Hospitals reap rewards of Medicaid expansion

Following the passage of the Affordable Care Act (ACA), discharges and revenue are up and care costs for low-income patients are down, at least in states that expanded their Medicaid programs, according to a new issue brief from the Kaiser Family Foundation (KFF).

KFF analyzed the delivery subsidiary of Ascension, the nation's largest non-profit health system, which encompassed 131 acute care facilities in 23 states. Ascension providers in Medicaid expansion states saw larger increases in Medicaid discharge volumes and reduced self-pay/uninsured volume from 2013 to 2014.

In expansion states, Ascension facilities' Medicaid discharge volumes rose 7.4 percent compared to 1.4 percent in non-expansion states. Echoing earlier research, Ascension hospitals' Medicaid revenue increased 8.2 percent in expansion states from 2013 to 2014 (compared to a 9.4 percent decline in non-expansion states) while their self-pay revenue fell 63.2 percent. Medicaid revenue for outpatient care also grew faster in expansion states than did inpatient revenue.

Ascension hospitals in expansion states also saw larger relative increases in operating margins even though their patient revenue was somewhat smaller than that of non-expansion states, according to the report, rising from 2.1 percent in 2013 to 3.4 percent in 2014.

The cost of charity care continued to decline in expansion states, falling 40.1 percent in Ascension hospitals, compared to only 6.2 percent in non-expansion states. Medicaid shortfalls increased in both expansion and non-expansion states, but increased revenue more than offset the deficit in expansion states.

Meanwhile, a separate KFF analysis of nine safety-net hospitals in expansion and non-expansion states looks at the changes leaders have made in delivery mechanisms to expand and integrate care post-ACA. Several systems expanded community-based physician networks, partnered with local federally-qualified health centers and mental health facilities or opened new primary care clinics.

Expectations were mixed in hospitals in non-expansion states; for example, Virginia Commonwealth University, located in a state that did not expand the program, was optimistic, projecting it will continue to diversify revenue streams and broaden its service area. Meanwhile, Harris Health System Parkland Health and Hospital System in Texas expressed more reservations about the future.

To learn more:
- read the first issue brief
- here's the second issue brief