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Report Forecasts Increase in Health Care Costs in West Virginia

Senate Majority Leader Mitch McConnell of Ky., talks with Secretary for the Majority Laura Dove, as he walks to his office on Capitol Hill in Washington, Monday, June 26, 2017. Senate Republicans unveil a revised health care bill in hopes of securing support from wavering GOP lawmakers, including one who calls the drive to whip his party's bill through the Senate this week "a little offensive." (AP Photo/Carolyn Kaster)

WHEELING — West Virginia is projected to have a 122-percent increase in uncompensated care costs from 2017 to 2026 under the American Health Care Act, according to a new report issued by the Commonwealth Fund.

The American Health Care Act, as passed by the U.S. House of Representatives, reduces federal spending on Medicaid by more than $834 billion over the next 10 years. The Senate bill, now under consideration, cuts Medicaid more deeply.

In a new post on “To the Point” — an online resource of the Commonwealth Fund — researchers Randy Haught, Allen Dobson, Joan DaVanzo and Melinda Abrams report that “this loss of Medicaid funding will have a profoundly negative impact on U.S. hospitals over the next 10 years. Hospitals in all states, but especially those in states that expanded Medicaid, will see an increase in uncompensated care — services not reimbursed by the insurer or patient.”

The researchers forecast that at least 11 states will have uncompensated care costs at least double between 2017 and 2026.

In studying the impact of AHCA Medicaid provisions on uncompensated care costs for acute care hospitals for 2017-26, the researchers projected a 122 percent increase for West Virginia and a 76 percent increase for Ohio. The states expected to have the highest increases are Washington, 195 percent; Oregon, 178 percent; California, 171 percent, and Kentucky, 165 percent.

“In addition to growing uncompensated care, our projections indicate that under the AHCA, hospitals in most states will experience a decline in Medicaid revenues, even though the law restores Medicaid disproportionate share hospital (DSH) payments,” the researchers stated.

Medicaid revenues for acute care hospitals for this period are expected to decline by 20 percent in West Virginia and 12 percent in Ohio, the report concludes.

The researchers stated, “More than 46 million Americans live in rural areas and depend on the hospitals located in those communities. There is already substantial financial pressure on rural hospitals; reports indicate that an increasing number are closing each year and many more are vulnerable to closure.

“Additional financial pressures on rural hospitals may be detrimental to their ability to maintain the current level of services for their communities. This analysis indicates that rural hospitals in expansion states will be hit hard by the Medicaid provisions in the AHCA,” they added.

Regarding the impact for rural acute care hospitals, the researchers anticipate an 86-percent increase in uncompensated care costs for West Virginia and a 66 percent increase for Ohio. The states expected to have the highest increases in this category are California, 180 percent; Kentucky, 170 percent; Washington, 138 percent, and Oregon, 127 percent.

Medicaid revenues for rural acute care hospitals are expected to decline by 21 percent in West Virginia and 12 percent in Ohio, according to the report.

The researchers also forecast lower operating margins for hospitals.

They said, “Operating margins –an important measure of a hospital’s financial health — for hospitals in all states are expected to decline over the 10-year period. This decline will be especially large for hospitals in expansion states as well as rural hospitals in nonexpansion states.

“On average, operating margins for hospitals in expansion states will drop to -5.3 percent in 2026 under the AHCA. This means that hospitals will lose 5 cents on every dollar of patient revenue,” they said.

Hospitals in 28 of the states — including West Virginia and Ohio –that have expanded Medicaid are predicted to have negative operating margins under the AHCA by 2026. The report forecasts operating margins will drop to -6.8 percent in West Virginia and -1.8 percent in Ohio.

“Operating margins reflect income from patient care and not income from other sources such as parking, food service and investments, and also take overhead expenses into account,” the researchers stated. “Positive margins enable hospitals to expand capacity, invest in strategies to improve care, hire new staff and modernize infrastructure to incorporate evolving technologies.”

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