State hospitals at risk

Eric Fleischauer, (Florence) Times-Daily, Dec. 22, 2013

Without an expansion of Medicaid, care for uninsured Alabamians will not stay the same, the head of the Huntsville Health System said.

It will deteriorate, David Spillers predicts.

Spillers, chief executive officer of a system that includes nine north Alabama hospitals, fears elected officials are assuming public hospitals will continue to provide roughly the same level of care for those without public or private insurance.

The same Affordable Care Act that would use federal dollars to foot more than 90 percent of the bill for a Medicaid expansion, however, also reduces funding for hospitals that are struggling to break even.

"You will see a lot of hospitals in Alabama who do not make it," Spillers said. "I'm predicting that 30 hospitals in Alabama are at risk of not being hospitals. There are some in this system that are going to struggle. I'm not going to say who, but there are some that are struggling today, and if it gets any worse, it is going to be tough to figure out how they make it."

In addition to Huntsville Hospital, Huntsville Health System includes Decatur Morgan Hospital, Helen Keller Hospital in Sheffield, Athens-Limestone Hospital and Lawrence Medical Center in Moulton.

Alabama hospitals receive the lowest reimbursement levels in the nation from Medicare, Medicaid and Blue Cross, Spillers said, which together represent essentially all their revenue.

"The poorer your payment from Medicare, Medicaid and Blue Cross, the harder it is to treat people," Spillers said. "So when you go to Decatur, when you go to Sheffield, when you go to Florence, those hospitals have horrendous payment from those payers. So there is not any excess that they can take to spend on these poor patients."

The problem is revenue is dropping, mainly because of cuts in federal Disproportionate Share, or DISH, payments. DISH payments came about to help offset the costs of hospitals that — either because of demographics or the types of services they provided — treated a disproportionate number of uninsured patients. As originally passed, the Affordable Care Act eliminated the need for DISH payments.

Minimum Medicaid

The health care reform law required all states to provide Medicaid to citizens at or below 138 percent of the poverty level. The law required almost everyone else to purchase insurance.

The U.S. Supreme Court upset this balance when it ruled states could opt out of the requirement that they expand Medicaid. Alabama is one of 23 states that has declined to expand Medicaid.

"Alabama has the bare minimum Medicaid system from a coverage perspective that there is," Spillers said. "So for us, because we are a poor state, there are a lot of people who fall below 138 percent of the federal poverty level. By not expanding Medicaid, that means there are a lot of people who are not going to be insured."

What that means for Huntsville Health System is that its hospitals will not receive the influx of Medicaid reimbursements for patients it now treats for free, but it still is losing the needed DISH payments.

"The concern about the impact of loss of DISH is a real one," said State Health Officer Don Williamson, although he said the most dramatic cuts in DISH payments begin in 2016. Removing revenue from a system that is struggling to break even means programs and services that lose money are at risk.

The problem, Spillers said, is not efficiency. The system's hospitals are among the most efficient in the nation.

"For Decatur Morgan, being really, really efficient means breaking even," Spillers said. "For Helen Keller, being really, really efficient means breaking even. For (Huntsville Hospital), if we are really, really efficient, we can make a little bit of money, which helps fund the things we need to do in the system."

The level of care Huntsville Health System provides to uninsured patients far exceeds legal requirements, which are set forth in the Emergency Medical Treatment and Labor Act, an unfunded mandate passed in 1986.

"It's a law that's widely misunderstood," said Harold Pollack, a health policy expert and Helen Ross Professor of Social Service Administration at the University of Chicago.

"EMTALA requires the hospital to provide a set of emergency services when you present an acute need," said Pollack, an executive member of the university's Center for Health Administration Studies. "It does not require that the care be free, and it does not require that you receive many services you need if you have a serious chronic illness or if you need more medical care once your condition is stabilized."

No money, no help

If elected officials believe the alternative to Medicaid expansion is a continuation of the care hospitals currently provide to uninsured patients, Spillers said, they are failing to understand the increasing pressure to cut all services that lose money and are not legally required.

Spillers provides an example of an uninsured patient who enters the emergency room with undiagnosed cancer.

"Once we find out they have cancer, that is not an emergency from an EMTALA perspective," Spillers said. "Our job was to triage and get you to the most appropriate care, which was that handoff to the oncologist. Once you're handed off to that oncologist, you are no longer an emergency patient."

In a system that only provided the care required by EMTALA, the cancer patient would be facing a death sentence.

"If they need something, the oncologist has the right to say, ‘Sorry, you don't have money. You don't get treatment,' " Spillers said. "EMTALA does not require the oncologist to do anything. Then the patient goes home until the cancer progresses and he gets sick enough to come back to the emergency room, and then there's a requirement to treat him."

To keep people from dying of untreated cancer, Huntsville Hospital leases space in a cancer institute. The uninsured patients are treated at the expense of Huntsville Hospital.

When a surgeon volunteers his time to perform non-emergency surgery — such as for a hernia — on an uninsured patient, Huntsville Health System provides expensive surgical support. It's an expense the system struggles to afford and one the law does not require.

"If we do nothing and let the DISH dollars fall off the cliff, then you're going to have fewer hospitals and hospitals less able to take care of the indigent patients," Williamson said.

‘A revenue problem'

The only way to sustain the level of care for uninsured patients, Spillers said, is to inject more money into the system. With DISH payments falling, the most obvious route is to expand Medicaid.

"We don't have a cost problem; there is no cost to cut," Spillers said. "We have a revenue problem. With a revenue problem, expanding Medicaid would help. Eventually the state will have to expand Medicaid. Every year we choose not to do it there's a significant negative economic impact to our state."

Williamson said the decision on whether to expand Medicaid is not up to him, but to the governor or the Legislature.

"At this point, the governor said he's not going to expand Medicaid," Williamson said. "My job is to try to give him a Medicaid system that — if he wants to revisit the decision at some point — is as lean and efficient as possible."

Williamson said the main downside of expanding Medicaid now, before an ongoing reorganization of the state's system is complete, is that emergency rooms and hospitals could be flooded with an extra 300,000 to 500,000 Alabamians who have no public or private insurance.

Gov. Robert Bentley has raised the same concern. He also has said — even with the federal government picking up 100 percent of the cost of expanded care through 2016 and an amount that gradually drops to 90 percent in 2020 and beyond — the cost to the state would be too high. A spokesman for the governor said the net cost of expansion in Alabama from 2014 through 2020 would total at least $488.5 million.

This year, Alabama taxpayers spent more than $600 million on a Medicaid program for about 930,000 people, according to state Medicaid officials.

"The positive of expansion is you bring in a billion dollars (a year)," Williamson said. "And the data is clear. If you compare a population where people have insurance to a population where people are uninsured, the people with insurance have better health outcomes."


Spillers said he struggles to understand the decision not to expand Medicaid, a move that would inject needed federal funds into the state's effort to care for the poor.

"The longer we stay out of the expansion, the longer we are going to approach No. 50 in every health category there is," Spillers said. "We are getting exactly what we're paying for. We have very poor health outcomes by every indicator. We are in the bottom two or three or four states in the country, but we're not putting any money into health care. So why would you expect anything different?"

Politics, not rational health policy, is preventing states like Alabama from expanding Medicaid, Pollack said.

"It's a sad commentary on the polarization of American life and the tenuous commitment we have to caring for the most disadvantaged Americans," Pollack said. "I do think that eventually every state will take the Medicaid expansion. The challenge we have on both sides is to find a politically dignified path to compromise."

Williamson said he has personal views on the issue of Medicaid expansion, which he has expressed to the governor, but he believes it is counterproductive to express those views publicly.

"My best role is to work as hard as I can to get the Medicaid program in the best shape we can get it in, so that if a decision is made to expand, two things happen," Williamson said. "No. 1, that I can assure the taxpayers that we are asking for the least amount of money possible to get the job done. No. 2, that we have organized the system of care in a way that doesn't simply flood emergency rooms and hospitals because people otherwise don't have access to care."

As Spillers waits for what he said is the inevitable Medicaid expansion, he has to figure out what money-losing programs or services to cut as DISH payments drop. He has no announcements to make.

"I can see the headline, ‘Huntsville is going to close this.' I don't want to put that out there," Spillers said. "I can tell you that we are providing services today that this community vitally needs, and they lose tons of money."

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