted for inpatient care (down about 46 percent), outpatient clinics (down 36 percent) and emergency rooms (down about 35 percent).

Arkansas legislators established the private option in 2013. The Medicaid expansion program uses federal subsidies to buy health insurance for Arkansans making up to 138 percent of the poverty level. More than 200,000 Arkansans who were previously uninsured now have insurance under the program.

The private option is federally funded through 2016; after that, Arkansas begins bearing more of the cost each year through 2021, when the state’s share of funding tops out at 10 percent.

The AHA and other major health care organizations in the state have endorsed the private option, having seen its benefits to their bottom lines.

In May, administrators at the University of Arkansas for Medical Sciences said they are considering expanding its 10-story UAMS Medical Center in response to the increased demand caused by the private option and the Affordable Care Act.

Later that month, Arkansas Blue Cross & Blue Shield reported a nearly 43 percent surge in revenue in 2014 over the previous year, mainly due to the private option and the Affordable Care Act.

But the future of the program remains unknown. In March, Republican Gov. Asa Hutchinson named 12 Republicans and four Democrats to a legislative task force to study the private option and consider broader changes to the state’s Medicaid program. The task force is required to issue its recommendations by the end of this year. Meanwhile, the private option is set to expire at the end of 2016.

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