March 08--Leaders of two local health care systems are hopeful Tennessee and Virginia will expand Medicaid programs but warn the consequences could be dramatic if they don't.
Medicaid is a federal and state government-backed health care insurance for those who can't afford it.
Each state can opt out of expanding its Medicaid program as part of the federal Affordable Care Act, following a U.S. Supreme Court ruling. At present 24 states are participating, 14 states have decided to opt out and the remaining 12 haven't decided.
Virginia has developed a legislative commission to review expansion but Gov. Bob McDonnell said this week he expects a series of reforms to occur before the commission will consider it.
"The language of the budget actually places a firewall against expansion consideration unless real, sustainable cost-cutting reforms are implemented at the state and federal level," McDonnell wrote in a letter to the Obama administration.
Tennessee's General Assembly has taken no action yet. In recent weeks members of the Tennessee Hospital Association -- including Dennis Vonderfecht, president and CEO of Mountain States Health Alliance and Margaret "Denny" DeNarvaez, president and CEO of Wellmont Health System -- have actively supported expansion.
"We feel like we're making good progress in Nashville, having our case stated and understood by the legislature and governor," Vonderfecht said. "I know there's still a lot of study being done but we feel that our points are being heard. If they are, I'm somewhat optimistic that Tennessee will have an expanded Medicaid population."
While there likely will be details to work out between the state and federal governments, Vonderfecht is "more optimistic" than when the process began.
DeNarvaez wishes for a crystal ball, but believes discussions have been productive.
"The more we are in front of people and explain how important expansion is -- the more we educate -- the better our chances are," DeNarvaez said. "This still is political but I think they [lawmakers] understand how important this piece of the puzzle is with the cuts that are already in place and the new cuts."
Virginia's situation appears a bit "ambiguous," Vonderfecht said.
"The one thing that seemed clear is that Medicaid expansion won't occur without reform of the Medicaid program in Virginia," Vonderfecht said. "That's what the task force is supposed to work on so hopefully that work will continue and result in something acceptable to allow us expand the Medicaid population."
DeNarvaez also anticipates Virginia will eventually approve expansion.
"They [Virginia] seemed to put a good process in place and we hope the governor will allow it to go forward as it was intended. The governor has asked some good questions and the process -- as proposed -- there will be a time for those questions to be answered. It's got to be a process that allows it to occur," she said.
Most health care leaders support Medicaid expansion because failure to do so won't save the federal government any money, instead it will just redistribute those dollars to states that do expand, DeNarvaez said.
"What's tied in with that is our part of the $155 billion that the hospital industry agreed to, to help fund implementation of the Affordable Care Act over a 10-year period of time," Vonderfecht said. "The Supreme Court decision derailed part of that, making it a state decision, and that wasn't anticipated when the hospital industry agreed to that amount of reimbursement. There's been no discussion by the Obama administration of reducing the contribution from the hospital industry, so that will be a very serious hit for hospitals and health systems in states that decide not to expand Medicaid."
In the first 5.5 years of an expanded Medicaid population, the state would bring in $6.4 million from the federal government exchange for $199 million going out, Vonderfecht said.
"That's certainly a very good return for dollars coming in. The way the hospital industry looks at it, $6.4 billion is what our tax has been in essence for support of the Affordable Care Act. This is the way we get the money back," Vonderfecht said.
If both states decline to expand Medicaid, the negative impact for Mountain States Health Alliance would be $503 million over 10 years for its hospitals in Tennessee and Virginia. For Wellmont Health System, the impact is $255 million over 10 years.
Both warn failure to expand is expected to generate reductions in services, personnel or both.
"If it doesn't happen it's going to have serious repercussions for health care in Tennessee or Virginia, if neither state did this," Vonderfecht said. "Obviously, we have to have reimbursements for the jobs and the services. There would have to be serious cuts made."
The sweeping changes included as part of the Affordable Care Act make this different from other times, DeNarvaez said.
"In the past hospitals have been able to tweak changes but it has never been something that is so fundamentally challenging, all at one time. This rattles the very foundation," she said. "We will not be able to maintain all the services. It will mean you start closing services. It's already happening. You're seeing closings and consolidations and it will continue."
Rural facilities that serve smaller volumes of patients and often have more uninsured patients, might be the most vulnerable to cutbacks, DeNarvaez added.
"The effect will hit hardest in our communities already hit hard by the economy. In Virginia, with the losses in the coal industry, that has affected jobs downstream. You have a number of people unemployed or under-employed. It is critical to pick up this group of people to help reduce our bad debt exposure," DeNarvaez said.
This uncertainty over Medicaid occurs at a time when Wellmont's bad debt ratio has nearly doubled in the past two years to an "unsustainable" 9 percent, in part because patients have lost jobs, insurance and can't pay for services.
"If we don't get the expansion, our most vulnerable population has lost access to primary care," DeNarvaez said. "Without insurance, people don't go to the doctor. They will ignore that lump or that pain, wait until its something very serious and then show up at the emergency room acutely ill and the prognosis is likely to be much worse.
"If that happens, we're doing the opposite of what we should be doing. It should be about more wellness and less acute care, but people need insurance to do that."
dmcgee@bristolnews.com
(276) 645-2532
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