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Hospitals and other providers

Following implementation of the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), state uninsured rates declined in most states, particularly in states that chose to adopt the Medicaid expansion (CMS 2019). Research has indicated that reductions in the uninsured rate have resulted in reductions in uninsured hospitalizations. For example:

  • An article in Health Affairs found that in the first three years following Louisiana’s Medicaid expansion, expansion was associated with a 33 percent reduction in the share of total expenses attributable to uncompensated care costs for general medical and surgical hospitals in the state. Because hospital operating expenses increased over this period, the results indicate that Louisiana hospitals were treating fewer patients for whom no reimbursement was provided (i.e., uninsured patients) (Callison et al. 2021).
  • An article in the Journal of Healthcare Management found that Medicaid expansion led to substantial reductions in hospitals’ uncompensated care costs, but that savings were partially offset by increased Medicaid payment shortfalls (Young et al. 2019).
  • An article in Health Affairs examining the relationship between Medicaid expansion and hospital closures found that expansion was associated with improved hospital financial performance and a lower likelihood of closure, particularly in rural areas and in counties that had high uninsured rates among adults prior to Medicaid expansion (Lindrooth et al. 2018).
  • A series of articles have examined the effect of the Medicaid expansion on inpatient payer mix:
    • A 2019 article estimated the effects of the ACA on hospital inpatient and emergency department utilization rates, costs, and patient illness severity. It found that in expansion states, rates of inpatient discharges and emergency department visits for the uninsured fell sharply across demographic groups. In non-expansion states, uninsured utilization rates remained unchanged or increased slightly. Changes in inpatient costs per discharge declined across all payers and most age and sex groups. The size of the uninsured population eligible for coverage was strongly associated with changes in outcomes (Pickens et al. 2019).
    • A 2019 study examining trends in hospital utilization after Medicaid expansion found that per capita hospital admissions remained consistent in expansion and non-expansion states, but Medicaid-covered admissions increased in expansion states. There were no significant changes in admissions by site of admission (clinic vs. emergency department), by discharge length, by diagnosis category, admission severity, comorbidity burden, or mortality (Admon et al. 2019).
    • A 2018 study comparing changes in inpatient payer mix at safety-net hospitals to changes for non-safety-net hospitals. It found that following expansion, both hospital types experienced similar decreases in uninsured stays, with non-safety net hospitals experiencing a greater percentage increase Medicaid stays (Wu et al. 2018).
    • A 2017 study examining changes in inpatient payer mix and hospitalizations following Medicaid expansion found that the share of uninsured discharges fell in Medicaid expansion states and the share of Medicaid discharges increased, even in states with baseline uninsured rates below the median.(Freedman et al. 2017).
    • Another article published in 2016 found that expansion states experienced sharp decreases in uninsured hospital stays and increases in Medicaid-covered hospital stays, while non-expansion states experienced no change in payer mix (Nikpay et al. 2016).
  • An article in Health Services Research examined the impact of Medicaid expansion in nine expansion states and found that following expansion, safety net and non-safety net hospitals experienced similar decreases in uninsured utilization, but non-safety net hospitals experienced a greater increase in Medicaid utilization (Wu et al. 2018).

Some research has indicated that declines in uninsured hospitalizations have resulted in declines in hospital uncompensated care. For example, a 2018 study found that in the first full year of Medicaid expansion, the amount of uncompensated care provided by hospitals in expansion states declined significantly (Camilleri 2018). An earlier study examining the impact of early Medicaid expansion in Connecticut found that it was associated with increased Medicaid discharges and Medicaid revenue, and estimated that hospital uncompensated care was approximately one-third lower than it would have been without the early expansion (Nikpay et al. 2015).

Disproportionate share hospitals

Medicaid disproportionate share hospital (DSH) payments are statutorily required lump-sum Medicaid payments to hospitals that serve high numbers of low-income patients. They supplement regular Medicaid payments for hospital services and are intended to improve the financial stability of safety-net hospitals to preserve access to necessary services for low-income patients. In fiscal year (FY) 2019, Medicaid made a total of $19.7 billion in DSH payments ($8.4 billion in state funds and $11.3 billion in federal funds) (MACPAC 2020). [1]

In anticipation of decreased uncompensated care costs due to the coverage expansions under the ACA, the law established a series of Medicaid DSH allotment reductions that were initially scheduled to begin in FY 2014. Congress required the Centers for Medicare & Medicaid Services (CMS) to develop a methodology that would apply greater reductions to states with low uninsured rates and states that do not target their DSH payments to hospitals with high levels of Medicaid and uncompensated care. However, these reductions have been delayed multiple times, and are currently scheduled to begin in FY 2024.

Primary care

The temporary Medicaid primary care payment increase required that all state Medicaid programs increase payment for certain primary care services to Medicare payment levels during calendar years 2013 and 2014. The payment increase was intended to address the need to maintain provider networks as the ACA was expected to cover millions of additional enrollees.

States reported early implementation challenges, although these were largely resolved by 2014. Nevertheless, whether or not the primary care payment increase affected access to primary care remains unclear. Studies in some states found that providers increased the number of Medicaid patients they were willing to see, or that Medicaid appointment availability increased concurrent with the payment increase. However, the eight states interviewed by MACPAC reported that the payment increase had little effect on recruiting Medicaid primary care providers, as few providers who participated in the increase were new to Medicaid. Moreover, some providers may not have been aware of the payment increase.

[1] Total DSH spending includes an estimate of the portion of California’s Section 1115 waiver spending that is based on the state’s DSH allotment

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