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Uncertainty over fate of Medicaid expansion worries North Dakota hospital administrators

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FARGO -- Expanding Medicaid in North Dakota provided health coverage to 20,000 previously uninsured residents and extended a financial lifeline to the state’s ailing hospitals -- one in three of which reportedly operates at a loss.

North Dakota expanded access to Medicaid in 2014 as part of the Affordable Care Act, but the state’s revenue shortfall has placed the expansion in jeopardy. So far, legislators have supported funding to continue Medicaid expansion in the 2017-19 budget, but the fate of the program could hinge on the Thursday revenue forecast.

“We’re definitely hoping for good news,” said Jerry Jurena, president of the North Dakota Hospital Association, whose member hospitals are watching the legislation closely.

Medicaid expansion has given hospital bottom lines a boost because it results in fewer bad debts owed by uninsured patients once they’re covered under the program.

Charity care and bad debt by North Dakota’s hospitals totaled $274.8 million in 2014, the year Medicaid expansion began, and dropped 45 percent, to $150.7 million, in 2016, according to figures compiled by the hospital association.

“Our bad debt has gone down dramatically at some of our hospitals around the state,” Jurena said.

Despite that, 16 of 42 hospitals, or 38 percent, reported negative operating margins, according to a survey for the association. That was better than in 2014, when 23 hospitals reported operating losses.

“The difference in financial performance between the various hospitals throughout the State can be attributed to many factors, including, but not limited to, reimbursement from Medicare, Medicaid, and other third party payers, scope of services offered, market share, capital improvements, bad debt, and operational costs,” a consultant for the hospital association wrote.

The volume of Medicaid services varies from hospital to hospital. For Presentation Medical Center, a 25-bed hospital in Rolla, located in Rolette County, Medicaid now accounts for 60 percent of revenue as a result of the expanded access, as more people became eligible for the program, said Paula Wilkie, chief financial officer.

“Twenty percent of our business would now become bad debt,” if Medicaid expansion is allowed to expire. “It would impact our viability to stay open.”

Even if Medicaid expansion survives in North Dakota, it might sustain cutbacks as legislators pare the budget to balance with reduced revenues and no new tax increases.

“There are two issues at hand,” said Paul Richard, executive vice president at Sanford Fargo. “The first is Medicaid expansion, which is up for reauthorization, and the second is proposed cuts of roughly $226 million to the program if it is reauthorized.

“Both decisions will significantly impact the more than 20,000 low-income North Dakotans covered by the program, as well as the providers serving those citizens.”

Reimbursement for patients covered under the expanded Medicaid program could be decreased to the rate for regular Medicaid, which would mean a significant reduction in payments.

“You get about 50 cents on the dollar for services,” Wilkie said.

Other reductions could come from a reduced medical inflation rate and reduced payments to physicians employed by hospitals, Jurena said.

“Medicaid expansion has had a significant impact in reducing uncompensated care in hospitals and clinics across the state -- including Essentia Health -- and in ensuring access to care remains available in urban and rural areas,” said Timothy Sayler, chief operating officer of Essentia Health’s west region.

“Access to appropriate treatment results in better health outcomes, and in turn, reduces future health care expenses,” Sayler said. “Last year, Essentia Health provided care to over 1,300 individuals covered by Medicaid expansion.”

The uncertainty over the fate of Medicaid expansion is a source of some anxiety for some hospital administrators.

“We’re in limbo,” Wilkie said. “It will impact us many times over.”

Legislators, most with hospitals in their district, are sympathetic and understand the importance of maintaining Medicaid expansion, for patients and hospitals, Jurena said.

“There is support for the concept of Medicaid expansion,” he said. “The big question is how.”

Readers can reach Forum reporter Patrick Springer at (701) 241-5522

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