Tennessee hospitals' decision to help fund Medicaid expansion under Republican Gov. Bill Haslam's new waiver proposal was driven by hospitals' financial survival as well as their desire to extend coverage to 200,000 low-income Tennesseans, hospital leaders there say.
The current financial picture for the state's hospitals is grim, made worse by the healthcare reform law's reduction in disproportionate-share payments, which were expected to be offset by Medicaid expansion. But Tennessee hospitals faced a double whammy when their state's Republican elected leaders did not accept expanding Medicaid to adults earning up to 138% of the federal poverty level. Hospitals in the state provided more than $2.4 billion in uncompensated care in 2012.
Three rural hospitals—Haywood Park Community Hospital, Brownsville; Gibson General Hospital, Trenton; and Humboldt (Tenn.) General Hospital—closed in 2014, and several other hospitals have cut staff and services. “Getting more people coverage is critical to the survival of Tennessee hospitals,” said Anthony Spezia, CEO of Knoxville, Tenn.-based Covenant Health. “You can't continue to have declining reimbursement and increasing costs.”
Before Haslam last week announced his alternative model for expanding Medicaid, called Insure Tennessee, he met with Tennessee Hospital Association leaders to discuss hospitals paying the state's portion of the cost for covering the Medicaid expansion population after 2016; states will have to pick up 10% of the cost by 2020. The state would receive an estimated $5.6 billion in new federal Medicaid funds over 10 years if it accepts the expansion.
Haslam's two-year waiver proposal would give employed beneficiaries the option to receive a voucher to help them buy into their employer's health plan, which would pay providers higher commercial rates. For the unemployed or those who decline the voucher, a Medicaid managed-care plan would be offered.
Beneficiaries with incomes above poverty would receive incentive payments placed in a health savings account to cover out-of-pocket costs if they demonstrated healthy behaviors. Advocacy groups, however, expressed concern about whether the plan would offer full Medicaid benefits and whether out-of-pocket costs would be affordable.
After surveying members, the THA board agreed to Haslam's proposal. The plan must still be approved by the Republican-controlled state Legislature and the CMS, though experts say the chances of CMS approval are good.