Nevada Hospital Association says Medicaid costs unsustainable

The combination of rising costs, state cuts during the recession and the burgeoning Medicaid population under the Affordable Health Care Act has left Nevada’s hospitals with an unsustainable, unfunded burden.

Bill Welch, head of the Nevada Hospital Association, told the joint human resources money committee of the Nevada Legislature on Thursday hospitals are now being reimbursed at 2001 levels for care.

He said in Medicaid alone, 2013 reimbursements were $249 million short of costs.

“That is unsustainable,” he said.

If the current budget is approved as proposed, Welch said uncompensated care is going to rise to almost $557 million. That budget does include an increase but only by 2.5 percent in the second year of the biennium.

“I cannot emphasize how unsustainable that is,” Welch said, adding the loss can’t be made up by increased volume if reimbursement for all those new cases is less than actual costs.

For the uninsured population, Welch said there were $770 million in uncompensated care in 2013. He said that will translate to $932 million a year by 2017.

Welch said rates haven’t increased in years while costs have continued to inflate by more than 57 percent. Another key part of the problem, he said, is the growth of Medicaid eligible under Obamacare. There were 316,000 in Medicaid in Fiscal 2013. By 2017, he said, there will be 565,000 enrollees.

Welch said hospitals do get some money through supplemental programs such as disproportionate share funding — a total of about $195 million in all.

“The rest of the story is, again, we’re being reimbursed at 47 percent of costs,” he said.

Even when the $195 million in supplemental program funds are added in, hospitals in Nevada are getting back just 56 percent of their costs for handling Medicaid and the uninsured.

Sen. Ben Kieckhefer, R-Reno, asked if that’s actual hospital costs or the percentage of billed charges, which are substantially higher. Welch said those numbers are actual costs.

Welch pointed out at the same time, the state gets a net benefit from those supplemental payment programs of about $85 million during the biennium, money that goes into the General Fund.

Nationally, he said, hospitals are being reimbursed an average of 89 percent of their costs and Nevada is last in the nation in payments per capita.

“If nothing changes, we’re being asked to absorb $1.1 billion in uncompensated care for the Medicaid population alone,” Welch told the combined Senate Finance/Assembly Ways and Means subcommittee.

That, he said, is going to further worsen access to care problems statewide as more hospitals are forced to shut down services such as obstetrics, pediatric services, cardiac rehabilitation and nuclear medicine.

Welch said hospital officials realize the gap in funding can’t be fixed in one budget cycle. But, he said, “we must prevent further erosion of access to care by moving Medicaid rates closer to the cost of the care.”

He said the hospital association is proposing a 10 percent rate increase in Fiscal 2016 and another 10 percent in the second year of the biennium. That would cost $57.7 and $115 million for a total of $173 million in added dollars.

But he pointed out those increases would allow the state to access $120 million more federal dollars and raise the percentage hospitals are being reimbursed for Medicaid costs to 64.5 percent.

The subcommittee took no action on the issue.