Blog | Medicaid Payment and Reimbursement

Analysis: New public charge rule will drive up healthcare costs

Blog | Medicaid Payment and Reimbursement

Analysis: New public charge rule will drive up healthcare costs

  • Doctors and public health experts warn of poor health and rising costs from Trump administration changes that would deny green cards to many immigrants who use Medicaid.
  • Hospital payments at risk under the public charge proposed rule total an estimated $17 billion.
  • It's important that health systems, and particularly patient financial service counselors, understand the public charge rule so they can help educate patients and guide them to the right coverage options.

The New York Times is reporting, “Doctors and public health experts warn of poor health and rising costs they say will come from sweeping Trump administration changes that would deny green cards to many immigrants who use Medicaid, as well as food stamps and other forms of public assistance.

Some advocates say they're already seeing the fallout even before the complex 837-page rule takes effect in October. Two California counties and attorneys general in 13 states sued, saying the changes will increase public health risks.

There are signs that is already happening in cities including Chicago, Detroit and New York, immigrant advocates say. New York's largest public health organization, Public Health Solutions, which serves a large immigrant population, reported a 20% drop in food stamps enrollment since the rule was first proposed in the fall.

After 1996 welfare and immigration changes that limited public assistance for some immigrants, the use of benefits dropped steeply among U.S. citizen children and refugees, groups who were still eligible. Studies based on data following that change showed people disenrolled from Medicaid at rates ranging from 15% to 35%, according to Harvard University's François-Bagnoud Center for Health and Human Rights. And, it found, this came at a high cost: Asthma-related school absences in 1996 led to $719 million in lost parental productivity.”

Takeaway

The rule will likely result in decreased enrollment in programs like Medicaid and food stamps by individuals seeking a green card. The rule is complex, which will also lead to:

  • Individuals who aren’t impacted by it declining to participate in impacted programs unnecessarily (aka, the chilling effect).
  • Individuals, both impacted and unimpacted by it declining to participate in social support programs that aren’t factored into the public charge determination.

As a result, fewer eligible patients will use Medicaid, and hospitals may see an increase in uncompensated care costs.

Why Medicaid payments are at risk under the new rule

Although the impact of the final rule hasn’t been independently modeled, analysis of the proposed rule is instructive. A Manatt Health whitepaper, Medicaid payments at risk for hospitals under public charge, estimates:

  • The potentially affected Medicaid and CHIP population is 13.2 million (based on 2016 data).
  •  These enrollees accounted for an estimated $68 billion in Medicaid and CHIP healthcare services in 2016.
  • Because hospitals provide a substantial share of the care delivered to Medicaid and CHIP enrollees, hospital payments at risk under the public charge proposed rule total an estimated $17 billion.
  •  Providers in Texas, Florida, California, Arizona, Nevada, Washington, New York and New Jersey are projected to see the largest reductions in payments.

Possible healthcare effects as immigrants decline public assistance

However, these impacts are only half the equation. Patients who have declined public assistance will likely be sicker and cost more when they finally do seek healthcare. The obvious one is someone who, for lack of insurance and access to primary care, has a chest cold that slips into pneumonia resulting in an ED visit and possible inpatient admission.

Less obvious is the impact it will have on (NICU) utilization. It’s well known that mothers who don’t receive adequate prenatal care and nutrition are more likely to have children who are premature/underweight, resulting in a NICU stay. Not only will these NICU stays drive up the cost of care unnecessarily, but depending on how premature the baby is, the lack of prenatal care and nutrition could have a lifelong negative impact on the child’s health and his/her healthcare spending.

While many health systems offer neonatal clinics for uninsured and high-risk mothers, the new rule may dissuade those who are eligible, and need the services from seeking them out even though using the services does not impact the public charge determination.

It's important that health systems, and particularly patient financial service counselors, understand the public charge rule so they can help educate patients and guide them to the right coverage options.

Despite 13 states challenging the regulation in court, the final rule will take effect on Oct. 15, 2019.

See related news article: A look at the financial ramifications hospitals may see from 'public charge' changes

About the Authors

Chad Mulvany

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

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