September 7, 2016
A new study reveals that, while Medicaid expansion under the Affordable Care Act (ACA) was associated with fewer unpaid patient bills and higher Medicaid revenues in both rural and urban hospitals, rural hospitals had, on average, smaller reductions in unpaid bills.
Brystana Kaufman, MSPH, doctoral student in the Department of Health Policy and Management at the UNC Gillings School of Global Public Health, is first author of a new article about the impact of Medicaid expansion. Kaufman also is a predoctoral fellow at the Duke Clinical Research Institute. Her co-authors from the Gillings School include Kristin Reiter, PhD, associate professor, George Pink, PhD, Humana Distinguished Professor, and George (Mark) Holmes, PhD, associate professor, all in the health policy and management department. Holmes also is director of the Cecil G. Sheps Center for Health Services Research.
The full article, titled, “Medicaid Expansion Affects Rural and Urban Hospitals Differently,” was published online Sept. 7 by Health Affairs.
“The financial benefit of expanded Medicaid coverage varies substantially among hospitals,” says Kaufman. “The increased access to health insurance created by the ACA – in part through Medicaid expansion – was expected to reduce the amount of uncompensated care provided by hospitals (in other words, care for which no payment is received).”
In turn, the reduction in uncompensated care was expected to limit the need for payments made through Medicaid’s Disproportionate-Share Hospital (DSH) programs, which support hospitals that serve large numbers of uninsured patients.
If rural hospitals continue to experience smaller reductions in uncompensated care than urban hospitals, however, rural institutions may have a greater ongoing need for DSH funding.
Under the ACA, Medicaid DSH payments are scheduled to decline beginning in fiscal year 2018. These planned reductions may increase financial pressure on rural hospitals.
“The financial impacts of Medicaid expansion are particularly important for rural hospitals because many already are at high risk of financial distress and closure,” Kaufman explains. “Nationally, 76 rural hospitals have closed since January 2010. Three of those were in North Carolina. As a result, people in those communities have to travel further to access inpatient care, which can affect their health outcomes.”