Hospitals in states that have expanded Medicaid eligibility for low-income adults are seeing a sharp drop in the amount of charity care they're providing and an increase in admissions.
But the uptick in high-deductible plans across the country means they're seeing higher-acuity patients and losing out to retail clinics and other lower-cost providers for less complex care, a new report found.
By the end of 2014, charity care in Medicaid expansion states had fallen to 1.7% of revenue, down from the national average of 3.2% in 2013. Bad debt also declined slightly to 2.3% from 2.5% in that same time period, according to a report from Crowe Horwath, an accounting and consulting firm, which reviewed revenue-cycle data for hospitals in 35 states.
In non-expansion states, in contrast, charity care edged up slightly to 3.3% of revenue and bad debt to 2.6%.
Hospitals in expansion states also saw a 10.8% increase in revenue per case compared with 2.2% in non-expansion states as fewer patients came in without insurance.
The study did not look at whether there were additional costs to providing this care, but Derek Bang, Crowe's chief innovation officer, said that, overall, getting something is better than nothing.
“Medicaid might pay 10 cents on the dollar whereas self-pay is probably 2 or 5 cents on the dollar,” he said.
The numbers echo what publicly traded hospital operators have been reporting in their quarterly earnings reports throughout 2014.
Medicaid expansion also has had an effect on volume. In expansion states, inpatient admissions increased 7.4% while they declined 12.9% in non-expansion states. Outpatient visits, however, declined 3.4% in expansion states and 2.7% in non-expansion states.
Those numbers reflect that patients are becoming more price-sensitive as they transition to high-deductible plans and use traditional health systems only for higher acuity care. In the same vein, the average revenue per outpatient visit is going up but fewer claims are being made for smaller procedures, Bang noted.
“They're losing low revenue claims,” he said about the hospitals in the analysis. “They've traditionally made very good money on MRIs or ultrasounds or those sorts of things. Now those are getting chopped away by lower-cost care settings in the market.”
Hospitals in expansion states also saw a nearly 5% increase in Medicaid managed care as a percentage of revenue, while the increase was less than 1% in non-expansion states. The share of self-pay patient revenue declined 4.2% in expansion states and 1.7% in non-expansion states.
However, commercial insurers represented a smaller piece of the pie in 2014 for hospitals in expansion states, or a drop of 1.6%. In non-expansion states, commercial insurers represented an additional 1% of the revenue mix compared with the previous year.
Therefore, it's too soon to tell whether the shift in payer mix has benefited hospitals, he added.
“When you think about the cuts hospitals have had in Medicare reimbursement, the whole promise to hospitals was you'll get more revenue in 2014,” Bang said. “It's not quite the benefit they expected. It's hard to know whether the promise is being delivered on.”
Follow Beth Kutscher on Twitter: @MHbkutscher