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States May Tap Hospitals to Help Pay for Medicaid Expansion

Lawmakers eye assessment fees

Policymakers in Medicaid expansion states will probably try to hit hospitals for some spare cash in 2017 when the federal government no longer pays the full tab for the coverage expansion, according to an article posted on the Modern Healthcare website.

Higher-than-expected enrollment means expansion states will be on the hook for hundreds of millions of dollars more than they expected when they took advantage of the Patient Protection and Affordable Care Act’s (PPACA) Medicaid expansion to adults earning up to 138% of the federal poverty level, writer Virgil Dickson says. For example, in Oregon, 386,000 people enrolled in Medicaid in 2014, up from a pre-expansion estimate of 222,700.

Under the PPACA, the federal government pays the full cost for newly eligible adults through 2016. After that, the match gradually drops to 90% by 2020. In 2013, Oregon estimated that its bill for Medicaid expansion would be $262 million between 2017 and 2019. The state now expects the cost will be $369 million during that period, said Stephanie Tripp, a spokeswoman for the Oregon Health Authority, the state’s Medicaid agency.

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) reported that the PPACA’s Medicaid expansion pushed enrollment higher than expected and that the projected costs for that coverage had gone up as well. Experts have noted, however, that the Medicaid expansion reduces state costs in other ways, and also boosts jobs and states' economies.

Any arrangement to have a state’s hospitals cough up “assessment fees” to pay for the Medicaid expansion would have to be approved by each state’s legislature, Modern Healthcare notes.

One option is to have hospitals contribute through the system of assessment fees already being collected by many states. Since the 1980s, provider assessments have generated billions of dollars to help states boost the matching funds they receive from the federal government. In 2015, 38 states had such levies in place, according to the Kaiser Family Foundation.

Arizona, Colorado, Indiana, and Ohio have already established policies to impose assessments on hospitals to cover the state’s share of the expansion costs. Hospitals in non-expansion states, such as Louisiana, Tennessee, and Utah, have said they would be willing to contribute if their states accepted Medicaid expansion.

It’s not clear whether policymakers in all of the 29 states that have expanded Medicaid will ask hospitals to contribute toward the expansion. But in California, where the state Medi-Cal program pays some of the lowest rates in the country, the California Hospital Association said its members are not interested in paying an additional assessment.

California has enrolled nearly 2.3 million people so far, nearly three times more than the 800,000 the state had anticipated, H.D. Palmer, a spokesman for the California Department of Finance, told Modern Healthcare.

Hospital associations in Illinois, Maryland, Nevada, New Mexico, and North Dakota say the assessment issue hasn’t yet been broached by state officials or their members.

States wouldn’t need hospital industry consent to introduce or increase assessments as long as it was done in compliance with federal law, according to Michael Miller, policy director for Community Catalyst, a nonprofit group that works to expand health coverage under the PPACA. Federal rules allow states to impose assessments on hospitals of up to 6% of patient revenue. This federal cap means that not all states will be able to assess hospitals to cover Medicaid expansion costs because some may already be assessing hospitals at the maximum level, Wilson said.

Source: Modern Healthcare; July 21, 2015.

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