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Providers made big con­ces­sions to gain cov­ered pa­tients---now they are eye­ing big give­backs

New es­ti­mates on the health­care law from the Con­gres­sional Bud­get Of­fice gave hos­pi­tals more am­mu­ni­tion in their fight for states to ex­pand their Med­i­caid pro­grams—and more con­cerns that what they bar­gained for isn’t what they’re go­ing to get.

The Med­i­caid ex­pan­sion bat­tle—or, rather, 50 in­di­vid­ual bat­tles—be­gan last month af­ter the U.S. Supreme Court de­cided states could choose whether to ex­pand el­i­gi­bil­ity for Med­i­caid un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act. Last week, the non­par­ti­san CBO re­leased a new es­ti­mate to ac­count for the high court’s June 28 de­ci­sion. Al­though the num­bers are only es­ti­mates, they’re still trou­ble­some for al­ready wor­ried health­care providers that face about $22 bil­lion in dis­pro­por­tion­ate-share hospi­tal pay­ment cuts, which they agreed to be­cause they counted on a much lower unin­sured pop­u­la­tion.

The CBO an­a­lysts pro­jected that about 6 mil­lion fewer peo­ple will have Med­i­caid cov­er­age in 2022 than pre­vi­ously es­ti­mated un­der the ACA, which means the fed­eral gov­ern­ment will spend roughly $289 bil­lion less for Med­i­caid and the Chil­dren’s Health In­sur­ance Pro­gram from 2012 to 2022. Dur­ing that same time, 3 mil­lion more peo­ple are expected to find cov­er­age in the state in­sur­ance ex­changes, which will in­crease the fed­eral gov­ern­ment’s cost for ex­change sub­si­dies by $210 bil­lion. The CBO also ex­pects an ad­di­tional 3 mil­lion peo­ple will be unin­sured, which will cause in­di­vid­u­als and busi­nesses to pay about $5 bil­lion more in penal­ties.

Those cal­cu­la­tions brought the re­vised, 11year cost of the Af­ford­able Care Act down to $1.168 tril­lion, or about $84 bil­lion less than the $1.2 tril­lion the of­fice es­ti­mated this past March. Sep­a­rately, the CBO con­cluded that re­peal­ing the law would add about $109 bil­lion to the fed­eral deficit over the next decade. The re­port also pre­dicted that about 29 mil­lion nonelderly peo­ple will be unin­sured by 2019, which is more than the 26 mil­lion the CBO pre­dicted in March 2012 and the 23 mil­lion it es­ti­mated in March 2010.

“When the law was passed, the idea was there would be less DSH money, but more peo­ple will be cov­ered and we won’t need as much DSH money,” said Dr. Bruce Siegel, pres­i­dent and CEO of the Na­tional As­so­ci­a­tion of Pub­lic Hos­pi­tals and Health Sys­tems. “Now, half of that is gone—the cov­er­age is expected to be less.”

Mak­ing an im­pact

And while the CBO num­bers are not a re­al­ity, the fig­ures are “al­ready col­or­ing the con­ver­sa­tion,” Siegel said, adding that he’s es­pe­cially wor­ried about Florida, Louisiana and Texas, states in which the gov­er­nors have said they won’t ex­pand Med­i­caid and where many unin­sured peo­ple rely on the safety net. Siegel said his or­ga­ni­za­tion gives the num­bers “a lot of weight” be­cause the CBO re­port was the first in­de­pen­dent as­sess­ment of the fu­ture of Med­i­caid ex­pan­sion.

He cited the CBO’s pre­dic­tions that many states ei­ther won’t ex­pand their Med­i­caid pro­grams or won’t ex­pand them for years— along with the find­ing that fewer peo­ple will be cov­ered un­der Med­i­caid—as his great­est con­cerns.

Some Wash­ing­ton pol­icy ex­perts—in­clud­ing Dou­glas Holtz-Eakin, a for­mer CBO di­rec­tor—be­moaned the un­cer­tainty of the es­ti­mates, which the CBO it­self ac­knowl­edged. An­a­lysts from both the CBO and the Joint Com­mit­tee on Tax­a­tion did not use state pre­dic­tions, but in­stead pro­jected

“ap­prox­i­mate shares of the af­fected pop­u­la­tion” who live in states that fit into broad cat­e­gories rang­ing from no ex­pan­sion to an ex­pan­sion that the health­care law en­vi­sioned.

The an­a­lysts es­ti­mate that in 2022 about one-third of the po­ten­tial newly el­i­gi­ble pop­u­la­tion will live in states that de­cide to ex­tend cov­er­age fully for up to 138% of the fed­eral poverty level, while about one-half of the po­ten­tial newly el­i­gi­ble pop­u­la­tion will live in states that par­tially ex­tend Med­i­caid cov­er­age to an in­come thresh­old less than that level. That leaves the re­main­ing one-sixth liv­ing in states that will not ex­tend Med­i­caid cov­er­age at all in the next 10 years. And the CBO and Joint Com­mit­tee on Tax­a­tion pre­dict that cov­er­age ex­pan­sions will un­fold in such a way that onethird of peo­ple who are newly el­i­gi­ble will re­side in states that ex­pand in 2014. An­other third, they es­ti­mate, will live in states that wait un­til 2015, and the re­main­ing third will re­side in states that de­lay ex­pan­sion longer.

Mean­while, DSH pay­ments are among the myr­iad ques­tions re­lated to Med­i­caid ex­pan­sion that hos­pi­tals have for the Obama ad­min­is­tra­tion. A day be­fore the CBO re­leased its re­port, sev­eral hospi­tal groups met pri­vately with HHS and CMS of­fi­cials, in­clud­ing HHS Sec­re­tary Kath­leen Se­be­lius and CMS act­ing Ad­min­is­tra­tor Mar­i­lyn Taven­ner, to dis­cuss is­sues about the Med­i­caid ex­pan­sion.

Siegel at­tended and said HHS con­vened the meet­ing to keep “lines of com­mu­ni­ca­tion open” among stake­hold­ers. Richard Umb­den­stock, pres­i­dent and CEO of the Amer­i­can Hospi­tal As­so­ci­a­tion, and Teri Fon­tenot, pres­i­dent and CEO of Ba­ton Rouge, La.-based Woman’s Hospi­tal who chairs the AHA board, also at­tended. Fon­tenot was un­avail­able for an in­ter­view, but Tom Nick­els, the AHA’s se­nior vice pres­i­dent for fed­eral re­la­tions—who did not at­tend—said HHS is en­gag­ing a va­ri­ety of stake­hold­ers to lobby state leg­is­la­tors to ex­pand Med­i­caid.

“That was the whole pur­pose,” Nick­els said. “That is cer­tainly some­thing our mem­bers would like to see hap­pen.” In a brief notice to its mem­bers, the AHA said the July 23 meet­ing cov­ered “many yet-to-be an­swered ques­tions con­cern­ing fed­eral and state ne­go­ti­a­tions, ad­vo­cacy at the state level, the con­nec­tion be­tween cov­er­age and pay­ment re­duc­tions, and how other is­sues in the ACA may af­fect the ex­pan­sion.”

HHS has al­ready an­swered one big ques­tion for providers. Af­ter the Supreme Court rul­ing, many won­dered whether states would be able to miss the law’s 2014 dead­line for ex­pand­ing Med­i­caid cov­er­age and still re­ceive the higher fed­eral fund­ing match promised to states that com­ply. “The an­swer was yes,” Nick­els said.

But ques­tions sur­round­ing DSH pay­ments are likely to re­main unan­swered for some time. “I think again this is pri­mar­ily a post­elec­tion de­ci­sion­mak­ing process with the states.” Specif­i­cally, hos­pi­tals want to know what will hap­pen to DSH pay­ments to providers in states that de­cide not to ex­pand their Med­i­caid pro­grams.

Some pol­icy ex­perts and ad­vo­cates took a more op­ti­mistic view last week. Ron Pol­lack, ex­ec­u­tive di­rec­tor of pa­tient-ad­vo­cacy group Fam­i­lies USA, noted that ev­ery state has cho­sen to par­tic­i­pate in Med­i­caid and the Chil­dren’s Health In­sur­ance Pro­gram even though they re­ceive about 57 cents for ev­ery dol­lar from the fed­eral gov­ern­ment for Med­i­caid and about 70 cents for CHIP. The re­form law prom­ises the fed­eral gov­ern­ment will cover 100% of the costs of new en­rollees through 2016 and at least 90% af­ter that. “If all the states de­cided to pick it up at 57% and 70%, why would they be stupid to not ac­cept the money?” Pol­lack said. “It’s a very sim­ple de­ci­sion.”

Paul Van de Wa­ter, se­nior fel­low at the Cen­ter on Bud­get and Pol­icy Pri­or­i­ties, said there are a lot of bad ar­gu­ments why states should not ex­pand their Med­i­caid pro­grams. Chief among those is the con­cern that the fed­eral gov­ern­ment might cut back on their fi­nan­cial com­mit­ment in years to come.

“I don’t think that will hap­pen, but clearly it’s a pos­si­bil­ity,” Van de Wa­ter said. “Were it not for that small amount of un­cer­tainty, I think that states would want to take it up

be­cause it’s a very good deal for them and their res­i­dents for get­ting broader cov­er­age at min­i­mal costs to the state.”

The Med­i­caid push comes amid a con­tentious con­gres­sional cam­paign sea­son in which provider groups have sought to in­crease their pro­files with health pol­icy lead­ers in both par­ties.

For in­stance, the largest hospi­tal po­lit­i­cal ac­tion com­mit­tee, AHA PAC, has col­lected $3,140,010 for the 2012 cam­paign sea­son. When added to un­spent funds from the pre­vi­ous cam­paign cy­cle, AHA PAC had a record $3,567,914 po­lit­i­cal war chest head­ing into the fi­nal four months of the elec­tion, ac­cord­ing to the Cen­ter for Re­spon­sive Pol­i­tics.

In com­par­i­son, the PAC for the Amer­i­can Health Care As­so­ci­a­tion, a nurs­ing home trade group, had col­lected $1,658,281 and the Fed­er­a­tion of Amer­i­can Hos­pi­tals PAC took in $578,215.

Those po­lit­i­cal funds are flow­ing freely to in­flu­en­tial health lead­ers, such as Sen. Or­rin Hatch (R-Utah), the rank­ing mem­ber on the Fi­nance Com­mit­tee, who gar­nered $10,000 from AHA PAC. Hatch is in line to take over the key health­care panel next year if Republicans win con­trol of the Se­nate and he is a staunch op­po­nent of the Af­ford­able Care Act.

How­ever, that has not led him to join the calls of some con­ser­va­tives for states to opt out of ex­pand­ing their Med­i­caid pro­grams. “That’s a de­ci­sion states are go­ing to have to make for them­selves,” Hatch said in a brief July 9 in­ter­view.

Other con­gres­sional Repub­li­can health pol­icy lead­ers who have re­ceived sub­stan­tial provider con­tri­bu­tions also have de­ferred to state lead­ers to de­cide whether to un­der­take a Med­i­caid ex­pan­sion that they have roundly crit­i­cized. For in­stance, Rep. Fred Up­ton (R-Mich.), chair­man of the pow­er­ful House En­ergy and Com­merce Com­mit­tee, was given $5,000 this cy­cle and de­clined to urge any state to re­ject the Med­i­caid ex­pan­sion when Mod­ern Health­care asked him about it.

Democrats have sim­i­larly de­clined to urge states to ex­pand af­ter the court rul­ing. That in­cludes Sen. Max Bau­cus (D-Mont.) the pri­mary au­thor of the health­care over­haul and the re­cip­i­ent of $2,000 from AHA PAC. “Ba­si­cally, Congress en­acted pro­vi­sions which ex­panded Med­i­caid cov­er­age,” Bau­cus told re­porters af­ter the health­care law rul­ing. “And if states won’t opt to par­tic­i­pate, that’s their pre­rog­a­tive.”

Dou­glas El­men­dorf is di­rec­tor of the Con­gres­sional Bud­get Of­fice, which re­ports that mil­lions could lose out on cov­er­age.


Rep. Steve King (R-Iowa) re­acts to the Supreme Court rul­ing June 28. Four weeks later, hos­pi­tals have got­ten es­ti­mates of the im­pact, and the num­bers will fuel their lob­by­ing.

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