Ky. hospitals crumble after Obamacare cuts
Facilities facing layoffs — and even shutdowns
LEXINGTON, Ky. — While Kentucky has gained national prominence as the only Southern state to fully embrace Obamacare, its hospitals say the law has left them facing billions of dollars in cuts and forced them to lay off staff, shut down services and worry for their financial health and survival.
LEXINGTON, KY. While Kentucky has gained national prominence as the only Southern state to fully embrace Obamacare, its hospitals say the law has left them facing billions of dollars in cuts and forced them to lay off staff, shut down services and worry for their financial health and, in some cases, survival.
The Kentucky Hospital Association outlined its concerns in a report released Friday called “Code Blue,” saying payment cuts to hospitals are expected to reach nearly $7 billion through 2024. “Kentucky hospitals will lose more money under the Affordable Care Act than they gain in revenue from expanded coverage,” it said, experiencing a net loss of $1 billion by 2020.
“This report provides the real picture of what our hospitals are facing,” KHA President Mike Rust said during a news conference.
Hospitals are suffering a net loss, officials said, partly because about three-quarters of newly insured Kentuckians signed up for Medicaid, which reimburses hospitals less than it costs to
treat patients. Nationally, the Congressional Budget Office projected half of newly insured patients would have private insurance.
State health officials, and Gov. Steve Beshear, have touted the benefits of Obamacare — officially the Affordable Care Act. More than half a million Kentuckians got coverage through the state’s insurance exchange, called kynect. A February report prepared for the state said Kentucky hospitals had received $506 million more in Medicaid reimbursement since January 2014 because of the Medicaid expansion.
Beshear said in a statement Friday that the new Medicaid payments have blunted the impact of other financial pressures on hospitals. “Rather than trying to turn back the clock and return to old business practices, we are working directly with providers to help them develop new strategies for better, more efficient, quality health care delivery,” the governor said.
Hospital officials say they’re glad so many Kentuckians have gotten coverage through Obamacare. A Gallup Poll shows the number of uninsured Kentuckians dropped from 20.4% in 2013 to 11.9% by mid-2014. But the KHA report says: “While Kentuckians should be proud of this achievement, it is also important to understand another part of the story: The government’s success in expanding health coverage has come at a significant cost to Kentucky hospitals.”
MORE FINANCIAL STRESS
Hospital officials acknowledged that some of the issues, such as low reimbursements from government insurance, predated health reform but have become worse since it went into effect.
“There’s no question it’s been accelerated under the ACA,” said Dennis Johnson, president and CEO of Hardin Memorial Health in Elizabethtown, Ky.
The KHA report says Obamacare cuts Medicaid and Medicare payments to hospitals by $4.6 billion from 2010 to 2024 to help pay for expanded coverage. Medicaid now pays 82% of the actual cost of treating patients; Medicare pays 86%.
Obamacare also calls for reducing Medicare payments to hospitals that readmit patients within 30 days at higher-thanexpected rates and those with increases in their rates of hospitalacquired conditions. And the law brings substantial cuts in “disproportionate share hospital” payments for uncompensated care. At $4.6 billion, these comprise the largest share of total federal payment cuts through 2024 of $6.98 billion to Kentucky hospitals.
The changing way patients get coverage also hurts hospitals, the report says. About one in five hospital patients who recently signed up for Medicaid previously had private health insurance, which reimbursed at higher rates, officials said.
Altogether, the report says, rising bad debt and low government reimbursements counter any gains from increased coverage. Even though hospitals are getting $506 million more in Medicaid payments, officials said, it costs $617 million to provide care to those patients.
RESPONDING TO PRESSURES
Complicating matters, the report says hospitals continue to face problems with Medicaid managed care organizations, or MCOs, such as slow payments, reduced reimbursements and denials of services.
Mark Carter, CEO of the Louisville-based MCO Passport Health Plan, said state contracts drive what they pay to providers. He acknowledged payments from MCOs used to be slower, but said they’ve improved in recent years.
Amid all of these pressures, hospitals are making significant cuts.
More than 65% of 109 hospitals responding to a September KHA survey reported they reduced staff, cutting more than 7,700 positions through layoffs, attrition and abolished positions.
More than four in 10 hospitals reported service reductions.
Worse yet, two Kentucky hospitals have recently reported they’ve had to close their doors for good.
The hospital group proposes solutions, such as standardizing policies and procedures across the MCOs and allowing health care providers to appeal denials that result in no payments.
Beshear said he plans to continue working with hospitals.
“We’re proud of the progress Kentucky is making in health care,” he said, “and will continue to support our medical providers as they navigate the changing health landscape.”
“The government’s success in expanding health coverage has come at a significant cost to Kentucky hospitals.”
Kentucky Hospital Association report