Sharp reductions in Medicaid funding also may impact the financial health of hospitals—especially in rural areas—provider-plan leaders warn.


June 12—Provider-affiliated health plans that provide Medicaid coverage warned this week that proposed funding cuts could cause a range of problems. But they agreed more flexibility is needed.

The provider-plans’ perspectives on the American Health Care Act (AHCA) came as the Senate is gearing up its consideration of the legislation, which would repeal and replace parts of the Affordable Care Act (ACA). Although discussions are ongoing among Senate Republicans over the details of their version of the AHCA, Sen. Mitch McConnell (R-Ky.), majority leader, recently took the procedural step of allowing a healthcare bill to be put directly on the Senate calendar so a vote can be held when a final bill is ready.

Drawing particular concern among provider-sponsored plans was a Congressional Budget Office projection that the version of the AHCA that passed the House of Representatives in May would increase the number of uninsured in the next 10 years by 23 million. That increase includes currently uninsured people who would be expected to enroll in coverage in coming years primarily due to the individual mandate in the ACA. The AHCA’s federal-funding cuts—including $834 billion in Medicaid funding over 10 years—would be expected to impact many health systems.

Lisa Mattson, MD, associate medical director of UCare—owned by health system Fairview Health Services—expressed concern that the AHCA cuts would especially affect the care of the elderly and disabled, to whom two-thirds of the provider-plan’s Medicaid spending goes.

“We’re really worried about how any cuts might impact the care we’re able to provide to that population,” said Mattson, whose plan covers 250,000 Medicaid enrollees.

That population may be especially impacted in rural areas, where a lack of resources and other care management capabilities may be most acute, she said.

Other leading concerns include the impact of the Medicaid cuts on covered medication-assisted treatments for opioid addiction. The Geisinger Health Plan recently worked with its health system to establish Geisinger’s first Medicaid-funded medication-assisted treatment clinic, which has had 60 patients and a three-week waiting list in its first two months of operation.

“Where are they going to go? They’re going to go back out on the street and they’re going to go back to heroin or Carfentanil or some of the other substances,” said Perry Meadows, MD, medical director, Geisinger Health Plan. “And I’m very concerned that we’re going to be losing lives if people lose coverage.”

Another source of concern is that the AHCA would allow states to opt out of the ACA’s package of essential health benefits (EHBs), or mandated areas of care that plans must cover.

“That would be devastating to the population we serve,” Meadows said. “If we take away the [EHBs] we’re going to flood our emergency rooms, we’re going to have people not receiving necessary care, and unfortunately we’re going to cost some people their lives.”

Medicaid cuts under the AHCA would likely affect recent innovative programs at UCare, such as a mobile dental clinic that the plan sends out into the community, and thus ultimately increase the cost of health care, Mattson said.

Hospital Impact

Sharp reductions in Medicaid funding also may impact the financial health of hospitals—especially rural facilities. 

Meadows highlighted one rural hospital at which his Medicaid enrollees seek care where 70 to 80 percent of patients are covered by Medicaid.

“If we cut funding to Medicaid, we’re going to be losing a lot of small, rural hospitals as well,” Meadows said during a media briefing.

Even with the influx of federal funding through the ACA, the share of rural hospitals with negative operating margins increased from 35 percent four years ago to 41 percent in 2016, according to an analysis by iVantage Health Analytics. On a related note, 80 rural hospitals have closed since the ACA was enacted in 2010, according to an analysis by the Sheps Center at the University of North Carolina.

Mattson cited estimates that 1.2 million Minnesota residents could lose coverage under the AHCA while others face increased cost sharing and decreased services.

“For providers, this could be a significant impact because they are going to see a decrease in reimbursements,” Mattson said. “But more importantly, you’re going to see more people going to the [ED] … and as a result of that there is going to be an increase in uncompensated care.”

The ACA’s coverage expansions have cut her health system’s uncompensated-care costs by $40 million.

“So that could have a significant impact on our hospitals—particularly our upstate hospitals,” Mattson said. “And we’re already seeing many of those being closed because of just general costs of health care.”  

Flexibility Sought

The provider-sponsored plans are supportive of having increased flexibility in how they target services to their Medicaid enrollees, which the AHCA would authorize.

The Alliance for Community Health Plans (ACHP) specifically has sought flexibility with respect to federal requirements on network adequacy, said Ceci Connolly, president and CEO. Changes that ACHP wanted as part of healthcare reform were included in a May 12 letter to Senate leaders.

That flexibility would be especially important in light of the cuts the legislation envisions. For instance, Minnesota expects the AHCA to cut federal healthcare funding to the state by $2.5 billion in the first 18 months after it is enacted.

“We’re going to have the elderly and disabled, they still have their needs, and we’ve got to still figure out how we’re going to pay for those. So we need some flexibility in the program so that we can get the needs of those disabled and elderly people met here,” Mattson said.

Meadows warned that his plan sees little opportunity to further stretch Medicaid spending to make up for lost federal funding.

The 19 plans in the ACHP—which are not-for-profit and provider-aligned, but not necessarily fully integrated, provider-sponsored plans—have an average margin of less than 2 percent, according to the association. Those plans provide coverage and care for nearly 19 million Americans across 27 states and Washington, D.C.

The Medicaid plan executives raised doubts about the estimation of some industry analysts that states may be able to replace federal funding lost under the AHCA.

“We really consider the federal money as the lynchpin to make all of this work; we just can’t do it all alone on our state budget,” Mattson said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, June 13, 2017