More than 17,000 Missourians have applied for Medicaid since a judge ordered the state to implement voter approved expansion in August. The shift could be a boon for hospitals, which often care for people who are uninsured.
Hospital leaders are broadly optimistic about expansion, but the road ahead isn’t exactly straightforward.
Golden Valley Memorial Hospital is a 56-bed facility in Clinton. While the western Missouri town has fewer than 10,000 residents, the hospital serves around 80,000 people in the broader region. “We serve a primarily rural population," CEO Craig Thompson explained. "If you look at Clinton and draw a 50 mile circle around the hospital that’s really the population that we serve.”
Golden Valley and other rural hospitals like it tend to have narrow profit margins. Many patients are on Medicare, which pays hospitals less than commercial insurance, and some patients are on Medicaid which pays even less than Medicare. But 10% of Golden Valley’s patients don’t have any insurance to begin with.
“Even though Medicaid isn’t a great payer and in a lot of cases doesn’t cover cost, covering a portion of the cost obviously is better than covering no cost at all,” Thompson said.
Thompson estimates between 3,000 and 4,000 of the hospital’s patients could be part of the 275,000 Missourians newly eligible for coverage. Losing money on uninsured patients has contributed to the 10 rural hospital closures Missouri has seen in just the past seven years.
Research shows that fewer rural hospital close in states that expand Medicaid.
But Thompson and other hospital leaders say they’ve supported Medicaid expansion for more than just the bottom line. For Steve Edwards, CEO of Cox Health in Springfield, expansion is about better serving patients.
“I feel kind of elated because I see the struggles," Edwards said. "When you’re in health care you see the struggles more up front and personal with patients.”
Having Medicaid coverage opens the door for patients to seek preventive care. Edwards maintains that’s better for them — and better for the hospital — in the long run. One critical area Medicaid expansion could help: mental health.
"So often people struggling with mental health often lose their job and lose their insurance, and then cycle through that really horrible cycle," Edwards said.
Those two things — Patient care and hospital finances — are big on the list of reasons the Missouri Hospital Association has supported Medicaid expansion in Missouri.
But other changes have complicated the outlook for hospitals. One of those developments is the increasing adoption of “managed care” in Medicaid. Traditionally, Medicaid pays providers directly, but under managed care, a private company serves as an intermediary.
The Hospital Association’s Dave Dillon says the issue with managed care for hospitals is two-fold; less compensation and more bureaucracy.
“Not only do you have a middle man, which will take some of the state’s payments for that care, but you also see that hospitals have more administration because they have to deal with denials of care,” Dillon said.
People who get care through Medicaid expansion in Missouri will be in managed care. Advocates for managed care say that’s an opportunity. They say if managed care is done right, it can benefit patients, hospitals and the state.
Elena Marks is the president of the Episcopal Health Foundation, a health-focused nonprofit based in Houston Texas. She also serves on the board of a managed care organization and believes managed care can benefit patients if the focus is on optimizing their health.
“There is some amount of care that does not need to be incurred," Marks said. "And when you are in a managed care plan, and someone is managing the care, and the overall experience, then those things are avoided.”
But Marks acknowledges that if a state only wants to use managed care to cut costs, it can increase the friction between providers and the care organizations. Missouri is also adjusting how it compensates providers for care, which is projected to also cut hospital revenues.
All of this, combined with the continued threat of a legislature that’s already tried to stop Medicaid expansion once this year, is cause for concern for hospital leaders.
Still, Cox CEO Edwards is optimistic about the future of Medicaid expansion in Missouri. “It’s a moment that gives us joy and hope and knowing that we can better serve our community … so that’s a very meaningful day for all of us in health care.”
And 11 years since the Affordable Care Act gave states the option to expand Medicaid, it’s a day long in the making.
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