Providers brace for financial impacts of Medicaid redetermination
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A surge in the uninsured population from Medicaid redetermination could swamp some health systems that struggled to stay afloat during the pandemic. But experts say it could also translate into a financial boost for networks, if enough individuals find new sources of coverage.
Why it matters: Even the temporary loss of coverage as states unwind their COVID-era Medicaid enrollment requirements means more people will go without checkups and other primary care, increasing the likelihood they'll wait until they're sick to seek help.
- A key question is how many of the disenrolled will find new arrangements through workplace insurance or subsidized Affordable Care Act plans, both of which pay providers at higher rates than Medicaid.
Driving the news: More than 170,000 people lost their Medicaid coverage in four states in April, and it's not clear from state data how many of those people found new arrangements, reapplied successfully for Medicaid or remain uninsured.
- An estimated 17 million children and adults could lose Medicaid coverage this year, after pandemic-era protections are rolled back, per a recent KFF survey.
- Trinity Health, an 88-hospital health system operating in 26 states, estimates that Medicaid redetermination could result in a loss of $70 million to $90 million if disenrolled people don't find other arrangements and the system has to provide them with charity care.
- "It's painful to watch; it's not good for people and for our communities and those who are most vulnerable," Dan Roth, chief clinical officer at Trinity Health, told Axios.
- Emergency departments could fill up quickly if enough people who delay care wait for a health crisis to get help, said Ben Finder, director of policy research and analysis at the American Hospital Association.
- He said other patients could cut pills in half or otherwise make medications last longer, "which can create cascading problems for folks."
What we're watching: Redeterminations could change the payer mix in a revenue-positive way if patients go from Medicaid to employer-sponsored or ACA plans.
- One Urban Institute report estimates that as many as 10.5 million patients could shift from Medicaid to employer-sponsored coverage or a marketplace plan.
- This could boost payments to hospitals significantly, per Duane Wright, a Bloomberg Intelligence analyst, since commercial payment rates for hospital services are on average 223% higher than Medicare payments.
Zoom in: Providers might be the first ones to inform patients who don't know that their coverage has been terminated when they come in seeking care.
- Health systems can create special teams to proactively reach out to Medicaid patients before they even come to the hospital, said Karen Shields, chief client engagement officer at Gainwell and former deputy director at the Centers for Medicare and Medicaid Services.
- "There is a moral and financial imperative for us to be good at this," Shields told Axios.
The bottom line: Most health systems have bounced back from a shaky 2022. But redeterminations, combined with inflation, supply chain problems and staffing shortages, could prove too much, especially during the colder months when respiratory viruses proliferate.
- "Everyone is holding their breath watching for how this unfolds in each state," Finder told Axios.
