Arizona hospitals to gain revenue under Medicaid expansion, state says

2013-08-29T00:00:00Z 2014-06-18T14:24:57Z Arizona hospitals to gain revenue under Medicaid expansion, state saysBy Howard Fischer Capitol Media Services Arizona Daily Star
August 29, 2013 12:00 am  • 

PHOENIX — Arizona hospitals should net $108 million in the first six months of 2014 under a Medicaid expansion plan, even after paying their new assessments, according to a state study.

The report details how much each of the state’s hospitals would be expected to pay to underwrite the legislatively approved plan to increase the number of people with government-funded health coverage by about 300,000.

In virtually all of those cases, the hospitals will get more in payments for taking care of Medicaid patients than they will pay out.

Overall, hospitals will shell out more than $75.3 million, a figure computed on each facility’s number of patients.

Those funds will be used to finance the plan pushed through the Legislature by Gov. Jan Brewer to restore coverage for some single adults who do not now have it as well as add adults, single and otherwise, whose income is above the federal poverty level — about $19,530 a year for a family of three — but below an adjusted figure of 138 percent.

But the assessment plan crafted by the Brewer administration also has some special carve-outs.

Most notable is the Mayo Clinic in Scottsdale, which will pay nothing at all. But the Arizona Health Care Cost Containment System report estimates that expanded Medicaid coverage will boost that hospital’s bottom line by more than $749,000.

In exempting Mayo, the governor’s office both avoided picking a fight during the legislative session and gained the unqualified support of the Arizona Hospital and Healthcare Association. That’s because the plan means every hospital chain will benefit financially, some significantly.

But AHCCCS’s deputy director, Monica Coury, said there were no specific promises made during this year’s legislative debate over expansion, either to Mayo or Phoenix Children’s Hospital, which also is not paying anything, that they would not be subject to the levy.

She said there are good reasons to exempt both. Mayo has a large number of out-of-state patients who either pay their own bills or are covered by private insurance or Medicare; Phoenix Children’s Hospital won’t benefit from having more adults with Medicaid coverage.

Small psychiatric hospitals also are exempt.

The plan, set to kick in Jan. 1, is premised on foes of expansion failing in their bid to gather enough signatures to force the question onto the 2014 ballot. If they succeed, the state cannot implement expansion before that election takes place.

AHCCCS, which is designed to cover most people below the poverty level, currently gets about $2 in federal cash for every dollar of state money. But the federal Affordable Care Act has a provision to pick up virtually all of the additional cost if states expand eligibility to 138 percent of the poverty level.

The reason there is a cost for Arizona is that the state, in an earlier budget-cutting move, stopped enrolling childless adults below the federal poverty level in the program. So the state has to come up with money to restore that coverage to be eligible for the additional cash for expansion.

Hospitals agreed to the assessment based on the belief that anything they contribute will be more than made up by having fewer patients show up without insurance. Coury said the assessment plan is built around that premise.

Jim Haynes, chief operating officer for the hospital association, said it had to be crafted that way. He pointed out that the law says no hospital can pass on any of its assessment to patients who are paying their own bills.

“And if you’re losing money ... how could you not pass it on?” Haynes said.

The handful of hospitals that are in that negative situation are those that are likely to have very few patients who are poor. For example, Oro Valley’s $617,320 assessment eclipses the $613,687 the facility would likely gain from having more of its patients covered by Medicaid.

But Community Health Systems, which also operates Northwest Medical Center in Tucson as well as hospitals in Payson and Bullhead City, is expected by AHCCCS to get more than $8 million overall for less than $4 million in assessments.

All that, however, remains to be seen. Haynes said the estimates of each hospital’s potential gain from an expanded Medicaid program are based on 2011 numbers  that may not be applicable in 2014.

“It’s just something we’ll have to track and monitor going forward,” he said, to be sure that hospitals are getting what they expect.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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