Ohio Medicaid surpluses may be short-lived

Hospitals in Columbus, Ohio with Medicaid surpluses may lose them under the Affordable Care Act and a round of reimbursement cuts, according to a report by Carrie Ghose for the Columbus Business First.

For example, Columbus-based OhioHealth reported an $8 million profit from patients on Medicaid and other government assistance at its four Franklin County facilities, according to the article, but about 25 percent of its Medicaid revenue derives from disproportionate share hospital (DSH) payments, which are due for cuts of $1.1 billion by 2020. OhioHealth also spends $40 million on charity care, which is likely to see reductions this year, particularly in states like Ohio that expanded Medicaid.

Meanwhile, Ohio State University Wexner Medical Center, which ran a Medicaid surplus of $63 million, "will be in a loss situation" when DSH cuts take effect, Jeff Ellison, administrative finance director at the Wexner Medical Center, told Columbus Business First.

In addition, Ellison said, the surpluses are largely illusory. Patients very rarely pay the list price for hospital services, he said. Furthermore, for cost reports, hospitals must divide total actual expenses by total charges and multiply that percentage by what the hospital charges.

"Here's where it gets tricky: The Medicare cost reports I gathered showed Ohio State's percentage is 20 percent. Ellison says on its separate cost report to Medicaid, that changes to 27 percent, because a lot of Medicaid cases are childbirth and newborns, where prices aren't so inflated," Ghose wrote. "If Ohio State's Medicaid ratio were applied in the reports I gathered, its gain would be $20 million instead of $63 million, [Ellison] said. Still a gain--but smaller, and still likely to disappear this year."

Ohio Gov. John Kasich (R) sidestepped the Republican-controlled General Assembly last October to expand Medicaid through a legislative panel, although six legislators have since announced their intent to file suit against the expansion, FierceHealthFinance previously reported.

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