Gaines, Edward R. III JD
Mr. Gaines is the chief compliance officer for Zotec Partners.
Several million people signed up for health coverage in the health care exchanges of the Affordable Care Act, according to the Obama administration, and a recent study by Jessica Galarraga, MD, and Jesse Pines, MD, indicates that the ACA could positively affect the bottom line of emergency departments across the country. (Ann Emerg Med 2014;63:412.) The study analyzed ED charges from 2005 to 2010, and found that Medicaid reimbursed 17 percent more compared with payments received from uninsured patients. Medicaid expansion under the ACA alone would be expected to contribute significantly to increased ED revenue. ED revenue growth will be even greater, on the order of 39 percent, for the currently uninsured who will not qualify for Medicaid through the ACA and are instead obliged to obtain coverage through a private insurer.
The expansion of health care coverage could turn out to be positive for hospital-based providers. In fact, Medicaid expansion, hospital volume increases, and expanding coverage with creativity stand to benefit physician groups this year.
Medicaid required certain qualifying conditions before low-income individuals could become eligible before the passage of the ACA. The elimination of these qualifying conditions in the ACA for states who have expanded Medicaid is an aspect that often goes unreported in the debate. Patients were required to have a dependent, be disabled or blind, and be at a certain poverty level before the ACA. A middle-aged couple with no children at 133 percent of the poverty level could not qualify for Medicaid before the ACA became law.
Why is that an issue? The problem is that 133 percent of the poverty level is definitely not enough to afford a commercial plan, and is the definition of the working poor. Qualifying for Medicaid under the ACA, in contrast, is turned into a simple income test. A middle-aged, childless couple at the upper ceiling is still only making $21,000 a year. The working poor are then defined as those who are underemployed or unemployed during times they are trying to improve their situations.
Some states have chosen to reject federal dollars for Medicaid expansion, but those that elected to expand their Medicaid programs have extended coverage to three key groups: working parents, non-working parents, and childless adults.
Emergency physicians are well aware of the implication of expanding Medicaid. Historically, Medicaid has reimbursed physicians poorly. This is certainly true in New Jersey and New York, where emergency physicians are reimbursed at some of the lowest rates in the country; New Jersey is at approximately $27 per visit. Some argue that at least care is reimbursed, but others counter that the reimbursement does not even cover the costs of malpractice or operational costs for physician staffing and billing. Some also say that Medicaid does not pay very well, and it does not in many states. It does pay something, however. Converting zero insurance or low single digits of collections for self-pay (approximately 5–8%) into some insurance is a pickup and a definite benefit to providers.
Another aspect of the ACA legislation that gets overlooked is its list of 10 essential health care benefits that payers are now required to provide by law. The benefits carry a dilemma, however, because it is being argued that this provision is the reason so many existing policies were canceled. The net positive aspect, though, is that ambulatory patient services, emergency services, and hospitalization are covered. The insurers generally cannot play games with offering plan benefits that do not include these mandated benefit coverage, which is a very good aspect of the law.
ED volume, in fact, increased in states that voluntarily expanded coverage even before the passage of the ACA, namely in Oregon, where ED volumes increased significantly, and in Massachusetts, where ED volume increases were smaller but showed steady growth. A recent study about Portland's newly-covered Medicaid recipients showed ED volume increases at approximately 40 percent over a nearly two-year period. ED volumes increased across the demographic of newly covered Medicaid recipients and across presenting conditions. Peter Smulowitz, MD, and his colleagues studied the impact of the Romney plan in Massachusetts, and found initial and then steady increases of ED visits across the demographic of the newly insured. (Ann Emerg Med 2014 Mar 15 [Epub ahead of print].) As coverage extends with ACA Medicaid into approximately half of the states, the pent-up demand for services by the working poor who were not previously covered by Medicaid and the lack of adequate primary care networks will increase ED volumes.
The ACA has inspired creative approaches to expand Medicaid coverage. Arkansas, for example, chose to use the federal dollars proffered for Medicaid expansion to buy private Medicaid health plans for its newly eligible Medicaid covered lives up to 138 percent of federal poverty levels. This program is known as premium support because it provides the federal Medicaid matching funds to pay for Medicaid policies until the Medicaid recipient is able to improve his income. The policy is covered by the health care exchanges at federally subsidized levels. If the recipient's income rises to 150 percent or more of federal poverty level, he would no longer be eligible for traditional Medicaid, and his policy would convert from a Medicaid health plan to a commercial policy that is significantly subsidized in the health exchange.
States that chose not to participate may eventually see the wisdom of a creative approach like Arkansas's; Iowa and Pennsylvania submitted their own versions to Health and Human Services for approval. Iowa's was approved, and Pennsylvania's is pending. The rationale cited by some states opting out of Medicaid expansion is that they do not want to expand a broken program, but Medicaid patients in Arkansas will receive commercial policies, making it a private-market solution. The state government is using federal expansion dollars to purchase private plans for the benefit of its working poor, and that is positive news for anyone working in hospital-based medicine.
Some hospitals and health systems are now considering paying patient premiums for the newly insured who access health insurance in the marketplace or the exchanges after federal subsidies are applied for those between 100–400 percent of poverty level. Hospitals are also considering making contributions to charities that obtain subsidized policies for the newly insured on the health exchanges. This could be a net benefit to the hospitals to pay for the patients' insurance because they will potentially be utilizing hospital services if they have insurance. It is a somewhat controversial notion and could introduce legal and compliance issues, but hospitals are still considering it. It should be noted that health care counsel should be consulted before a hospital or group decides to proceed with such plans because these arrangements may carry implications under federal antikickback statutes.
The long-term budget and policy implications of the ACA remain to be seen. Issues of adverse selection, how plans will alter premiums over time, the level of federal subsidies, and the impact of significant cost sharing (e.g., high deductible plans) on health care providers and individuals will remain x factors in the health care debate. Recent statements by health plan officials regarding increased costs for the exchange policies are potentially concerning. Whether the 3.0 versions of the AR model of Medicaid expansion will be submitted to HHS for approval also remains to be seen. But increasingly more states are requesting some version of partial or modified expansion authority. There is no question that the number of uninsured patients is going to continue decreasing over time, and that is a net positive for emergency physicians in particular and hospital-based physician groups in general. The burdens to emergency physicians for uncompensated care should be reduced, with more reimbursements from private insurance and public institutions and fewer self-pay patients.