State will cut reimbursement increase; hospital group says insured patients will make up the difference
The state will not increase Medicaid reimbursement for hospitals, and insured Ohioans could pay the price.
Late last week, Gov. Ted Strickland announced hospitals would not receive the 3.3 percent increase for Medicaid reimbursement scheduled to take effect in January.
Tiffany Himmelreich, spokesperson for the Ohio Hospital Association, said the difference falls on the backs of insured patients when the Medicaid reimbursement amount doesn't cover the cost of care.
"There's no such thing as free care," Himmelreich said.
Strickland's decision to halt the reimbursement increase could also cost Ohio hospitals about $24 million, according to the Ohio Hospital Association.
When hospitals increase the amount of money billed to insurance companies because of the deficit caused by inadequate Medicaid reimbursement, she said, those companies often raise premiums and deductibles. The Ohio Hospital Association said hospitals are already underpaid for Medicaid services at 95 cents on the dollar.
Wendy Melching, chief financial officer of Fisher-Titus Medical Center in Norwalk, said Medicaid accounts for about 10 percent of hospital business. She said that Medicaid only covers about 78 percent of the actual cost of care for patients, and patients covered with commercial insurance end up subsidizing the cost.
The lack of the new reimbursement increase will cost Fisher-Titus about $200,000 during the delay.
Medicaid is also responsible for about 10 percent of business at Firelands Regional Medical Center, said Dan Moncher, executive vice president and chief financial officer at Firelands.
The state's halt on a Medicaid reimbursement increase will cost Firelands between $125,000 and $200,000 during the delay.
Whenever reimbursement gets cut, "it's never an easy pill to swallow," Moncher said.
Himmelreich said that inflation rates, a labor shortage and increased labor costs have intensified the financial pressure on hospitals as well.
"What we risk here is the potential for hospitals to close down some services lines and community programs in order to maintain vital units," Himmelreich said. "There's not a lot of new money coming in, but there are a lot of new expenses."
Moncher said that Firelands is in a position where it can maximize cost-efficiency to ensure the hospital continues to provide the highest quality care in the most efficient way possible.
The lack of an increase in reimbursements will cost The Bellevue Hospital about $90,000 during the delay, said Alan Ganci, executive vice president of The Bellevue Hospital.
"We did not budget for an increase just to be safe...but it will have a negative impact on us," Ganci said.
Medicaid accounts for about 10.5 to 11 percent of the total business at Bellevue.
Strickland isn't the first to halt Medicaid reimbursement increases for hospitals. Ganci said the Bob Taft administration also froze reimbursement increases for a two-year period.
Keith Dailey, spokesman for Strickland, said that the Medicaid caseload throughout the state continues to exceed projections, which makes it increasingly important for the administration to be fiscally responsible.
There are 1.7 million Ohioans eligible for Medicaid.
The Medicaid caseload in Ohio has increased 1.2 percent during the last quarter, said Scarlett Bouder, spokeswoman for the Ohio Department of Job and Family Services. That's an increase of about 18,000 people.
Bouder explained that though that number doesn't seem too startling, once it is combined with the existing economic state and bleak economic projections the problem becomes more significant.
"The governor is keeping his promise to live within our means," Dailey said.
The Strickland administration has delayed the recalibration of Medicare rates from January until April. The recalibration is expected to cost Ohio hospitals around $13 million.
This helps, but it doesn't completely alleviate the problem of not receiving the 3.3 percent increase in reimbursement, Himmelreich said.