Alabama's refusal to expand Medicaid through federal health reform this year is hitting local hospitals in their pocketbooks, according to health care leaders and advocates for the poor.
Regional Medical Center in Anniston and its nearby Jacksonville hospital have lost $1.2 million in revenue this year and expect to lose more next year because the state hasn’t expanded Medicaid, hospital officials say. It’s a situation hospitals across the state are also facing and will continue to face as long as the state does not expand its Medicaid program, health industry experts say.
The Affordable Care Act offered millions of dollars in extra Medicaid money to states, starting in January, to provide care for additional previously uninsured residents. Medicaid is an insurance program operated jointly by the states and the federal government for mainly low-income residents.
However, Alabama refused to expand its Medicaid program, opting to reform the system instead.
Meanwhile, the federal government is cutting back on reimbursements to hospitals for uncompensated charity care to pay for the expansion. With no reduction in uninsured patients and decreases in revenue, hospitals such as RMC are feeling the financial pinch.
David McCormack, CEO of RMC, said the $1.2 million decrease in reimbursements for uncompensated care this year is just the beginning.
"It's supposed to go up every year, but we don't know yet what it will be next year," McCormack said of the reimbursement cuts.
The reimbursement decreases are hitting RMC particularly hard this year because the hospital is providing more uncompensated care than it did last year. McCormack said RMC provided $8 million worth of uncompensated care between January and April — an increase from the $6.7 million in care it provided during the same period last year.
McCormack said the hospital has had an increase in patient visits due mainly to its expansion into other counties, such as Talladega and Randolph, with the opening of rural health clinics. However, he added that uncompensated care costs have been increasing for some time, due in part to the rough economy.
"Those costs are going up across the country as people are losing their insurance," McCormack said.
To compensate for the loss in revenue, RMC has had to tighten its budget and even consolidate services with its Jacksonville hospital, McCormack said. Earlier this year, RMC closed obstetrics and gynecology services at its Jacksonville hospital and consolidated those services at its main Anniston facility.
Rosemary Blackmon, vice president of the Alabama Hospital Association, said hospitals across the state are dealing with similar financial struggles.
"We do hear stories all the time of hospitals and their financial challenges," Blackmon said. "We've seen a lot just through the recession ... and you place on top of that the cuts ... Medicaid expansion would be a welcome help for that."
In a survey the association conducted of Alabama hospitals in December, hospitals' financial situations were dire before the cuts really kicked in. According to the survey, during 2012 the average operating margin of all Alabama hospitals was 2.68 percent, and 60 percent of hospitals had less than a 5 percent margin. Also, 41 percent of hospitals were operating with a negative margin.
Jasmine Benningfield, spokeswoman for Stringfellow Memorial Hospital in Anniston, did not have exact figures regarding reimbursement cuts, but said that those cuts did pose a challenge.
"Like most hospitals, we are committed to providing medically necessary emergency care for all patients, regardless of their ability to pay," Benningfield wrote in a Wednesday email. "By forgoing the opportunity to cover more of our community's most vulnerable citizens with Medicaid expansion, Alabama hospitals will face the continued challenge of providing care that is uncompensated."
Benningfield noted that Stringfellow provided more than $18 million in uncompensated care last year.
"We remain committed to providing our patients and community with the most needed, quality healthcare services," Benningfield wrote.
Gov. Robert Bentley has consistently been against expanding Medicaid, however, opting to reform the system first instead. Jim Carnes, policy director for Alabama Arise, a non-partisan group that advocates for low-income residents, said the reform efforts are designed to improve the system. Arise was also a member of the Alabama Medicaid Advisory Commission, which developed the reform plan.
Carnes said the plan is to move the Medicaid program from a centralized system based on paying for services already rendered to a regionally-based system that pays providers on a monthly basis.
"The goals are to improve the patient experience, reduce costs and improve the delivery of care," Carnes said.
However, Arise still supports Medicaid expansion, Carnes said.
"The results of not expanding means we've got hard-working people who ... are not getting coverage," Carnes said. "That means more people are delaying care for more serious conditions, then going to emergency rooms and that results in higher costs."